Whenever any legislation is framed, framers of law have challenge in hand to draft a complete code which should provide for every past, present and foreseeable future exigencies in addition to keep pace with developments around the subject matter of such legislation. Accordingly, for instance in taxation legislations, framers of the legislation have to provide for definition of key terms; levy of tax; subject of tax; assessment; demand, recovery and refund of tax; correction or amendment of documents; and authorise administrative authority to draft machinery provisions for implementation thereof. Thus, there is almost standard template for every taxation or similar legislation, which framers thereof follows and then provide for additional key peculiar features.
In this outing we are discussing about amendment or correction of documents under the Customs Act, 1962 (Customs Act) which is big bone of contention between the customs and the importer exporter community.
The Custom Act has replaced the Sea Customs Act, 1878 (Sea Customs Act) with the objective of consolidation of law related to customs duty. Section 201 of the Sea Customs Act read - Amendment of Documents - Except in the cases provided for by sections 36, 55, 63 and 94, the Customs collector may in his discretion, upon payment of one rupee, authorize any document, after it has been entered and recorded in the Custom-house, to be amended.
However, framers of the Customs Act gone a step further and provided for amendment of documents and correction of clerical errors, etc. by separate sections reproduced below:
149. Amendment of documents.—Save as otherwise provided in sections 30 and 41, the proper officer may, in his discretion, authorise any document, after it has been presented in the custom house to be amended.
Provided that no amendment of a bill of entry or a shipping bill or bill of export shall be so authorised to be amended after the imported goods have been cleared for home consumption or deposited in a warehouse, or the export goods have been exported, except on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported, as the case may be.
154. Correction of clerical errors, etc.—Clerical or arithmetical mistakes in any decision or order passed by the Central Government, the Board or any officer of customs under this Act, or errors arising therein from any accidental slip or omission may, at any time, be corrected by the Central Government, the Board or such officer of customs or the successor in office of such officer, as the case may be.
The above provisions proves that framers of the Customs Act wanted to cover contingencies like need for amendment of documents or correction of clerical errors as they recognised the same as part of normal business activity. It is human to make mistakes requiring amendment of documents filed with tax and other statutory authorities. Existence of provisions for amendment of documents in the Sea Customs Act enacted in the year 1878 and in its modern avatar the Customs Act, confirms that these provisions are based on equity, fair play and to provide normal business exigencies.
While the authorities have the power of assessment and reassessment and demand of any duty short paid or not paid, what a taxpayer does if he has paid excess duty or has not claimed any benefit due to him or simply made a mistake while preparing documents for filing with the customs authorities. In case of import a common mistake made by importers is in entering currency e.g. in place of South Korean Won or Chinese Yuan, USD is entered in Bill of Entry leading to higher assessable value and excess payment of customs duty; or not claiming concessional rate or exemption from duty under a governing notification. Similarly, in case of export, at times export benefits are not claimed or claimed under a wrong or non-existent/ non-relevant scheme of the Foreign Trade Policy. Thus, requiring amendment of Bill of Entry or Shipping Bill, as the case may be.
The CBIC2 has issued the CBEC Customs Manual of Instructions (Customs Manual) listing instructions to be followed by the Customs Officers and also for guidance of the industry, Para 7 of Chapter 3 – Procedure For Clearance of Imported And Export Goods – of which reads:
7. Amendment of Bill of Entry:
7.1 Bonafide mistakes noticed after submission of documents, may be rectified by way of amendment to the Bill of Entry with the approval of Deputy/ Assistant Commissioner. Levy of Fees (Customs Documents) Amendment Regulations, 2017, issued under vide Notification No. 36/2017 (N.Y.), dated 11-4-2017, provides a number of amendments which can be allowed on payment of amount mentioned therein.
Sr. No. ix(b) of the Table the Levy of Fees (Customs Documents) Amendment Regulations, 2017, provide for fee of INR 1,000 for amendment of Bill of Entry, in pursuance of which the Commissioner of Customs NS II and NS IV, Nhava Sheva Port has issued Public Notice No. 83/2017 informing all the stakeholders of schedule of fee payable and also advising them to contact the Deputy Commissioner in case of any difficulty. It is not out of place to mention here that Nhava Sheva is one of the biggest ports in India and account for large volume of import and export trade.
Thus, there is complete code in the form of law enacted by the Parliament, regulations notified by the administrative body i.e. the CBIC and various public notices and standing orders are issued by the jurisdictional Commissioners of Customs. Further, the only condition for amendment of Bill of Entry or Shipping Bill or Bill of Export prescribed under Section 154 of the Customs Act is that such amendment should be on the basis of documentary evidence which was in existence at the time the goods were cleared.
Does this provision of law is followed by the authorities and amendment of Bill of Entry or Shipping Bill is allowed as and when requested by the importer or the exporter? Answer is obviously NO evidenced by large volume of litigation on this issue alone, when the exporters and exporters are forced to knock the doors of appellate bodies including Courts.
