LUT HAS BEEN DECLARED BY OVERSIGHT IN SHIPPING BILL – SHIPPER NEEDS TO PAY IGST AND GET REFUND – IS SB AMENDABLE AND SHIPPER ELIGIBLE FOR IGST REFUND ?

A Shipper forgot to mention IGST while filing Shipping Bill but paid IGST and given request letter to The Deputy Commissioner to amend SB. Subsequently, The DC has given a SB amendment confirmation letter to Shipper but The Commissioner denied IGST refund. What is the remedy ? 

Yes. Post amendment of Shipping bill shipper is eligible for refund of IGST. 

Let us see the observations of Hon’ble High Court as follows ;

It is the case of the writ-applicant that the writ-applicant is a manufacturer and is holding the GST Registration. The writ-applicant exported goods under the various invoices of payment of the IGST from the Mundra Port. However, on account of a clerical error, the amount of the IGST was not mentioned in the shipping bills. In such circumstances, the shipping bills were amended for the purpose of getting the details of the IGST, incorporated in the shipping bills.

The grievance of the writ-applicant is that the respondent-authorities are not responding to the request with regard to the sanction of the refund of the IGST paid in connection with the goods exported, i.e. “Zero Rated Supplies”.

Letter of Superintendent of Customs (Export), Customs House, Mundra, dated 15th February, 2018, which reads thus:

“F.No.VII/48-1510/EXP/AMD/MP & SEZ/17-18

Date:15.02.2018

To,

M/s.Heavy Metals and Tubes (India) Pvt. Ltd.,

107, Ashwarath Complex,

Usmanpura, Ashram Road,

Ahmedabad.

Gentleman,

Subject:-Amendment under sec. 149 of customs act, 1962.

Please refer to your letter dated 18.01.2018 requesting for amendment under Sec 149 of Customs Act, 1962 in Shipping Bill No.7900219 dated 09.08.2017.

In this connection, it is to inform you that Deputy Commissioner of Customs, Custom House, Mundra has approved the amendment on 14.02.2018, against the below said shipping bills Under Section 149 of Customs Act, 1962 as under:-

FROM	To
IGST Payment:- NIL	IGST payment: Paid Taxable Value : 10311740 IGST Amount : 1856113

Yours Sincerely,

Superintendent of Customs (Export)

Customs House, Mundra

Copy to: Friend Syndicate Clearing Pvt. Ltd., Gandhidham for information only.”

We dispose of this Writ-Application with a direction, to both, the Principal Commissioner of Customs, Mundra Port as well as the Deputy Commissioner of Customs, Mundra Port, to look into the matter and take appropriate decision within a period of four weeks from the date of receipt of the writ of this order.

M/S. HEAVY METAL AND TUBES (INDIA) PVT. LIMITED VERSUS THE PRINCIPAL COMMISSIONER OF CUSTOMS, GUJARAT HIGH COURT, Order pronounced on 12.02.2020

 

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#Customs Law Quick Bites-43

Illegal Syndicate of IEC holders to bypass Customs assessment – Customs brokers should not become prey to fraudsters !!!

A Customs Broker has filed various Bill of Entries of different IEC holders and cleared LED TV parts. DRI has investigated the issue of import of parts of LED TV with the perception that these parts are imported by a group of persons and that these parts should be assessed as complete LED TV. Customs Broker did not dealt with importers directly and one middlemen brought this business and Customs broker has raised invoice against middlemen and not against importers. The Customs department revoked licence, forfeited security deposit and imposed penalty of Rs.50,000/- and Customs broker appealed to CESTAT.

Let us see important observations of CESTAT as follows ;

Customs Brokers advocate has submitted that the Commissioner has failed to apply the ratio of the decision in the case  of HIM Logistics Pvt. Ltd. Vs. CC, New Delhi [2016(338) ELT 725 (Tri. Del.)] wherein it has been held that “ customs broker need not meet the importer and their premises need not be verified physically”

Learned counsel also cited the decision of Kunal Travels (Cargo) Vs. CC (I&G), IGI Airport, New Delhi [2017(354) ELT 447 (Del.)] wherein it has been clarified that “it is onerous to expect CHA to inquire into and verify genuineness of IE code given by client for each import/export and that if goods did not corroborate with declaration in shipping bills, it cannot be deemed to be misdeclaration by CHA”

