I.P Rings Ltd. v. Commissioner Of Customs (Air), Chennai

[Order]. - The appellants imported stainless steel wires and filed four Bills of Entry dated 8th, 12th, 14th and 16th March, 2006. The goods were cleared before 27-3-2002 on payment of duty at 40% (BCD) +16% (CVD) + 4% SAD. On 27-3-2003, the Central Government issued a corrigendum to Customs Notification No. 21/2002, dated 1-3-2002. This corrigendum had the effect of rendering the above goods chargeable to BCD @ 30%. After taking note of this corrigendum the assessee filed refund claims for a total amount of duty of Rs. 1,95,422/- being the excess duty of Customs paid. These refund claims were within the normal period of limitation prescribed under Section 27 of the Customs Act, 1962. The original authority rejected the claims as unsubstantiated, for want of certain documents. The first appellate authority took the view that the refund claims were not maintainable on account of the fact that the assessments of the Bills of Entry had not been challenged. In the present appeal, it is submitted that, as the lower appellate authority   has rejected the refund claims on a ground extraneous to the order-in-original, the impugned order cannot be sustained in law. It is submitted by the learned Counsel for the appellants that the view taken by the Commissioner (Appeals) is not applicable to this case inasmuch as there was no ‘lis’ between the appellants and the department. In this connection, reliance is placed on the Tribunal’s Larger Bench decision in the case of Faxtel System (India) Pvt. Ltd. v. CC, Cochin reported in (Tri. - LB) wherein the Bench applied to the case, the ratio of the the Hon’ble Supreme Court’s decision in Collector v. Flock (India) Pvt. Ltd. reported in (S.C.) wherein it was held that an officer considering a refund claim could not sit in judgment over the assessment made by a competent officer of Customs and that refund of any duty so assessed could be claimed only after successfully challenging the assessment. Both sides have extensively referred to the provisions of Sections 17 and 27 of the Customs Act in their endeavour to substantiate the respective points of view.

2. After giving careful consideration to the submissions, I find that, when the goods were cleared for home consumption, it was chargeable to duties of Customs at the rates 40 + 16 + 4 inasmuch as it was not one of the goods specified for any different rate (effective rate) under Notification No. 21/2002. It was after the clearance of the goods that, through corrigendum, the Central Government brought the goods within the coverage of Serial No. 207 of the table annexed to the above Notification thereby rendering the goods chargeable to BCD @ 30%. The assessee sought to claim the benefit of the amendment of the Notification, through the refund claims in question. These claims have been held to be not maintainable for want of challenge to the assessment.

3. The’ learned SDR has contended that the appellants, to be eligible to claim the refund of excess duty paid, should have applied to the proper officer of Customs for re-assessment of the goods in terms of sub-section (4) of Section 17 of the Customs Act. It appears from the tenor of arguments made by the learned Counsel that, on the facts of this case, re-assessment should have been done by the proper officer suo motu. Section 17 which has been debated at length in this case reads as under  :

"SECTION 17. Assessment of duty. - (1) After an importer has entered any imported goods under section 46 or an exporter has entered any export goods under section 50 the imported goods or the export goods, as the case may be, or such part thereof as may be necessary may, without undue delay, be examined and tested by the proper officer.

(2) After such examination and testing, the duty, if any, leviable on such goods shall, save as otherwise provided in section 85, be assessed.

(3) For the purpose of assessing duty under sub-section (2), the proper officer may require the importer, exporter or any other person to produce any contract, broker’s note, policy of insurance, catalogue or other document whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained, and to furnish any information required for such ascertainment which it is his power to produce or furnish, and thereupon the importer, exporter or such other person shall produce such document and furnish such information.

(4) Notwithstanding anything contained in this section, imported goods or export goods may, prior to the examination or testing thereof, be permitted by the proper officer to be assessed to duty on the basis of the statements made in the entry relating thereto and the documents produced and the information furnished under sub-section (3); but if it is found subsequently on examination or testing of the goods or otherwise that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act, be re-assessed to duty."

In this case, subsequent to the assessment of the goods in terms of the provisions contained in the first half of sub-section (4), it was noted (from the Notification as amended)  that the effective rate of BCD on the goods was 30% instead of 40%. Therefore, the goods should have been re-assessed to duty in terms of the provisions contained in the second half of the above sub-section (underlined). The question now is whether such re-assessment should have been initiated by the proper officer of Customs or claimed by the assessee. In order to answer this question, it may be relevant to consider the provisions of Section 149 of the Customs Act inasmuch as any re-assessment in this case would follow amendment of the rate of BCD (from 40% to 30%) entered in the Bills of Entry. Section 149 reads as under.

“SECTION 149. Amendment of documents. - Save as otherwise provided in sections 30 and 41, the proper officer may, in his discretion, authorise any document, after it has been presented in the custom house to be amended :

Provided that no amendment of a bill of entry or a shipping bill or bill of export shall be so authorised to be amended after the imported goods have been cleared for home consumption or deposited in a warehouse, or the export goods have been exported, except on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported, as the case may be.”

The above provision governs the amendment of import documents and export documents. Amendment of Bill of Entry is permissible on the basis of documentary evidence which was in existence at the time when the goods were cleared. In the present case, when the goods were cleared, Customs Notification 21/2002 (un-amended) was in existence. As its amendment through corrigendum was retrospective in effect, the amended Notification should be deemed to have been in existence at the time of clearance of the goods and, consequently, in terms of Section 149, the subject Bills of Entry were open to be amended. It appears from the provisions of Section 149 that such amendment shall be made by the importer as authorised by the proper officer. Thus the importer is expected to apply to the proper officer for permission to amend the Bills of Entry. Such amendment of the Bills of Entry should precede re-assessment under Section 17 of the Act. Therefore, it would appear that the initiative for re-assessment should come from the assessee. I am of the considered view that it is still open to the assessee to take this initiative, there being no period of limitation prescribed for re-assessment under the Act. Hence, for the ends of justice, I set aside the impugned order and direct the original authority to reassess the Bills of Entry under Section 17(4) of the Act after allowing the assessee to amend the Bills of Entry under Section 149. The authority shall thereafter proceed to entertain the refund claims already filed by the party. Of course, the assessee, in that event, will have to discharge is burden of proof against the bar of unjust enrichment. Needless to say that they should be given a reasonable opportunity to adduce evidence against unjust enrichment as also to be personally heard.

4. The appeal stands allowed by way of remand.