Introduction
The Central Excise law provided for physical control for all commodities except a few in the past. However, subsequently self-assessment mechanism was introduced in Central Excise in which the revenue authorities’ role at the time of clearance of goods has become almost nil. However, the Central Government has taken more than a decade to introduce the same self-assessment mechanism under the Customs provisions.
On considering the recommendations of TARC report, self-assessment mechanism was introduced from 8-4-2011 under Customs considering the time consumed in assessing each and every bill of entry and the delay caused to the importer in clearance of the consignments. Accordingly, the importer of the goods can file a bill of entry under Section 17(1) of the Customs Act, 1962 based on self-assessment without any intervention of the proper officer of customs.
While introducing such self-assessment mechanism, the provisions of Section 17 have underwent an amendment though no corresponding amendment was carried out under Section 47 of the Customs Act, 1962. Therefore, even today an importer under the self-assessment mechanism has to obtain an out-of-charge order from a proper officer of customs under Section 47 of Customs Act, 1962 as it was required during the earlier era. Therefore, a question arises as to whether the self-assessment mechanism under Customs is really a self-assessment in complete sense or is it an assessment made by the customs authorities under the disguise of self assessment?
In this regard, one can argue that the order passed under Section 47 is merely a clerical/administrative order as the proper officer is merely ensuring that the duty is paid properly as per the assessment of bill of entry and prohibited goods are not cleared by the importers. Hence, the proper officer giving out of charge for the imported goods is not validating the assessment done by the importer under Section 17(1). Hence the said bill of entry is not an assessment order passed by a proper officer of customs which can be challenged as order of assessment.
In this regard, the High Court of Madras in case of Best & Crompton Engineering [1997 (93) ELT 21 (Mad)] has held that the order passed under Section 47 is not merely a clerical/administrative order but is a quasi-judicial order which can be appealed against. Further the said view of High Court was further agreed by the High Court of Kerala in case of Arvind Export (P) Ltd. [2010 (253) ELT A81 (Ker)].
Therefore, as per the provisions of Section 17(1) read with Section 47 of Customs Act, 1962, a self-assessed bill of entry becomes an order of proper officer which can be appealed against before appropriate appellate authorities.
Obtaining refund of excess duty paid under self assessment era
As discussed above, even under self-assessment system, the self-assessed bill of entry would amount to order passed by a proper officer of customs. Hence the refund of erroneous duty paid would be available only upon setting aside the said assessment order of proper officer by an appropriate appellate authority as held by Supreme Court in case of Priya Blue Industries Ltd. [2004 (172) ELT 145 SC].
However, recently it is learnt that an appeal filed by an importer against an erroneous self-assessed bill of entry filed under amended Section 17(1) has been rejected by the Commissioner (Appeals) only on the ground that the self-assessed bill of entry filed under Section 17(1) is not an order passed by a proper officer of customs. Therefore, an importer has option to file an application for amendment under Section 149 of the Customs Act, 1962 to rectify any mistake in the bill of entry based on the documents available at the time of importation. Further Section 149 does not prescribe any time limit within which the importer has to file an application for amendment.
However, it is observed that the applications of the importer for seeking amendment in the bill of entry under Section 149 are not entertained by the officer of customs in timely manner as lot of time is taken to pass an order either allowing or rejecting the application of the importer. Based on the outcome of the order of the customs officer under Section 149 the importer can file a refund claim in case the application is allowed. Further in case of an order under Section 149 is passed rejecting the application, the importer will have to pursue the appellate remedy as prescribed under the Customs law against the said rejection order.
Further, assuming that no appeal is maintainable against the self-assessed bill of entry, the importer can directly file a refund claim of excess duties paid on account of erroneous bill of entry without challenging the self-assessed bill of entry. In such cases, the refund claim may be allowed by the customs officer in light of the decision of Delhi High Court in the case of Aman Medical Products Ltd. [2010 (250) ELT 30 (Del)].
Conclusion
In view of the above, following three alternatives can be availed for obtaining refund under self-assessment system:
- Appeal against self-assessed BOE;
- Filing application for amendment of self assessed BOE; or
- Filing refund claim under Section 27 of the Customs Act, 1962.
However, there is no clarity as to which is the most appropriate and expeditious method to obtain refund of excess customs duties paid by the importer erroneously.
[The author is a Senior Associate, Lakshmikumaran & Sridharan, Pune]