Learned counsel also submitted that in plethora of cases, the Tribunal has held that revocation of licence is too harsh punishment which will deprive them of their livelihood and for this he relied upon the following decisions:-

i. Sadanand Chaudhary Vs. CC(G), New Delhi [2018(363) ELT 1018 (Tri. Del.)]

ii. Service Bureau Vs. CC, New Delhi [2018(363) ELT 949 (Tri. Del.)]

iii. Shri Manjunatha Shipping Pvt. Ltd. Vs. CC, Bangalore [Final Order No.21867-21868/2018 dt. 11/12/2018 by CESTAT, Bangalore]

Further we find that in the present case there are serious allegations against the Customs Broker regarding the violation of various Regulations as to not properly authorized by the importer and not advised the importer regarding the compliance of Customs Act and also not verified the IE code, antecedents of the importer and the premises of the importer. We find that in the impugned order, the Commissioner has considered each and every submission raised by the appellant and has dealt with the same.

Hence, it is pertinent to reproduce the finding of the Commissioner ;

Para 22. The Customs Broker has been receiving documents of multiple IECs from the same persons, the cargo imported by these multiple IEC is the almost the same. The supplier of the goods is same. The modus operandi is so obvious that the TVs are being imported in SKD condition. The Customs Broker was aware of the fact that duty was being paid from the account of middlemen and not from importer's account. The documents are being forwarded from the same email account in respect of all importers. These are all enough indications that there is syndicate working in import of TVs in SKD conditions which were in the knowledge of the CB. These facts also indicate complicity of the CB in the offence of duty evasion carried out by fraudsters. The CB not only violated all the above provisions of Regulations, but also embroiled himself in the scheme of the duty evasion. Thus, the CB apart from violating the provisions under the Regulations have also indulged in misconduct. Such misconduct calls for exemplary punishment.

It is also clear from the evidence that the identity of the importer was not verified by the CB. It is also a fact that IEC holders have stated that they were not aware of any imports by them. We also find that CB actually knowing the correct facts, chose to keep quiet and continued to make clearances which were being imported by 3rd parties and not by the IEC holders.

We are of the considered view that CB has violated the Regulations as alleged in the show-cause notice and are guilty of gross negligence in performance of their duties as Customs Broker.

We are of the view that revocation of Customs Broker licence is a harsh punishment which will deprive the appellant from their livelihood along with livelihood of all those people working with them.

Hence by following the ratios in the cases of Sadanand Chaudhary and Shri Manjunatha Shipping Pvt. Ltd. cited supra, we take a lenient view and set aside the revocation but we uphold the forfeiture of security deposit as well as the penalty of ₹ 50,000/- imposed on the CB.

Customs Broker VERSUS C. C-BANGALORE-CUS, CESTAT, BANGALORE, Order pronounced on 12/06/2020

Take away for readers : Forming Illegal syndication and imports in SKD condition by various IEC holders to evade Customs duty / to circumvent import restrictions is a serious offence. CB should have strict vigil and needless to say, should have proper KYC documents.

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#Customs Law Quick Bites-42

Issuing G card to non employees – May be very costly mistake !!!

 A Customs Brokers has issued G cards to two persons who were not his employees against monthly rental. They were employed with another freight forwarding company who were involved in exporting narcotics. The Customs adjudicating authority, by holding that there is no dispute that the said Customs Broker has lent overt /covert support in subletting his CB agency by obtaining G cards for such persons who were not his employees and were not eligible G card holders unabashedly indulged in fraudulent exports of narcotics drugs. Hence The Customs Dept has revoked CB licence,forfeited security deposit & also imposed 20 Lakhs penalty. Subsequently, CB appealed before CESTAT. The case has almost dragged for 6 years then CESTAT has given his final order.

Let us see the important observations of CESTAT in this case ;

1.         The Proprietor of the CB firm in his statement recorded under Section 108 Customs Act, 1962 unequivocally admitted that said G card holders are not his employees and he had obtained the above mentioned G-Cards for the said persons by mis-representing the fact to the Customs for facilitating the activities of freight forwarders and he was receiving monthly monetary consideration.

