The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the Customs House Agent ( CHA ) is not required to advise on assessment aspect to clients unless solicited and set aside Penalty under section 117 of Customs Act, 1962. There is nothing on record to show that he has been subjected to action under Customs Broker License Rules, ( CBLR ) 2018. The appellants, Louis Dreyfus Company India Pvt Ltd had imported goods against duty-free scrips issued under the MEIS (Merchandise Exports from India Scheme) and SEIS (Service Exports from India Scheme).

On importation, the appellants have paid the customs duties, consisting of BCD, Education Cess ( EC ), Secondary and Higher Education Cess ( SHEC ) and Social Welfare Surcharge ( SWS ) by debiting them in the duty scrip tendered at the time of import. The import of goods against MEIS and SEIS are governed by Notification No.24/2015-Cus, dated 08.04.15 and Notification No. 25/2015-Cus dated 08.04.2015 respectively. The contention of the department is barring the basic customs duty, other duties namely EC, SHEC and SWS ought not to have been debited in the duty credit scrips According to the department, these duties ought to have been paid in cash. The department invoked the extended period, that the appellants have deliberately debited these duties from the duty-free scrips with an ulterior motive to evade the payment of duties

. The appellants have also not informed the department above the debits made in the scrips, of these duties. In respect of duty demand about EC and SHEC, in the appellants’ case involving identical factual matrix, CESTAT, Mumbai, vide Final Order No. 87149/2023 dated 16.11.2023 observed that any cess collectable as a percentage of duty liability could not be computed in the absence of duty liability. Under Section 47 of the Act, out-of-charge for these bills of entry was granted after the proper officer was satisfied that the importer had paid import duties. Passing of an order under Section 47 is not an empty formality. That being said, there is no case for the invocation of an extended period in the present case. The entire duty demand in all the SCNs has been confirmed by invocation of the extended period. No part of the duty demand falls within the normal period of limitation. The imposition of penalty under Section 114 A of the Act was confirmed observing that the cesses were paid by debiting the MEIS scrips were recoverable under Section 28 (4) of the Act.

The appellants submitted that when the EDI system itself permitted the appellants to pay the cess using the scrip, there could not have been suppression of facts etc. Therefore, a penalty under Section 114A of the Act is unsustainable, especially when the duty demand is otherwise time-barred. Regarding the breach of sub-regulation of Regulation 10 has not been mentioned, the two-member bench comprising Mr Raju, Member (Technical) and Mr Somesh Arora, Member (Judicial) observed that CHA is not required to advise on assessment aspects to its clients unless solicited. Again there is nothing on record to show that he has been subjected to action under C.B.L.R, 2018. The Tribunal held that “when specific penalty under C.B.L.R for violation of any Regulation exists, same cannot be relegated to residual provisions of penalty under Section 117 of the Customs Act, 1962. Same is therefore set aside and appeal of Narendra Forwarders P Ltd is allowed.”