Exports customs duty prevalent at the date of entry outward – An interesting twist !!!

 For a particular a product export duty was applicable @ 10% and exporter had paid relevant duty. For want of space in the said vessel, the goods were "shut out". The exporter however secured necessary space for exporting these goods by another vessel. On the basis of a request from exporter shipping bills were allowed to be amended enabling the respondent to ship the goods on board in the new vessel.

Meanwhile and before the necessary amendment of the shipping bills the export duty payable on the said product was enhanced from 10% to 25%.Customs department demanded difference in duty. Exporter has paid difference in duty under protest. Later exporter has submitted refund request . Is Exporter eligible for refund ?

No. It is well settled that the relevant rate of customs duty in connection with the export of goods would be the rate which prevailed when the `entry outwards' for the vessel which ultimately exported the goods, was effected and subsequent changes in the rate of duty before the actual arrival of the vessel would be irrelevant.

In the present case the situation is slightly different. The earlier `entry outwards' for the first planned vessel remained inoperative and ineffective. For that vessel Section 39 of the Act never operated. It is only for the second vessel that an effective `entry outwards' became operative and under Section 39 of the Act as per the said `entry outwards' the goods could be loaded on the ship and could be exported.

Hence demand of difference in export duty is upheld and exporter is not eligible for refund.

Relevant parts of the Customs Act sections reproduced below ;

Date for determination of rate of duty and tariff valuation of export goods SECTION 16 (1) (a) “ in the case of goods entered for export under section 50, on the date on which the proper officer makes an order permitting clearance and loading of the goods for exportation under section 51”

Export goods not to be loaded on vessel until entry-outwards granted SECTION 39  “ The master of a vessel shall not permit the loading of any export goods, other than baggage and mail bags, until an order has been given by the proper officer granting entry-outwards to such vessel”

Entry of goods for exportation SECTION 50 (1) “ The exporter of any goods shall make entry thereof by presenting ⁵[on the customs automated system] to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export ⁶[in such form and manner as may be prescribed.]”

Clearance of goods for exportation SECTION 51 (1) Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation.

PRINCIPAL APPRAISER (EXPORTS) VERSUS ESAJEE TAYABALLY KAPASI Supreme Court, decided on 11.10.1995

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