2.         The issue is that the job of a Customs Broker is that of trust as in the case of any agent. He is acting as agent of the Customs House as well as agent of the exporter or importer. The license granted under CBLR is for helping members of the public as well as the Customs House in activities relating to import and export within or in the vicinity of the customs area. So naturally he and his employees have apposition of trust with customs officers and also have access to sensitive places which access can be misused for smuggling of goods. The license cannot be seen as a means to earn rental income either by giving blank signed Shipping Bills or Bills of Entry for a specific consideration or to help some persons to get G cards and thereby gain trust of customs officers and also access to the customs areas so that he can do mischief. It is the bounden duty of a Customs Broker to employ persons of dependable character and to continuously supervise them and also not to authorize anybody else to represent him before the Customs House without his knowledge. In this case he has helped two persons to get G cards stating that they were his employees. He should have known the seriousness of the matter. We do not accept the argument that it was an innocent mistake. If a person is so innocent as to do such an act, it is only proper that he is not allowed to continue as a CB because it is not known what type of problems he will cause later in an innocent manner.

3.         Hon’ble Andhra Pradesh High Court in the case of Commissioner v. HB Cargo cited by the learned senior Departmental Representative has held that the Tribunal while considering the appeal against the Commissioner’s order regarding cancellation of CB licence should not be swayed by the consideration of mis-placed sympathy and no sympathy can be shown in the cases where the mis-conduct is of serious nature.

4.         The argument that the cancellation of his licence has denied him his means of livelihood and hence it should be restored is also is not a sound argument. Such an argument makes sense while considering an appeal against a suspension order and not while considering an appeal against a cancellation order being considered after more than 6 years. The Appellant should have been doing other jobs during these years. Even before the cancellation of his licence, he was seeking rental income from his licence. When the appellant engages his employees against payment of money instead of paying the employee, the intention is clear. A message is sent that the so called employee is given an opportunity to do whatever he wants using the identity card to earn his livelihood. Now after a break of six years, when he has to restart his business, the risk of such behaviour is higher and we are of the view that this is not a fit case where licence can be restored.

CUSTOMS BROKER VERSUS COMMISSIONER OF CUSTOMS (IMPORT & GENERAL), NEW DELHI, CESTAT, NEW DELHI order pronounced on 17.01.2012

In later review petition only against 20 lakhs penalty, during May 2013, the CESTAT held as follows ;

“We make it clear that we have not considered the penalty aspect leniently. But penal proceedings being quasi-criminal in nature, taking into consideration the civil punishment the appellant has already undergone as aforesaid and also making an overall assessment of the facts depicted above as well as finding that the Customs Broker was not an abettor to the offence committed, we consider that quantum of penalty of Rs. 5 lakhs (Rupees five lakhs) shall be reasonable.

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#Customs Law Quick Bites-41

Whether Import/Export restrictions imposed by DGFT, is applicable to third country shipments also?

 An Indian merchant exporter wants to export from China to USA ( third country shipment ) of an item declared “Restricted” by DGFT in India.  For example, refer recent past prohibition/restrictions on N95 masks etc. He has approached his banker to issue LC in favour of Chinese shipper but banker refused to issue LC saying that said item restricted by DGFT. The shipper has filed writ petition in High court stating that Constitution of India guarantees fundamental right in respect of freedom of trade and commerce.Let us see important observations of Hon’ble High Court in this case as follows ;

The RBI circular RBI/2019-20/152 dated 23.01.2020 Clause 2 ( iii) says ;

“ The Merchanting Trade Transactions shall be undertaken for the goods that are permitted for exports / imports under the prevailing Foreign Trade Policy (FTP) of India as on the date of shipment. All rules, regulations and directions applicable to exports (except Export Declaration Form) and imports (except Bill of Entry) shall be complied with for the export leg and import leg respectively”

The conditions imposed by Government of India as well as Reserve Bank of India are of general application to every Indian entity wishing to carry on Merchanting Trade Transactions. The conditions are neither specific either to petitioner's business, nor to a particular products

The Merchanting Trade Transactions involves foreign exchange and issuance of a Letter of Credit in India from a banker as well as Reserve Bank of India through its authorised dealer in foreign exchange. The banker as well as Reserve Bank of India are located in India and therefore, there is a clear nexus between the transactions and the involvement of foreign exchange reserves of Reserve Bank of India.

The Foreign Trade Policy is in existence framed by Government of India in exercise of powers conferred under the Foreign Trade (Development & Regulation) Act, 1992 and notifications have been issued by Government of India keeping in view the powers conferred by Section 3 of the Act of 1992. Its purely a policy decision taken by Government of India in larger public interest as there is an acute shortage of the goods which are the subject matter of the present writ petition.

Thus, in short the statutory provisions, rules, circulars and notifications issued from time to time permits Merchanting Trade Transactions only in respect of goods that are permitted for export and import under the prevailing Foreign Trade Policy of India and the question of complete ban in respect of freedom of trade and commerce as argued by exporter does not arise.

