2025 (6) TMI 777 - AT - Customs

Refusal by the Deputy Commissioner of Customs to amend the import manifest to substitute the importer under section 30(3) of the Customs Act 1962 - absence of fraudulent intention and the existence of a no objection certificate from the original consignee - lack of application of mind on the part of the original authority - HELD THAT - There can be no fraudulent intent when proceedings for re-assessment under section 17 are not underway. There can be no fraudulent intent with obligations devolving on importer if any arising only after clearance under section 47 of Customs Act 1962. There can be no fraudulent intent when proceedings already under way against any person is not stultified by amendment nor does seizure of goods stand in the way of exercise of specific empowerment under section 30 of Customs Act 1962. Most of all the original authority appeared to be oblivious of the demonstrated disinclination of M/s Shine Metal Industries to complete the process of clearance and oblivious that being influenced by reported conditional willingness of M/s Shine Metal Industries to complete the process which would only defer the collection of duties by the exchequer that another importer was prepared to discharge with promptitude. The decision of the original authority was not in the interests of the exchequer unless it was intended that the exchequer should acquire possession of the impugned goods. The original authority had chosen also to ignore a most important obligation on the part of M/s Shine Metal Industries to seek extension for completion of clearance as required by section 48 of Customs Act 1962 and protection of title of M/s Shine Metal Industries such as it is in the light of investigation into their alleged activities and unwillingness to comply with procedural stipulations on retention of goods without clearance is not a decision that finds favour. The first appellate authority appreciating the facts and circumstances permitted the amendment - There is no appeal by the jurisdictional Commissioner of Customs against the order directing the amendment sought by the appellant that may have served to enable defence of such recalcitrance. The appellant herein had no reason to be aggrieved by the impugned order and indeed was not until in receipt of communication of Assistant Commissioner of Customs and lacking any reference to the direction of Commissioner of Customs (Appeals) that sufficed for them to re-look at their order and the imperative of appealing that order. In the circumstances of new view of the order the delay in resorting to section 129A of Customs Act 1962 was found fit to be condoned. In view of the circumstances of the goods lying uncleared and likely to remain so for the near future with potential of re-litigation the appeal was pulled in for out of turn disposal. There is no provision of law brought on record to demonstrate that substitution of one importer by another is of consequence to Customs Act 1962. To turn the provisions of instructions intended to erase whimsical handling of requests under section 30(3) of Customs Act 1962 to disable the process for clearance of goods brought in legally and as yet not tainted by illegality is if anything deplorable. The foundation of the objection by customs authorities to the amendment is that M/s Shine Metal Industries adopted by customs authorities as the rightful owner whose claims must be preserved even in the face of appellate order is consignee. Conclusion - There is no scope for perspective of the impugned order as cause of grievance to the appellant. Any action that proceeds on a different assumption is in the light of no challenge to the impugned order at peril of consequence of patent breach of judicial discipline. The impugned order clear as it is is not ambivalent and does not to be interfered with. Appeal disposed off.

Summary

Issues Presented and Considered

The core legal questions considered in this judgment revolve around the following issues:

1. Whether the refusal by the Deputy Commissioner of Customs to amend the import manifest to substitute the importer under section 30(3) of the Customs Act, 1962, was legally justified, particularly in light of the absence of fraudulent intention and the existence of a no objection certificate from the original consignee.

2. The legal effect and significance of seizure of imported goods under section 110 of the Customs Act, 1962, and whether such seizure precludes amendment of the manifest or clearance of goods under the statutory framework.

3. The jurisdictional limits of customs authorities in determining ownership or title to imported goods during clearance proceedings, especially when the dispute over title arises from a commercial contract failure.

4. The binding nature of appellate orders on subordinate customs authorities and the consequences of non-compliance with such orders.

5. The scope and application of sections 46, 47, 48, and 50 of the Customs Act, 1962, relating to filing bills of entry, clearance of goods, extension of time for clearance, and retention of goods by customs.

6. Whether the customs authorities' insistence on the original consignee's consent for amendment of the manifest and clearance of goods was supported by statutory provisions or merely administrative circulars.

7. The impact of failure by the original consignee to seek extension of time under section 48 and the consequent effect on their claim to the goods.

