Nature Coffee Curing And Processing, Represented By Its Partner Shanavaz vs. Union Of INDIA
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The appellant, Nature Coffee Curing and Processing, imported 27 metric tonnes of Sri Lankan arecanut and filed a bill of entry on 12.10.2023, claiming exemption from basic customs duty under notification 26/2000. The respondents, Customs authorities, provisionally assessed the goods at the tariff rate of 100% basic customs duty, denying the exemption without stating reasons. The appellant submitted a certificate of origin. The provisional assessment demanded ₹1,76,42,468/- in customs duty and ₹8,82,123/- in IGST for release of goods. The appellant made several requests for clarification, which went unanswered. The learned Single Judge dismissed the writ petition, directing the appellant to file an appeal. The appellant filed a writ appeal against this judgment.
Held
The Court held that the appellant should not be made to wait indefinitely for the finalization of the assessment. It noted that while Section 28DA of the Customs Act, read with the Rules 2020, provides a procedure with definite time frames for verification of the certificate of origin, the respondents sent their request for verification only on 27.12.2023, two months after the provisional assessment on 18.10.2023. The Court found that the appellant should not be prejudiced by the lapse on the part of the Department. Considering the appellant is a regular importer with no past adverse record, the Court directed the release of the imported consignment upon payment of the IGST amount and furnishing a bank guarantee for 20% of the differential customs duty. The respondents were also directed to finalize the provisional assessment within three months from the receipt of the judgment copy. The ratio is that importers cannot be made to suffer indefinite delays due to departmental lapses in following prescribed procedures for verification of origin, and provisional release with security is a viable option.
Key Issues
1. Whether the Customs authorities followed the procedure prescribed under Section 28DA of the Customs Act, 1962, and the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020, in denying the benefit of the exemption notification and delaying the finalization of the provisional assessment? Petitioner's arguments: The petitioner argued that the procedure under Section 28DA was not followed, making the delay in finalising the provisional assessment unjustifiable. They contended that if Section 28DA and Rules 2020 were not applicable, they had the right to seek provisional release of goods under Section 18 of the Customs Act read with the Customs (Finalisation of the Provisional Assessment) Regulations, 2018. Respondent's arguments: The respondents argued that the delay was solely due to the time taken to obtain the necessary verification report from Sri Lankan Authorities, as mandated by Section 28DA of the Customs Act read with the Rules 2020. However, when questioned, the Additional Commissioner of Customs stated that the request for verification was received by their office only on 27.12.2023, two months after the provisional assessment.
Sections Cited
Section 28DA, Section 18
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Cause title — parties, addresses and appearances
J U D G M E N T Dr. A.K.Jayasankaran Nambiar, J.
The appellant herein has approached this Court aggrieved by the judgment dated 22.11.2023 of the learned Single Judge in W.P. (C).No.38741/2023. 2. The brief facts necessary of the disposal of this writ appeal are as follows: The appellant had preferred the writ petition aforementioned impugning the provisional assessment order (Ext.P14) that directed the appellant to deposit customs duty to the extent of ₹1,76,42,468/- and IGST in an amount of ₹8,82,123/- as a condition for release of the imported goods. The appellant had imported 27 metric tonnes of Sri Lankan arecanut through Kochi Port and filed a bill of entry dated 12.10.2023 for clearing the same. The appellant had in the bill of entry claimed the benefit of exemption under notification 26/2000 by which arecanuts imported from Sri Lanka were entitled to a complete exemption from basic customs duty.
The respondents however, provisionally assessed the imported goods at the tariff rate of 100% basic customs duty by provisionally denying the benefit of the aforementioned exemption notification to the appellant. It is significant that while completing the provisional assessment and demanding the differential customs duty, there was no mention made of the reasons that weighed with the customs authorities for demanding the differential duty. This is notwithstanding the fact that along with the bill of entry, the appellant/importer had submitted the necessary certificate of origin to prove that the arecanuts imported were of Sri Lankan origin. In terms of Section 28DA of the Customs Act, 1962 if the proper officer of the Customs has reasons to believe that the country of origin criteria has not been met, he can require the importer to furnish further information, consistent with the respective trade agreements, in the manner provided by the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (for short 'the Rules 2020'). As per Section 28DA (4), where an importer fails to provide the requisite information, for any reason, the proper officer may cause further verification consistent with the trade agreement, in such manner as may be provided by the Rules 2020. In that event, the provisions of Section 28DA (5) also provide that pending further verification, the proper officer may on the request of the importer, release the goods subject to furnishing by the importer of a security amount equal to the difference between the duty provisionally assessed and the preferential duty claimed.