Generally, the request for amendment of Bill of Entry or Shipping Bill is disallowed by the Deputy Commissioner against which an appeal is to be filed before the Commissioner (Appeals), who also routinely reject such appeals. At the second stage, an appeal against the order of the Commissioner (Appeals) is filed before the Tribunal3, where the importer or the exporter get relief and generally the Tribunal passes directions to the jurisdictional Customs Authorities to allow amendment of Bill of Entry or Shipping Bill, as the case may be.
Recently, the Supreme Court in decision in the case of ITC Limited v. Commissioner4 [ITC Case] held that Bill of Entry under self-assessment is an assessment order and any aggrieved party can file an appeal against the same and no refund can be granted unless assessment on such Bill of Entry is modified under the Customs Act, relevant extracts of which reads:
43. As the order of self-assessment is nonetheless an assessment order passed under the Act, obviously it would be appealable by any person aggrieved thereby. The expression 'Any person' is of wider amplitude. The revenue, as well as assessee, can also prefer an appeal aggrieved by an order of assessment. It is not only the order of re-assessment which is appealable but the provisions of Section 128 make appealable any decision or order under the Act including that of self-assessment. The order of self-assessment is an order of assessment as per Section 2(2), as such, it is appealable in case any person is aggrieved by it. There is a specific provision made in Section 17 to pass a reasoned/speaking order in the situation in case on verification, self-assessment is not found to be satisfactory, an order of re-assessment has to be passed under Section 17(4). Section 128 has not provided for an appeal against a speaking order but against "any order" which is of wide amplitude. The reasoning employed by the High Court is that since there is no lis, no speaking order is passed, as such an appeal would not lie, is not sustainable in law, is contrary to what has been held by this Court in Escorts (supra).
47. When we consider the overall effect of the provisions prior to amendment and post-amendment under Finance Act, 2011, we are of the opinion that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act.
The Supreme Court did not say documents cannot be modified, which was not the issue before the Apex Court, but ruled that no refund can be granted without amendment of Bill of Entry.
After passing of decision in the ITC Case by the Supreme Court on September 18, 2019, the Customs Authorities got another tool in their hands to deny amendment of Bill of Entry or Shipping Bill filed by importer or exporter, though based on wrong interpretation.
Recently on January 18, 2021 the High Court of Bombay in the case of Dimensions Data India Private Limited v. Commissioner of Customs5 (Dimensions Case) examined the issue of amendment of Bill of Entry with reference to interpretation of the ITC Case adopted by customs and held:
18. From a careful analysis of section 149, we find that under the said provision a discretion is vested on the proper officer to authorise amendment of any document after being presented in the customs house. However, as per the proviso, no such amendment shall be authorised after the imported goods have been cleared for home consumption or warehoused, etc. except on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported, etc. Thus, amendment of the Bill of Entry is clearly permissible even in a situation where the goods are cleared for home consumption. The only condition is that in such a case, the amendment shall be allowed only on the basis of the documentary evidence which was in existence at the time of clearance of the goods.
19. This bring us to section 154 of the Customs Act which deals with correction, clerical errors, etc. It says that clerical or arithmetical mistakes in any decision or order passed by the Central Government, the Board or any officer of customs under the Customs Act or errors arising therein from any accidental slip or omission may, at any time, be corrected by the Central Government, the Board or such officer of customs or the successor in office of such officer, as the case may be.
19.1. Section 154 of the Customs Act reads as under : "154. Clerical or arithmetical mistakes in any decision or order passed by the Central Government, the Board or any officer of customs under this Act, or errors arising therein from any accidental slip or omission may, at any time, be corrected by the Central Government, the Board or such officer of customs or the successor in office of such officer, as the case may be.
20. Thus, section 154 permits correction of any clerical or
arithmetical mistakes in any decision or order or of errors arising
therein due to any incidental slip or omission. Such correction may
be made at any time.
21. From a conjoint reading of the aforesaid provisions of
the Customs Act, it is evident that 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.
22. Having noticed and analysed the relevant legal provisions, we may now turn to the decision of the Supreme Court in ITC Ltd. Vs. Commissioner of Central Excise, Kolkata IV (supra). The question which arose before the Supreme Court was whether in the absence of any challenge to the order of assessment in appeal, any refund application against the assessed duty could be entertained.
