FEBRUARY 20, 2025

By Ranjeet Mahtani, Partner & Neha Jain, Principal, Dhruva Advisors LLP

THE Union Budget 2025 ('the Budget') reaffirmed the destination for the year 2047 as "Viksit Bharat". For this, the Budget aims to initiate transformative reforms across six dimensions, one of which is taxation - interestingly listed as the first domain.

For a variety of reasons including furthering the Make in India initiative, promoting exports, et cetera a trade facilitation measure was proposed viz. to insert Section 18A in the Customs Act, 1962 ('the Act'). This provision is intended to enable importers and exporters, post clearance of goods, to voluntarily declare material facts and pay duty along with interest but without penalty or, claim refund, as the case may be. The authors analyse this proposal for statutory but voluntary revision and discuss some nuances of this topic.

Section 18A shall enable an importer or exporter to voluntarily revise the self-assessed bill of entry or shipping bill after clearance of goods. Such revision shall be in the prescribed form and manner, and time limit subject to some conditions. All such aspects are possibly to be prescribed later, in the rules.

In case of upward revision of the import assessment resulting in increased duty liability, it will have to be paid along with interest under Section 28AA of the Act; importantly, no penalty will be due or imposed on the importer. On the other hand, in case of downward revision of import value, entailing refund, the revised bill of entry shall itself be deemed to be a refund claim and so, no separate refund application is needed. The proper officer may verify the revised entry and re-assess the duty leviable on such goods on the basis of risk evaluation parameters, only if he/she believes that self-assessment is not done correctly.

This provision is intended to promote voluntary compliance and so, will not apply to cases where the Customs Department has initiated audit or investigation or search, seizure, or any summon proceedings and intimated the concerned importer or the exporter. The self-revision facility shall also not be feasible in cases entailing refund, where the proper officer has re-assessed the self-assessment under Section 17 or, the provisional assessment under Section 18 or, the assessment in case of goods imported or exported by post or courier under Section 84 of the Act.

Revision versus amendment under Section 149 of the Act

The Bombay High Court in Dimension Data India Private Limited v. Commissioner of Customs and ANR 2021-TIOL-224-HC-MUM-CUS, a case concerning amendment and consequential refund, observed that the Customs authorities have the power and jurisdiction to make corrections of any clerical or arithmetical mistakes or errors arising in any decision or order due to any accidental slip or omission at any time which would include an order of self-assessment post out of charge. The Court, in that case, directed the Customs Department to correct the mistake or error in classification of the goods, in the bill of entry filed by the assessee, by exercising powers under Section 149 read with Section 154 of the Customs Act ('Correction of clerical errors etc.'). The Court further directed that the authorities thereafter pass an appropriate order under Section 17(4) of the Customs Act for re-assessment of the said bill of entry.

Presently, amendment of customs documents including a bill of entry is a discretionary power, vested with the proper officer. On account of incorrect determination of duty (self-assessment), an importer may seek amendment of a bill of entry under Section 149, which the proper officer may allow on the basis of documentary evidence existing at the time of clearance of goods by the assessee. Similarly, for export shipments, a variety of reasons, for e.g. conversion from free shipping bill to a drawback shipping bill, could necessitate an amendment of the documents, which entails approaching the proper officer.

The extant statutory provision is fraught with limitations; firstly, it is discretionary and secondly, it was oriented to allow amendment of documents based on information/evidence available at the time of clearance of goods, which often gave rise to disputes. At any rate, there has been a general reluctance on the part of the Customs Department to amend any document, which caused difficulties to the trade. Section 149 of the Act was not fashioned or meant to alter or revise the assessment (whether upward or downward) made by the assessee or Customs Department. Hence, it wasn't popular with the field formations. In the proposed Section 18A, there are not prescribed similar conditions for an effective self-revision of a bill of entry and a shipping bill - the Central Government's proposal is delightful from the trade's standpoint.

The self-revision facility will be time bound and have certain timelines (rules in this behalf will be notified) besides which it cannot be undertaken in situations where the Customs Department has initiated proceedings, whereas there is no time limit prescription to seek an amendment of documents under Section 149. Thus, it will be incumbent that importers and exporters routinely review their self-assessments and, where necessary, file for revision, within the specified time limit.

In the authors' view, the self-revision facility is a welcome measure and hopefully will fill in the gaps felt by the present Section 149 of the Act - revision of the assessment, even in the absence of documentary evidence existing at the time of clearance of goods, will become possible.

Impact of proposed amendment on the Apex Court's judgement in ITC

The Supreme Court in ITC Limited v. CCE, Kolkata 2019-TIOL-418-SC-CUS-LB, and UOI & Anr. v. Sony India Private Limited 2023-TIOL-42-SC-CUS, declared the law that refund of duty cannot be claimed directly without first modifying a bill of entry (either self-assessed by importer or verified or re-assessed by proper officer) i.e. altering the assessment made. Owing to this decision, trade and industry faced the burdensome task of filing an appeal against each bill of entry (within a timeline of 60 days plus 30 grace days, if explained) to make a refund claim against its import assessment.

The proposed provision for revision is thus a much-needed facility to assist importers and exporters, in dealing with upward or downward revision of self-assessment, and without having to challenge the self- assessment in case of refund, as was prescribed by the Supreme Court in the ITC Limited case. Trade and industry had repeatedly raised a request for suitable dispensation of this onerous requirement. With the proposed amendment, it is anticipated that trade's administrative burden as well as litigation would dissipate.

Time limit to claim Refund of Excess Duty Paid

Section 27 of the Act outlines the scheme and procedure for claiming refund of duty. Concomitant with Section 18A, the proposed amendment to Section 27 is that the one-year time limit to claim refund consequent to a revised entry under Section 18A or amendment under Section 149 shall be reckoned from the date of payment of duty and interest and, not from the date of such revision or amendment (self-assessment). Interestingly, Courts, on numerous occasions, have held that such time limit shall be calculated from the date of amendment of the document and not from the date of payment of duty.

Concluding remarks

The proposed provision enabling suo moto revision of assessment sans interference by Customs Department authorities truly heralds a "self-assessment" regime; indubitably, a trade friendly proposal.

[The views expressed are strictly personal.]