The Government of India is the best judge either to ban export of the aforesaid items or to place the aforesaid items under the restricted categories. It is true that the Constitution of India guarantees fundamental right in respect of freedom of trade and commerce, however, the same can be subjected to reasonable restrictions as the same has been done in the present case.

The restriction imposed by Government of India and Reserve Bank of India amounts to reasonable restriction and in no way violating the freedom of trade and commerce.

MR. AKSHAY N. PATEL VERSUS RESERVE BANK OF INDIA AND ANOTHER, MADHYA PRADESH HIGH COURT, order pronounced on 08.10.2020

Take away for readers : Import and export restrictions imposed by Central Govt through DGFT is applicable to third country shipments also. No one can argue that goods are not touching the land mass of India and Shipper is bringing Forex into India by way of profit etc.,

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#Customs Law Quick Bites-40

If ascertainable actual import Air freight is more than 20% of FOB value, Is it mandatory to declare differential higher airfreight under misc. expenses ?

No. Not required. Let us see relevant part of Customs Valuation (Determination of Price of imported Goods) Rules, 2007 Rule 10 Cost and services –

2) For the purposes of sub-section (1) of section 14 of the Customs Act, 1962 (52 of 1962) and these rules, the value of the imported goods shall be the value of such goods, and shall include -

(a) the cost of transport, loading, unloading and handling charges associated with the delivery of the imported goods to the place of importation;

(b) the cost of insurance to the place of importation:

Provided that where the cost referred to in clause (a) is not ascertainable, such cost shall be twenty per cent of the free on board value of the goods:

proviso (1) where the cost of transport of imported goods is ascertainable, Such cost shall not exceed 20% of free on board value of the goods. Another where this value is not ascertainable, it shall be 20% of free on board value of goods plus cost of insurance.

Whether the freight irrespective mentioned separately or not, should be considered at the rate of 20% of FOB value while discharging the liability?

Bare perusal of these provisions makes it clear that the value of imported goods shall be the transaction value of such goods i.e. the price which is actually paid or is payable at the time of import with any other amount as mentioned in the proviso to Section 14 above to be added to the said transaction value.

Where there is a clear bifurcation about the amount of air freight involved and that the same has been paid by the supplier and has been included in the C & F value paid by the Importer, the amount is absolutely ascertainable. In such case the amount has not to exceed 20% of FOB value. When actual air freight is much less than 20% no question arises for enhancing this value to the extent of 20%, in view of the words “shall not exceed 20% of freight on board value of goods”.

M/S. RAJASTHAN PRIME STEEL, PROCESSING CENTRE PVT. LTD., BHARAT KUMAR, SANDEEP RAGHAV VERSUS C.C., NEW DELHI, CESTAT NEW DELHI order pronounced on 05.09.2018

Note : In above article we have discussed only about air freight and not Ex works costs which has anyway to be declared under misc expenses.

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#Customs Law Quick Bites-39

SUB LETTING CUSTOMS BROKER LICENCE IS CREATING AN OPEN CHANNEL FOR SMUGGLING – SERIOUS VIEW TAKEN BY CESTAT

A Customs Broker sublet his licence to another person, for monthly payment .The other person misused license and crated fake documents including ARE1 ( before GST case ) and declared cargo as accessories of sanitary ware but loaded container with red sanders. DRI intercepted container and based on subsequent investigation Customs Broker licence revoked. Customs Broker has appealed before CESTAT and let us see its important observations ;

In the present case, the Directorate of Revenue Intelligence (DRI) received information that in a container in respect of which the shipping bill was filed by the CB, declaring the goods as  accessories of sanitary ware, was indeed containing Red Sanders - an endangered species of wood - whose export is prohibited. On examination, it was found to be true.

In Customs operations, the Customs Broker plays a very vital role. He acts as an interface between the Customs Officers responsible for implementing and enforcing the Act and the importer or exporter. Therefore, Customs Brokers licence is not given to everyone. The applicant must pass the examination conducted by the department for the purpose which tests his knowledge of the Customs law and procedures. The licensed Customs Broker is required to guide and undertake activities on behalf of, the importer or the exporter only after checking his background, etc.

Just as a person, who is licensed to drive or run a pharmaceutical shop or practice medicine cannot transfer or sub-let his licence to another person, the Customs Broker is also prohibited from transferring or selling his licence.

