KARACHI: The Customs Appellate tribunal has struck down the penalty imposed by Adjudication on a clearing agent for attempting to take undue benefit of RO 575(I)/2006 on behalf of the importer. Tribunal noted that fine on clearing agent was not warranted. According to the details of the case, M/s Usmania Restaurant Islamabad imported a consignment of ‘lamps and lanterns’ and sought clearance claiming benefit of SRO 575(I)/2006 on the basis of claim that they are operating hotel of category three stars and above. On post clearance scrutiny of the documents, it revealed that the importers availed inadmissible exemption of customs duty in excess of 5% and whole of sales tax and income tax. The aforesaid exemptions were admissible on the import of machinery, equipment and other items inter alia required for setting up, up gradation or expansion of hotels (3 stars and above). M/s. Usmania Restaurant, Islamabad was not categorized as "three star hotel" which is basic prerequisite qualification for exemption. As such, M/s. Usmania Restaurant, Islamabad in active connivance of their clearing agent M/s. Pioneer Trading caused loss of government exchequer to the tune of Rs. 1.915 million. The adjudication ordered the importer to pay the evaded amount and imposed a penalty of Rs0.5 million on the importer. A penalty of Rs0.1 million was also imposed on clearing agent. The Tribunal ruled that the penalty on clearing agent was not warranted and struck down the same, however recovery order for evaded amount and penalty on importer was upheld.