Issue-wise Detailed Analysis

1. Legality of Refusal to Amend the Import Manifest under Section 30(3) of the Customs Act, 1962

Legal Framework and Precedents: Section 30(3) empowers the proper officer to permit amendment of the import manifest if satisfied that the manifest is incorrect or incomplete and there is no fraudulent intention. The circulars and facilities issued by the Central Board of Excise & Customs (CBEC) and Jawaharlal Nehru Customs House (JNCH) provide procedural guidance but cannot override statutory provisions.

Court's Interpretation and Reasoning: The Court held that the Deputy Commissioner of Customs erred in refusing the amendment application on the ground of absence of a no objection certificate from the original consignee, M/s Shine Metal Industries. The statutory provision requires only satisfaction regarding fraudulent intention, which was not established. The administrative circulars cited do not substitute the statutory test and cannot justify denial of amendment.

Key Evidence and Findings: The appellant produced a no objection certificate dated 4th December 2020 from M/s Shine Metal Industries. The first appellate authority accepted this and directed amendment of the manifest, which was ignored by the original authority.

Application of Law to Facts: The manifest is a summary document for cargo control and can be amended by the proper officer on satisfaction of statutory conditions. The refusal was based on extraneous considerations, including seizure and disputed ownership, which are irrelevant to the limited scope of section 30(3).

Treatment of Competing Arguments: Customs authorities argued that the amendment would affect the ownership dispute and that seizure precluded amendment. The Court rejected these, emphasizing the limited scope of the proper officer's role and the absence of statutory prohibition on amendment due to seizure or ownership dispute.

Conclusion: The refusal to amend the manifest was illegal and contrary to the statutory framework.

2. Significance of Seizure under Section 110 and Its Effect on Clearance and Amendment

Legal Framework: Section 110 authorizes seizure of goods suspected to be confiscable under section 111. However, seizure is a temporary interdiction pending adjudication and does not affect the fundamental rights to clear goods upon payment of duties under sections 46 and 47.

Court's Reasoning: The Court observed that seizure was used as a pretext to withhold clearance and amendment. The goods were not prohibited imports, nor was there any misdeclaration or breach of import conditions. Seizure should not impede clearance proceedings or amendment applications unless confiscation is established.

Evidence: No allegation or proof of misdeclaration or illegality was made. The goods were entered for home consumption and eligible for clearance.

Application: Seizure does not confer ownership or control rights beyond statutory custodianship and cannot be used to indefinitely withhold goods or prevent amendment.

Competing Arguments: Customs authorities treated seizure as a bar to amendment and clearance. The Court rejected this, emphasizing the provisional nature of seizure and statutory provisions for release.

Conclusion: Seizure alone cannot justify refusal to amend manifest or clear goods.

3. Jurisdiction of Customs Authorities to Determine Ownership or Title

Legal Framework: The Customs Act does not empower customs officers to adjudicate disputes of ownership or title arising from commercial contracts. Their role is limited to ensuring compliance with customs laws and collection of duties.

Court's Reasoning: The Court held that the Deputy Commissioner exceeded jurisdiction by requiring proof of title from the appellant and effectively sitting in judgment over ownership. The ownership dispute arose from a failed commercial contract and was irrelevant to customs clearance under the Act.

Evidence: The appellant's contract with the original consignee had terminated, and documents enabling the new buyer to clear the goods were in place.

Application: Customs authorities must not conflate ownership disputes with customs clearance procedures. The proper officer's discretion under section 30(3) is limited to fraudulent intention, not title determination.

Competing Arguments: Customs relied on a writ court's refusal to decide ownership as justification to defer amendment. The Court clarified that the writ court's order only required the proper officer to decide on the amendment application within statutory limits.

Conclusion: Customs authorities acted beyond their statutory mandate by attempting to determine ownership.

4. Binding Nature of Appellate Orders and Consequences of Non-compliance

Legal Framework: The Supreme Court has emphasized that revenue officers are bound by appellate orders and must comply unless the order's operation is stayed by a competent court.

Court's Reasoning: The Deputy Commissioner's refusal to comply with the Commissioner of Customs (Appeals) order directing amendment was a breach of judicial discipline and statutory obligation. The initiation of fresh proceedings to revisit the issue was improper and constituted insubordination.