Revenue submits that the facts of the case speak for themselves. At the time of investigation and even when the statement of the partner of the CB firm was recorded by the DRI, they had no documents whatsoever pertaining to the export consignment. In fact, he gave a statement that they will be available with another person to whom they have sub-let their licence.

The Customs Broker had nothing on record to show that the ARE-1 was genuine. The Customs Broker did not have any knowledge of the export of the exporter in whose name the export was attempted.In this case the Customs Broker has done nothing except the claim that the IEC was verified online as per their own claim and they have not conducted any enquiry. Therefore, they have violated the conditions of his licence.

The Customs Brokers Licensing Regulations, 2013, do not permit the CB to sub-let their licence. They have to conduct their business directly through their own employees. In fact, in the statement given by Customs Broker, he said that he allowed another person to handle export and import work using their licence and therefore all original documents are lying with them.

Evidently, the Customs Broker has transferred his licence or sublet it to allow unlicensed person to clear exports and imports. Not only with respect to this consignment, but the CB also had no records of the previous consignments exported in the name of the same exporter where the shipping bills were filed indicating the appellant as the Customs Broker.

The Customs Broker was required to verify not only the correctness of the IEC, but also his antecedents, identity, declared address etc. using reliable, independent, authentic document data or information. The CB’s claim now, is that they have verified the IEC from the DGFT website. The IEC number can be verified by anybody on the DGFT website. It is not a substantive compliance of the requirement under Regulation 11(n) of CBLR, 2013.

 

Considering the totality of the circumstances we find that the violations in the present case are very serious. It would have been a different case if the exports documents were filed properly by the CB and the exporter had either mis declared the contents of the sealed container or at some stage replaced the declared contents with the contraband. In fact, in this case the exporter is not in picture.

Thus, the CB has, by subletting their licence to another person in complete violation of CBLR, 2013 has created an open channel through which any contraband can be smuggled out of India with impunity. Since export consignments, especially if the documents show that the container was sealed by the Central Excise Officer, are not checked by the Customs officers, by creating fake ARE-1s shown to have been signed by the Central Excise Officers, an open channel for smuggling has been created by the CB by sub-letting their licence.

We do appreciate that the Customs Broker was not directly involved in the attempted smuggling but has only allowed another person to open such a channel of smuggling using their licence. This is serious enough to warrant revocation of the licence of the Customs Broker and for forfeiture of the Security Deposit.

CUSTOMS BROKER VERSUS COMMISSIONER OF CUSTOMS (AIRPORT & ADMINISTRATION) , KOLKATA, CESTAT KOLKATA, Order pronounced on 28.07.2020

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#Customs Law Quick Bites-38

Online trade Portal like Flipkart, Amazon sale price can’t be the basis for Customs valuation !!!

Sunglass online sale price was offered on the flip cart/Amazon/ Snapdeal websites before discount Rs.1899 per piece. But customs assessable value declared is Rs.466 per piece. The customs has enhanced value and demanded difference in duty and redemption fine. Initially importer has agreed to pay difference in duty without show cause notice and personal hearing. Later being aggrieved, the importer preferred appeal before the Commissioner (Appeals) challenging the adjudication order that the confiscation of the goods and imposition of penalty is bad and uncalled for. He further argued that without transaction value being rejected as required under Section 14 of the Act, the revaluation undertaken by Revenue is ab initio void. Further, the MRP of Retailer (third party) like Flipkart, Amazon etc., cannot form the basis of valuation under the Valuation Rules. Further, there is no case of any misdeclaration, and hence rejection of transaction value is hit by the provision of Section 14 of the Customs Act. Learned Commissioner ( Appeals) rejected the appeal by upholding the adjudication order. Hence importer preferred appeal to CESTAT.

Let us see CESTAT observations as follows ;

Neither there is any data of contemporaneous import of higher values, nor there is any evidence of extra payment made to the foreign supplier, other than the recognised banking channel.

It is further urged that the Hon‟ble Supreme Court held in Eicher Tractors Limited –2000 (122) ELT 321 (SC) that where there is no evidence to any extra payment to foreign supplier, the transaction value is to be accepted.

Further, there is no evidence of any relationship, or any payment made by the importer indirectly to the seller. Declared transaction value can only be rejected with cogent reason, by undertaking the exercise as to on what basis the paid price was not the sale consideration or the transaction value, as has been held by Hon‟ble Supreme Court in Century Non Ferro Castings case.