22.1. From the question itself, it is clear that the issue before the Supreme Court was not invocation of the power of re-assessment under section 17(4) or amendment of documents under section 149 or correction of clerical mistakes or errors in the order of self-assessment made under section 17(4) by exercising power under section 154 vis-a-vis challenging an order of assessment in appeal. The issue considered by the Supreme Court was whether in the absence of any challenge to an order of assessment in appeal, any refund application against the assessed duty could be entertained. In that context Supreme Court observed in paragraph 43 as extracted above that an order of self-assessment is nonetheless an assessment order which is appealable by "any person" aggrieved thereby. It was held that the expression "any person" is an expression of wider amplitude. Not only the revenue but also an assessee could prefer an appeal under section 128. Having so held, Supreme Court opined in response to the question framed that the claim for refund cannot be entertained unless order of assessment or self-assessment is modified in accordance with law by taking recourse to appropriate proceedings. It was in that context that Supreme Court held that in case any person is aggrieved by any order which would include an order of self-assessment, he has to get the order modified under section 128 or under other relevant provisions of the Customs Act (emphasis ours).
22.2. Therefore, in the judgment itself Supreme Court has clarified that in case any person is aggrieved by an order which would include an order of self-assessment, he has to get the order modified under section 128 or under other relevant provisions of the Customs Act before he makes a claim for refund. This is because as long as the order is not modified the order remains on record holding the field and on that basis no refund can be claimed but the moot point is Supreme Court has not confined modification of the order through the mechanism of section 128 only. Supreme Court has clarified that such modification can be done under other relevant provisions of the Customs Act also which would include section 149 and section 154 of the Customs Act.
27. The expression "mistake" appearing in section 154 of the Customs Act may be defined as something done unintendedly or through inadvertence. The section itself says that the error in any decision or order should be due to any accidental slip or omission. Moreover, it can be a mistake of law or a mistake of fact. In all cases it need not be an arithmetical error alone. It may connote errors which can be discerned upon due verification. Having said so, we may also indicate that power to amend documents available under section 149 of the Customs Act read with correction of clerical or arithmetical mistakes or errors in orders due to accidental slip or omission under section 154 thereof is different and distinct from the appellate power exercised under section 128 of the Customs Act. The power of amendment or correction, as the case may be, is vested on the same officer who had passed the initial order or an officer of equivalent rank. On the other hand, appellate jurisdiction is directed to correct decisions or orders passed by an inferior or lower authority. By its very nature an appellate authority is superior to the authority which had passed the order appealed against.
28. In the light of the above, we are of the view that petitioner has made out a case for issuance of a direction to the respondents for correction of the mistake or error in classification of the goods from CTH '85176990' to '85176930' and thereby for amendment of the Bills of Entry. Refusal of the respondents to look into the aforesaid grievance of the respondents is therefore not justified.
Similarly, in recent rulings, the High Court of Madras in the case of Hindustan Unilever Limited and the High Court of Gujarat at Ahmedabad in the case of Oriental Carbon and Chemicals Limited, amendment of Bill of Entry and Shipping Bill, respectively, have been allowed.
Inspite of these decisions of the High Courts and interpreting true import of decision of the Supreme Court in the ITC Case, it appears that the CBIC is proceeding to file appeal against decisions of the High Court in the Dimensions Case. This is sad confirmation of revenue bias on the part of the CBIC.
On one hand the Government is putting in lot of efforts and money in showcasing marquee projects of Ease of Doing Business and Make in India to make India a manufacturing and sourcing hub for multinational companies, which effort is also supplemented by the CBIC, taking a vey narrow view on industry friendly and appropriate interpretation of law by the High Court of Bombay does not sit will these marquee projects. The very purpose of these marquee projects is defeated with this retrograde view.
As revenue collection body, it is always expected of the CBIC to take measures for revenue augmentation, plug leakage of revenue by plugging loopholes in law, going harsh on tax evaders. However, by allowing amendment of Bill of Entry or Shipping Bill in case any mistake done by importer of exporter how these stated objectives of the CBIC are compromised? On the contrary from the Colonial Regime for more 143 years, successive Customs Act are having provisions allowing amendment of documents without causing any leakage of revenue for Customs, itself proves that intention of legislation is very clear – to allow amendment of documents in case in case of legitimate business exigencies. How can an administrative body defeats the very objectives of the Legislature by not following the express mandate of the law.
In case the CBIC believes that both Section 149 and Section 154 of the Customs Acts breeds duty evasion, then it should put such data in public domain and also make out a case before Legislature seeking to omit both these Sections from the Customs Act by an act of the Parliament. Till such time this happens, as a fair tax administration body, the CBIC should issue standing instructions to the field officers to dispose of requests for amendment of documents under Section 149 and Section 154 of the Customs Acts either by allowing such requests and if for any reason such requests not found to be allowable, pass speaking order in time bound manner to allow industry to seek legal remedy.
Ball lies in the court of the CBIC.
* Author is partner with Ashok Dhingra Associates and views expressed herein are strictly personal
2 The Central Board of Indirect Taxes and Customs (earlier known as the Central Board of Customs and Excise), Ministry of Finance (Department of Revenue), New Delhi is the nodal authority for administration of federal legislation of Customs and Goods and Services Tax in India
3. The Customs, Excise and Service Tax Appellate Tribunal
4. 2019 (368) E.L.T. 216 (S.C.)
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