MAY 06, 2019

By Priyojeet Chatterjee

THE Finance Act, 2011 (Act No. 8 of 2011) brought a paradigm shift in the Customs regime wherein the definition of Assessment u/s 2(2)¹ of the Customs Act, ibid, was amended to include self-assessment along with amendments in Section 17, 18 and 27, amongst others. The amendments vide the Finance Act, 2011, ushered an era of self-assessment regime, wherein the onus of declaration of particulars viz., classification, value, rate etc., was casted on the importer/ exporter and the powers of the 'proper officer' were restricted to verification.

Vide amendment made in Section 27(1) of the Customs Act, ibid, the condition to challenge the assessment was deleted. Inasmuch as the words 'paid by him in pursuance of an order of assessment' were substituted by the words 'paid by him;'. With deletion of the condition, assessment order was not required to be challenged any more to claim refund of duty.

This article is an attempt to highlight that even though assessment is not required to be challenged post amendment vide Finance Act, 2011, the refund claim still cannot be processed until particulars furnished in the Bill of Entry or Shipping Bill filed under Section 17 of the Act, 1962 stands corrected/amended. Goods entered for importation or exportation under u/s 46 and 50 of the Act, requires an importer or exporter to subscribe a declaration which states that the information or documents furnished in the Bill of Entry or Shipping Bill is true and proper.

The Customs Act, Section 149 provides a mechanism wherein amendments can be made to the documents pre and post clearance of goods. The provision allows amendment even if the goods are out of charge or exported, subject to condition that such correction / modification should be based on material document available at the time of import or export.

In the case of Micromax Informatics Ltd vs. Union of India reported in - 2016-TIOL-978-DEL-HC, the Hon'ble Delhi High Court held that with deletion of condition u/s 27 (1) with regards to "pursuant of assessment of order" refund claim u/s 27 (1) (i) and (ii) are maintainable and the ratio laid down in the case of Collector vs. Flock Industries reported in - 2002-TIOL-208-SC-CX, and Priya Blue Industries vs. Commissioner reported in - 2004-TIOL-78-SC-CUS is not applicable. The Court relied upon the Judgement in the case of Commissioner vs. Aman Medical Products wherein the Supreme Court while admitting the appeal on the primary question with regards to challenge of assessment order for claiming refund u/s 27 (1) of the Customs Act, did not grant any stay on the application of the Judgement rendered by Delhi High Court reported in - 2009-TIOL-566-HC-DEL-CUS. The Delhi High Court in the Aman Medical case highlighted the relevance of 'or' used between Section 27(1)(i) and (ii) and opined that sub-clause (ii) covers all scenarios wherein duty is paid without an assessment i.e. due to inadvertence or without availing the benefit of a notification.

With due to respect to the Judgement rendered by the Delhi High Court in the case of Micromax Informatics cited supra, the court, it seems, erred in not appreciating that the Customs Act u/s 149 provides a mechanism for amendment of particulars in Bill of Entry or Shipping Bill post clearance of goods subject to the condition that material documents should be available at the time of import or export. Amendment u/s 149 of the Act, is not re-assessment proceedings, since the amendment only seeks to alter/modify the particulars and same can be initiated suo-moto by the importer or exporter. Section 149 provides scope for correction of particulars furnished viz., weight, notification, value etc., in a Bill of Entry or Shipping Bill, even if the goods are out of charge / cleared for home consumption or exported, as the case may be.

In this regard proper officer u/s 30 and 41 read with Section 149 i.e. Assistant/ Deputy Commissioner (refer Notification No. 12/2014-Cus) has power to rectify/ amend the errors in the Bill of Entry subject to limitation envisaged therein.

In the case of Micromax Informatics supra, the issue was with regards to excess payment of CVD when the effective rate was lower than the rate at which the CVD was calculated and paid under self-assessment scheme. Possibly the Hon'ble High Court missed the purview and scope of Section 149 of the Customs Act, 1962.

In an ideal situation, when a Bill of Entry or Shipping Bill is filed under self–assessment scheme, inadvertence if any, may be brought before the proper officer who is appointed u/s 30 or 41 read with Section 149 and 154 of the Act for modification/amendment of the document. Since, the declaration made in the Bill of Entry or Shipping Bill filed under Section 46 and 50 asserts on true and correct disclosure of particulars. Filing a refund claim without correcting the errors in the Bill of Entry or Shipping Bill is incorrect. Without amending the primary document and correcting the errors, refund cannot be issued, since, the particulars and the accuracy of such document is doubtful prima facie.

Further, without correcting the error in the Bill of Entry or Shipping Bill (self-assessed) with regards to taxability or classification or availing benefit notification, the condition laid u/s 27 (2) of the At, which lays a pre-requisite that satisfaction of the 'proper officer' is a condition precedent to issue a refund will not be satisfied. Refund authority cannot suo-moto satisfy himself without amending / correcting the error in the Bill of Entry or Shipping Bill which justifies the refund on the face of the document.

On a holistic reading of Section 27, it can be opined that for the purpose of processing a refund claim the primary document i.e. Bill of Entry or Shipping Bill must indicate a correct and true position. Further, correction or amendment of Bill of Entry or Shipping Bill initiated by the importer or exporter u/s 149 or by the department u/s 154 is not a challenge to the assessment order as held in the case of Ashok Leyland vs. CCEx, Chennai reported in 2004-TIOL-750-CESTAT-MAD.

Thus, the scheme and scope of Section 27 of the Act, is apparenlty, incorrectly interpreted to this extent. After amendment in 2011, refund though may be claimed without challenging the assessment order but same requires modification/ amendment of Bill of Entry u/s 149 / 154 of the Customs Act, 1962 by a proper officer. Without modification/ correction in the Bill of Entry or Shipping Bill, there cannot be a suo-moto refund. In a recent judgement the Hon'ble Madras High Court in the case of CC, (Imports) Chennai vs. M/s Symrise (P) Ltd., - 2019-TIOL-776-HC-MAD-CUS remanded the matter back to the assessing officer in an appeal filed by the department (Commissioner, Customs) challenging the refund claim allowed by the Tribunal without any assessment order or appeal. The Hon'ble High Court noted that u/s 154 of the Act, powers are vested wherein an importer or exporter can also approach the authority and seek correction of errors and the provision is not restricted only to the department / authority. The Hon'ble High Court respectfully opined that refund cannot be granted until the assessment is corrected and remanded the matter to the Assessing officer for afresh decision.

(The author is a Tax Consultant based out of Delhi. The views expressed are strictly personal.)

¹ Substituted by Finance Act, 2018 (Act No. 13 of 2018)