It is urged that the reopening of the assessed Bill of Entry under Section 28 is bad, without resorting to process of appeal under Section 128 of the Act. It is further urged that the payment of differential customs duty as demanded, does not mean that the enhancement in the transaction value has been accepted by the importer, in view of the appeal filed soon thereafter.

Section 14 of the Customs Act provides that for the purpose of valuation the value of imported goods shall be the transaction value of such goods, i.e. to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time of place of importation, or as the case may be for export from India, where the buyer and seller of the goods are not related and price is the sole consideration for the sale, subject to such other conditions as may be specified in the rules made in this behalf.

 It is further provided that rules made in this behalf may provide for the manner and acceptance or rejection of value declared by the importer or exporter, where the proper officer has reason to doubt the truth or accuracy of such value and determine value for the purposes of this Section.

There are no reasons recorded for rejection of transaction value before taking the exercise of revaluation and enhancement of transaction value. In this view of the matter, the impugned order is bad in law and also on facts. Accordingly CESTAT has set aside the impugned order of enhancement of declared value, redemption fine and penalty.

M/S AUREOLE ATELIER PVT. LIMITED VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) , NEW DELHI, CESTAT NEW DELHI, Order Pronounced on 11.02.2020

Take away to readers : Online trade portal sale price can not be the basis of Customs valuation and Customs should record the reasons for rejection of transaction value and should strictly adhere Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. 

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#Customs Law Quick Bites-37

REFUND OF BILL OF ENTRY LATE FILING CHARGES – IF DELAY DUE TO CUSTOMS DEPT THEN IMPORTER CAN GET REFUND !!!

It is clear that the importer is required to present the bill of entry before the end of the next day following the day (excluding holidays) on which the Aircraft or Vessel or Vehicle carrying the goods arrives at a Customs station at which such goods are to be cleared for home consumption or warehousing.

Bill of Entry (Forms) Regulations, 1976 - Amendment of 2017

Regulation 4 (2) Where the bill of entry is not presented within the time specified in sub-regulation (1) and the proper officer of Customs is satisfied that there was no sufficient cause for such delay, the importer shall be liable to pay charges for late presentation of the bill of entry at the rate of rupees five thousand per day for the initial three days of default and at the rate of rupees ten thousand per day for each day of default thereafter:_

Provided that where the proper officer is satisfied with the reasons of delay, he may waive off the charges referred to in the second proviso to sub-section (3) of the section 46 of the Customs Act, 1962 (52 of 1962).

As per regulation 4(2), it is provided that the penalty for late presentation of bill of entry shall be liable to be paid, if there was no sufficient cause for delay in filing the bill of entry.

In a case, what we are discussing now, entire event from time of import till the filing of bill of entry is known to the Custom Department that the importer intended to claim the exemption notification but due to apparent error in the notification, the importer  was not in a position to file the bill of entry on EDI System.

Since, the Importer had strong belief that they are entitled for exemption Notification, they followed up the matter with the Customs. However, the Customs Official even after knowing that the goods are exempted, insisted the importer to file bill of entry and pay the entire custom duty and said that the importer can claim the refund later.

Once it is admitted that the goods are exempted, no business men will pay the custom duty and clear the goods and this is the reason the importers were reluctant to file the bill of entry and delayed presentation of BE.

Since the Customs Official did not clear the goods under exemption, the importer had no option but to file bill of entry without claiming the exemption notification. Later he got sanction of refund of duty but refund of late filing charges Rs.5,87,047/- denied by the customs.

This entire episode is a sufficient cause for delay in filing the bill of entry, therefore, invoking the sub-regulation-(2) of regulation 4, no charges for late presentation of bill of entry should have been demanded from the importer. 

Accordingly, Importer has made out a fit case for non-imposition of charges for late presentation of bill of entry. Hence the charges paid for late filing of bill of entry is ordered to be refunded to the importer.

M/S. BAEROCHER INDIA ADDITIVES PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS., -INDORE, CESTAT, NEW DELHI, Order pronounced on 20.02.2020

Takeaway for readers – If importer can prove the delayed presentation of Bill of Entry is not due to his fault and can prove the delay due to Customs Department, he can get refund of BoE late filing charges.

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#Customs Law Quick Bites-36

Have you ever heard about short landing of 230 tons ?? Anything is possible in international trade !!!