Evidence: The first appellate authority had allowed amendment; no appeal was filed against this order by customs authorities.

Application: Subordinate authorities must follow appellate decisions unreservedly to avoid harassment and chaos in tax administration.

Competing Arguments: Customs argued procedural or investigatory reasons for non-compliance, but the Court found these insufficient to override appellate orders.

Conclusion: Non-compliance with appellate orders was illegal and unjustified.

5. Application of Sections 46, 47, 48, and 50 of Customs Act, 1962

Legal Framework: Section 46 mandates filing of bill of entry for clearance; section 47 provides for clearance after assessment; section 48 allows extension of time for clearance; section 50 governs retention of goods by customs.

Court's Reasoning: The original consignee failed to seek extension under section 48, effectively renouncing claim to goods. The appellant, as substitute importer, was ready to pay duties and clear goods. Retention by customs without lawful basis was improper.

Evidence: No extension application was filed by M/s Shine Metal Industries; the appellant had made arrangements for clearance.

Application: Failure to comply with section 48 extinguishes the original consignee's right to retain goods. Customs must allow clearance to the lawful importer who discharges duties.

Competing Arguments: Customs sought to preserve original consignee's claim despite statutory non-compliance. The Court rejected this.

Conclusion: Statutory provisions require release of goods to the lawful importer upon payment of dues and compliance with procedural requirements.

6. Legality of Customs Authorities' Demand for No Objection Certificate and Impact on Clearance

Legal Framework: No statutory provision requires a no objection certificate from the original consignee for amendment of manifest or clearance by a substitute importer.

Court's Reasoning: The demand for such certificate was an administrative imposition without legal basis. The manifest amendment is governed by section 30(3), which does not contemplate such a condition.

Evidence: The appellant produced a no objection certificate which was disregarded; no legal basis was shown for requiring it.

Application: Customs authorities cannot impose conditions beyond statutory requirements to delay or deny clearance.

Competing Arguments: Customs relied on internal circulars and procedural instructions; the Court held these cannot override statutory provisions.

Conclusion: The insistence on no objection certificate was unlawful and contributed to wrongful denial of clearance.

7. Effect of Failure to Seek Extension under Section 48 on Claim to Goods

Legal Framework: Section 48 requires importers to seek extension of time for clearance; failure results in loss of claim and possible disposal of goods by customs.

Court's Reasoning: M/s Shine Metal Industries did not seek extension, effectively relinquishing rights to the goods. Customs' continued retention in their favor was unjustified.

Evidence: No extension application filed; goods remained uncleared due to customs' refusal to amend manifest.

Application: The statutory scheme favors clearance upon payment of duties and does not permit indefinite retention based on abandoned claims.

Competing Arguments: Customs sought to preserve original consignee's rights despite statutory default; the Court rejected this.

Conclusion: Failure to comply with section 48 extinguishes claim to goods and mandates clearance to rightful importer.

Significant Holdings

"The refusal to amend the import manifest under section 30(3) of the Customs Act, 1962, on grounds extraneous to the statutory test of fraudulent intention, is illegal and contrary to the statutory framework."

"Seizure under section 110 of the Customs Act, 1962, is a temporary interdiction and does not preclude amendment of the manifest or clearance of goods unless confiscation under section 111 is established."

"Customs authorities have no jurisdiction to adjudicate ownership or title disputes arising from commercial contracts during clearance proceedings; their role is limited to ensuring compliance with customs laws."

"Appellate orders are binding on subordinate customs authorities and must be complied with unless stayed by a competent court; non-compliance constitutes breach of judicial discipline."

"Failure by the original consignee to seek extension under section 48 results in loss of claim to goods, and customs must permit clearance by the lawful importer upon payment of duties."

"Administrative circulars and procedural instructions cannot override statutory provisions governing amendment of import manifest and clearance of goods."

"The interests of the State in collection of customs duties are paramount; denial of opportunity to file bill of entry except on grounds permitted by law is denial of State's right to levy dues."

Final determinations included directing compliance with the appellate order permitting amendment of the manifest, waiver of demurrage costs on application, and dismissal of the appeal against the impugned order, affirming that the customs authorities' refusal to amend the manifest and clear the goods was unjustified and illegal.