Penalty cannot be levied for clerical mistake in Bill of Entry when differential duty was paid: CESTAT

Brief facts of the case are that the appellant is a manufacturer of ceramic tableware located at Jaipur. They are the regular importers of their inputs – ‘calcium phosphate’ falling under chapter heading 28352690. In the regular course of business, the appellant imported calcium phosphate and filed a Bill of Entry Nos. (i) 6897549 dated 15.02.2020 (ii) 6969438 dated 21.02.2020 and (iii) 70066555 dated 25.02.2020. However, due to some clerical error, the description of goods was mentioned as ‘Apatite (GR) Calcium Phosphate’ falling under chapter heading 25102030.

However, the appellant suo motu discovered the error in filing the Bill of Entry and accordingly approached the Revenue for correct classification and payment of duty vide letter dated 27.02.2020, pointing out the mistake and mentioning that the correct classification of the goods is 28352690 and accordingly prayed for rectification in the Bill of Entry and offering to pay the differential amount of customs duty and GST /IGST. It was also pointed out that the mistake occurred due to an error in the shipping documents (being Bill of Lading wherein the goods have been mentioned as ‘Apatite (GR) Calcium Phosphate’ HS Code 25102030). The said mistake is also in the commercial invoice.

However, it appeared to Revenue that it is a case of deliberate mis-declaration and accordingly the goods were liable to confiscation under Section 111(d), (l), (m), (n), and (o) of the Customs Act. Accordingly, the goods were put under seizure on 02.03.2020 and it further appeared that the appellant was liable to penalty under Section 112(a)(ii) and Section 114AA.

The appellant in continuation of their earlier letter suo motu admitted the error and prayed for correction in the Bill of Entry, agreed to the proposed demand and differential duty by giving a consent letter dated 05.03.2020. The appellant also waived their right to receive show-cause notice.

On the aforementioned facts, the Additional Commissioner of Customs passed an order-in-original dated 07.03.2020 holding that the appellant have intentionally filed Bill of Entry under the wrong description and classification, and accordingly held the goods are liable for confiscation under Section 111(d), (l), (m), (n) and (o) of the Customs Act. Further, a penalty under Section 112(a)(ii) was imposed –Rs. 12 lakhs and also a penalty under Section 114AA of the Customs Act of Rs. 9 lakhs. Further, the option of redemption was given subject to payment of a redemption fine of Rs. 10 lakhs.

Being aggrieved, the appellant preferred to appeal before the Commissioner (Appeals) who was pleased to reject the appeal confirming the order in original. Being aggrieved, the appellant is before this Customs, Excise & Service Tax Appellate Tribunal (CESTAT).

Learned Counsel for the appellant inter alia urges that there is no case of any deliberate mis-declaration made out. The Bill of Entry was filed by the Clerk of the appellant, who filed the Bill of Entry based on the documents like Commercial Invoice and Bill of Lading. However, as soon as the matter came to the knowledge of the Senior Officer in the appellant company, they immediately have suo- motu filed an application for rectification and offered to pay the differential duty, even before any inspection or dispute raised by the Customs Department. Thus, in the facts and circumstances, no case of deliberate mis-declaration to short pay custom duty is made out. Further, the appellant is a regular importer of calcium phosphate and has already been granted the ‘No Objection Certificate’ by the Drug Controller – Department. Thus, there was no reason for the appellant to deliberately mis-declare the description of goods and classification. It is further urged that the appellant is a regular importer, thus, there is no reasonable basis available to Revenue to draw an adverse inference against the appellant.

Tribunal found that there appears to be a genuine mistake in the nature of clerical mistake on the part of the Clerk of the appellant company. This fact is evident on the basis of the record, as the appellant has suo motu approached the Department for making necessary rectification in the Bill of Entry with regard to the classification and also offered to pay the differential duty. Such suo motu offer was made before the Department pointed out or issue of any notice to the appellant.

Thus, Tribunal held that it is a case of simple clerical error and there is no case of contumacious conduct on the part of the appellant.