There were 11x20’ FCL containers loaded with Rapeseed (Brassica napus) discharged at Kolkatta port in transit to Nepal. All the containers were apparently intact condition. Seals as per BL affixed on containers door. But out of total 2,46,510 Kgs short landing was 2,30,100 Kgs. The total assessable value of short landed quantity is ₹ 69,67,163/- involving duty of ₹ 52,25,372/-.The Customs Department  had imposed a penalty of ₹ 10.00 Lakhs on the Steamer Agent under section 116 of Customs Act, 1962 for short landing of goods.

 Let us see what happened later as follows ;

The survey was carried out on noticing the shortage of goods. The joint survey report  states ;

 “…. on opening the containers (In presence of Customs Authority) it was found that all the containers having 2 to 4 cut/holes (Approx 3” to 6”) on the floor. During inspection of under structure it was found that the holes of floor (both 1st ply and cross member – 4 to 6) of containers were blocked by plywood sheet duly fixed by screws and pointed with black colour …….”

Hence we can understand from the survey report that container’s bottom floor was broken and cargo was stolen. Holes were blocked by plywood sheets again.

In reply to the show cause notice, the Steamer Agent stated that they have fulfilled their obligation under the contract of carriage in this shipment. According to them after the discharge of the containers it is the responsibility of the consignee to comply with the port and customs rule by paying statutory dues and take delivery of goods. They have said that there is a clear endorsement in the Bill of Lading that particular furnished by the Shipper were not checked by the carrier and carrier is not responsible under clause 14 of the Bill of Lading. Therefore, carrier is not held liable for any misdeclaration or fraud made by the exporter/consignee or their agents. According to them cargo is for final destination to Nepal under Transhipment Permit discharged at Kolkata and all these containers were discharged and delivered in seal intact status to consignee and their authorized Customs House Agent.

Also no duty is involved in the case as the cargo was meant for Nepal Transit and not Indian Import. They have also said that they are not the owner of the vessel carrying the consignments and therefore they are not liable for the short shipment as they were acting as agent of the container owner.

In the High Court of Judicature at Bombay in the case of Seahorse Shipping & Ship- Management Pvt.Ltd. Vs. Union of India 2004 (163) E.L.T. 145 (Bom.), whereby it has been held that in case of short landing of goods alleged when seals of containers are found intact, shipping agents cannot be made liable and penalty cannot be levied solely based on the outturn report of port Trust. Penalty was set aside as imposed under Section 116 of Customs Act, 1962.

In the impugned Bill of Lading the term ‘Shippers Load Stow & Count’ is mentioned in the description. As long as the seal has not been altered or tampered with, the carrier cannot be held liable for the shortage because the carrier was not present at the time of the packing of the container and carrier does not know what the shipper loaded, stowed or counted. Bill of Lading shows details that was provided by the shipper.

Hence it is declared by CESTAT that ‘Shipper’s Load Stow and Count’ is the term seen in the description of the Bill of Lading for the shipment. This term absolves steamer agent/carrier of any claim relating to damaged or missing cargo etc.

M/S. MSC AGENCY (INDIA) PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS (PORT) , KOLKATA, CESTAT KOLKATA order pronounced on 11.03.2020

 

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GOODS NEWS TO “H” CARD HOLDERS WILLING TO APPEAR FOR “G” CARD EXAMS – NO MORE ORAL EXAM FOR G CARD !!!

 As you may aware, different “G” card holder’s selection method is followed by Customs formations across India. For example Noida, Jodhpur, Mundra, Kandla and Kolkata Customs locations, a written examination alone is conducted for selection of candidates from "H" card holder to "G" card holder. But in other many locations, apart from written exam, oral exam also conducted to select “G” card holders Which is now struck down by Madurai Bench of Madras High Court.

 

Providing below full style Judgement for the benefit of Customs Brokers;

 

 

MADRAS HIGH COURT – MADURAI BENCH

SHABEER AHMED SAYEED VERSUS PR. COMMR. OF CUS. (PREVENTIVE) , TIRUCHIRAPALLI

Writ Petition (MD) No. 14425 of 2019 and W.M.P. (MD) Nos. 10860-10861 of 2019

Dated: - 11 March 2020

Judgment / Order

C. V. Karthikeyan , J.

For the Appellant : R.S. Sivaram

For the Respondents : B. Vijay Karthikeyan, Senior Standing Counsel

ORDER

C. V. Karthikeyan, J.

1. The writ petition has been filed in the nature of Certiorarified Mandamus to call for the records relating to the impugned notification regarding examination issued by the respondent viz., the Principal Commissioner, Office of the Commissioner of Customs (Preventive), No. 1, Williams Road, Cantonment, Tiruchirapalli, with respect to screening and selection of candidates from "H" Card to "G" Card and for permission to hold "G" Card license.