It would appear that, in the instant case, while the appellant had filed the bill of entry as early as on 18.10.2023 and the provisional assessments as evidenced by Exts.P8 and P14 were completed the very next day, there was a demand for the differential customs duty in an amount of ₹1,85,24,592/- by the Customs authorities without furnishing any reason for the said demand. This prompted the appellant/importer to prefer Exts. P11, P12 and P13 letters dated 13.10.2023, 16,10,2023 and 26.10.2023 to the customs authorities seeking a clarification as to why the preferential duty claimed by him was not found acceptable by the customs authorities. It is rather surprising that the said letters did not evoke any response from the customs authorities. The provocation for the writ petition appears to have been the exasperation of the appellant/importer on not hearing anything from the customs authorities for well over two months on the issue of finalisation of the provisional assessment. In the writ petition, the prayer of the appellant was for a direction to the respondents to finally assess Ext.P8 bill of entry within a particular time frame or in the alternative to direct the respondents to release the goods under a bond in accordance with the Customs (Provisional Duty Assessment) Regulations.
The learned Single Judge who considered the matter found that against the provisional assessment orders passed by the Customs authorities, the appellant had an effective right of appeal under the Customs Act and hence this was not a case where a writ court could be approached for interference with the orders passed by the customs authorities. The learned Single Judge therefore dismissed the writ petition and relegated the appellant to his alternative remedy of filing an appeal against the impugned order within 15 days, coupled with a direction to the appellate authority to consider the appeal expeditiously in accordance with law.
Before us, it is the submission of Sri. John Varghese, the learned counsel for the appellant that, while the respondents claim that the delay in finalising the provisional assessment is on account of their having sent a request for verification to the Sri Lankan authorities through the Customs authorities in Delhi and the Indian Embassy in Sri Lanka, for verification of the authenticity of Ext.P9 certificate of origin, it is relevant that the procedure contemplated under Section 28DA of the Customs Act was not followed and hence the delay in finalising the provisional assessment cannot be justified under any circumstances. He would further point out that, if the provisions of Section 28DA read with the Rules 2020 are not applicable to the factual situation in this case, then the appellant has the right to seek a provisional release of the imported goods in accordance with Section 18 of the Customs Act read with the Customs (Finalisation of the Provisional Assessment) Regulations, 2018. Per contra, it is the submission of the learned Standing Counsel for the respondents Sri. R. Harishankar that the delay in finalising the provisional assessment is only on account of the delay in obtaining the necessary verification report from the Sri Lankan Authorities as mandated in Section 28DA of the Customs Act read with the Rules 2020. However, when we enquired with the Additional Commissioner of Customs, International Customs Division (ICD), CBIC, New Delhi who is present before us through video conference, we were informed that the request from the Customs Authorities in Kochi for a verification of the authenticity of the certificate of origin produced by the appellant herein was received by that office only on 27.12.2023. He would also inform us that the request has been forwarded to the Indian Embassy at Sri Lanka on 29.12.2023 for further action.
On a consideration of the rival submissions, we are of the view that the appellant/importer cannot be made to wait indefinitely for finalisation of the assessment in relation to the goods imported by him. As has already been noticed by us, in the event of the respondents entertaining any doubt with regard to the certificate of origin of the imported goods for the purposes of various free trade agreements entered into between India and other countries, the procedure that has to be followed is clearly delineated in Section 28DA of the Customs Act. The said provision, read with the Rules 2020, provides for a seamless procedure with definite time frames so as to ensure that goods are not held up indefinitely at the customs stations after their import into the country. In the instant case, we find that although the provisional assessment denying the appellant the benefit of concessional rate of duty was completed as early as on 18.10.2023, the request for verification as mandated under Section 28DA was sent only two months later, on 27.12.2023. We are of the view that the appellant cannot be prejudiced for the lapse on the part of the Department and hence the request of the appellant for a provisional release of the goods pending finalisation of the assessment deserves to be considered favourably. We are mindful of the fact that there is a demand for differential duty to safeguard against the possibility that the certificate of origin of the goods given by the appellant is not authentic. We feel however, that to safeguard the interest of the Revenue in the present context, we can take into account the fact that the appellant is stated to be a regular importer of arecanut from Sri Lanka and that there have not been any instances in the past where the goods imported have been confiscated or differential duty demanded from him. We, therefore, allow this appeal by setting aside the impugned judgment of the learned Single Judge with the following directions: I) The respondents shall forthwith release the imported consignment of arecanuts covered by Ext.P8 bill of entry on the appellant paying the IGST amount of ₹8,82,123/- and furnishing a Bank Guarantee for 20% of the differential customs duty demanded (20% of ₹1,76,42,468/-) within ten days from today. II) The respondents shall thereafter proceed to finalise the provisional assessment in respect of the import covered by the aforementioned bill of entry within a period of three months from the date of receipt of a copy of this judgment. DR. A.K.JAYASANKARAN NAMBIAR JUDGE DR. KAUSER EDAPPAGATH JUDGE kp
Reproduced from the public record of the Kerala High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.