JULY 09, 2021

By Ravi Raghavan, Senior Partner,  D.Kalirajan, Principal Associate, & Laksh Manocha, Associate, at Lakshmikumaran & Sridharan, Bangalore

FOR a business to survive in any economy it is necessary that it functions and grows in an environment which is a balance of both regulatory and legislative compliances and relaxations. The Legislature and the Judiciaries in India are taking various measures to provide the balanced business environment and to achieve the objective of ease of doing business. Various measures have also been taken to reduce the burden of litigation on both the assessees and the government. Even, the Central Government has framed the National Litigation Policy which aims to reduce Government litigation and to ensure that valuable time of the Courts is spent in resolving pending cases and in bringing down the average pendency time in the Courts. However, in light of the decision of the Hon'ble Supreme Court in the case of ITC Ltd., ¹ the assesses are facing some procedural barriers in carrying out their businesses efficiently.

The Hon'ble Apex Court in the case of ITC Ltd., held inter alia that the endorsement made by assessing authorities on the bills of entry is an order of self-assessment. An appeal before Commissioner Appeals shall be filed against such order of assessment by any aggrieved person. In view of said decision of the Hon'ble Supreme Court, every bill of entry is an appealable order and appeal should be filed against such bill of entry, in case the importer or the department is aggrieved by the assessments made under such bill of entry.

To put it in simple words let's take an example where an importer has imported goods and filed 10 bills of entry accounting for the imports and discharging appropriate customs duties and such bills of entry are self-assessed. Later, the importer realises that they paid excess customs duty. In such a situation, unless the assessments under said bills of entry can be modified under the other provisions of Customs Act viz., amendment to bill of entry under Section 149 of Customs, correction of clerical errors under Section 154 of Customs Act, etc., the importer should challenge assessments made in each bill of entry by way of filing separate appeal before the Commissioner (Appeals). This would mean that the importer will have to file 10 appeals.

This has resulted not only in the time and effort being frittered away but also in procedural difficulties and wastage of resources as the contents of the appeal would remain the same except for details pertaining to the bills of entry. The Commissioner (Appeals) may club all the appeals together and dispose them off in a single order-in-appeal (for brevity 'OIA') instead of passing 10 separate orders.

The arduousness of the taxpayer does not end here. It may appear that in case the Commissioner (appeals) passes a single OIA summarily against multiple appeals, it would sufficient to file single appeal before CESTAT by the aggrieved party. However, in terms of Rule 6A the CESTAT Procedure Rules, 1982, irrespective of the number of show cause notices, price lists, classification lists, bills of entry, shipping bills, refund claims/demands, letters or declarations dealt within the decision or order appealed against, the appellant shall file one Memorandum of Appeal against the order or decision. In case the OIA has been passed with reference to more than one OIO, the number of memoranda of appeal required to be filed shall be as many as the number of OIA.

On a bare reading of the Rule 6A, it may appear that a single appeal will be sufficient against the OIO irrespective of number of bills of entry. However, as each bill of entry is an appealable order of assessment, number of appeals to be filed before CESTAT should be as many of number of bills of entry covered under the OIA. This causes multiple problems to the assessee. To name a few would be :

a. Bills of Entry-wise pre-deposit to be made separately.

b. Verification of each appeal by the department or CESTAT registry, as the case may be.

c. Delay that may be caused while filing multiple appeals.

d. Due to voluminous documents and paper work, there could be minor defects in appeal which could lead to filing of appeal.

Recently, the Hon'ble Tribunal Ahmedabad in the case of CMR Nikkie India Pvt Ltd., ² has held that where the assessments under multiple bills of entry (in this case 84 bills of entry) are challenged by way of filing separate appeals and the OIA is passed accordingly, separate appeals (84 appeals) before CESTAT should be filed against each bills of entry.

Before parting…

Filing separate appeals at each stage against the assessments under bills of entry creates a lot of difficulties for the taxpayer as the quantum of effort involved and time spent increases manifold. The provisions requiring an assessee to file multiple appeals is only a procedural requirement. As stated above, ease of doing business connotes such a regulatory environment where its conducive for the business to grow and survive. In contrast, such a requirement under the law concerning the number of appeals to be filed only creates procedural difficulties and impediments for the businessmen more so when the customs authorities, off late, have been raising one issue or another at the time of import and the assessees in order to avoid demurrage clear goods on payment of duty under protest. In all such cases they have to challenge the bills of entry by filing separate appeals.

Thus, in order to do away with such an unintended, procedural and time-consuming requirement under the law, a suitable amendment should be made to the provisions of the Customs Act and other legislations. The industry may file a representation before the Government of India, explaining how such a requirement results in redundancy of efforts, wastage of resources and should be amended to bring it in line with the Government's initiative of Ease of Doing Business and to reduce the number of cases piling up before the appellate forums.

[Views expressed in the article are strictly personal.]

¹ITC Ltd., v. Commissioner of Central Excise, Kolkata - 2019-TIOL-418-SC-CUS-LB

²CMR Nikkie India Pvt Ltd., v. Commissioner of Customs, Ahmedabad- 2021-TIOL-308-CESTAT-AHM