2. This notice was issued on 30-1-2019, in Notice No. 1 of 2019. The petitioner is a "H" Card license holder. He is a Customs Broker. The minimum educational qualification required is 10 + 2. With the basis of "H" Card license, a photo identity card is given to him and he can transact work at the Customs Station. He must produce the identity card whenever demanded by any Officer in the Customs Station. The Customs Brokers Licensing Regulations, 2018 issued a Notification No. 41/2018-Cus. (N.T.), dated 14-5-2018, specifying that a Customs Broker is a person licensed under the regulations to act as an agent on behalf of the importer or an exporter for purposes of transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs Station including audit.

3. There are three kinds of card holders. "F" card holder, "G" card holder and "H" card holder. On qualifying of a written examination as stipulated under the Regulations referred above, he can be appointed as a "G" card holder. As a "G" card holder he will have the permission of signing the documents.

4. The Learned Counsel for the petitioner had drawn the attention of this Court to the manner in which "H" card license holders are selected to become "G" card license holder in other port authorities across the country. The illustrations of Noida, Jodhpur, Mundra, Kandla and Kolkata had been drawn to this Court. It is seen that in all those stations, the Regulations stipulated that a written examination alone is conducted for selection of candidates from "H" card holder to "G" card holder. Those Regulations have been stipulated by those Customs Authorities on the basis of the Customs Brokers Licensing Regulations, 2018. Under these Regulations "G" and "H" card holders are defined as follows:

(h) "G card holder" means a person who has passed the examination referred to in regulation 13 and has been issued a photo identity card in Form G;

(I) "H card holder" means a person who has not passed the examination referred to in regulation 13 and has been issued a photo identity card in Form H;

5. Regulation 13 again referred to relates to Engagement or Employment of persons.

6. Sub-clause 5 of Clause 13 relates to the manner in which a "H" card holder is selected. It is seen that he must pass a written examination. Regulation 13 relates to "G" card holder. However, in the impugned Notification, the Trichy Customs Authorities have not only imposed a condition to pass written examination but also oral examination. The petitioner had passed his written examination. He did not qualify in the oral examination. Conducting an oral examination is beyond the scope of the authorities. The writ petition has been filed to quash the said conducting of oral examination.

7. A counter-affidavit has been filed on behalf of the respondents, in which it has been stated that neither the writ petitioner nor any other person had approached the office for clarification regarding oral examination. It was stated that based on the Public Notice issued in this regard, 41 eligible candidates appeared for the written examination on 4-4-2019 and the results were declared on 9-4-2019. Out of 41 candidates who appeared for the written examination, 22 candidates passed in the written examination. The petitioner also passed in the written examination. Oral examination was conducted on 30-4-2019. The result of the oral examination was declared on 6-5-2019. Only 2 candidates had passed.

8. It is clear that the respondent authorities have conducted the examination not with a view to upgrade the licence holder, but with a view to reject the upgradation from "H" to "G". The object of any examination is to ensure that the qualified candidate is promoted to the next post. If an examination is conducted with the object to reject candidates, then the examination itself has to be struck down. In this case, the respondent had no right to conduct any oral examination. It is not provided in the Rules. The Rules stipulate that written examination alone must be conducted. Other State authorities have conducted only written examination and they have not called upon the qualified candidates to again appear for an oral examination. The reasons are obvious. During oral examination, an element of bias can always takes place. To eliminate such bias, it has been consistently held that the marks allotted for oral examination should be less than 25% of the total marks.

9. In the present case, for the written examination, the maximum mark was 100 and the qualifying mark was 50 and separately, for oral examination 100. marks were allotted as a maximum and the qualifying mark was given as 50. It is not known what is the nature of oral examination, which was conducted and how the candidates were assessed. Those details are absent in the counter-affidavit. Except merely stating that only two candidates passed in the oral examination, no other specific details have been given in the counter-affidavit. The counter-affidavit has to be rejected. The conducting of the examination on 30-1-2019 and the Public Notice No. 1 of 2019, wherein both the written examination and the oral examination were stipulated, has to be struck down and accordingly struck down. A direction is issued to the respondent, insofar as the petitioner is concerned, since he has passed the written examination, to appoint him as "G" card licence holder on or before 31-3-2020, if he is otherwise eligible. Accordingly, the writ petition is allowed. No costs. Consequently, the connected Miscellaneous Petitions are closed.

 

 

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