2021 (1) TMI 1042 - HC - Customs

Inadvertent mistake in self-assessed Bills of Entry - Seeking Direction to the respondents to reassess the customs duty - 8 Slot Single Chassis (Cisco Routers) - Correction of Customs Tarrif Heading (CTH) from 85176990 to 85176930 - Stand taken in the affidavit is that petitioner had imported goods declared as routers under five Bills of Entry bearing Nos.2434172 2436049 2522910 2805152 and 2968920 - whether request of the petitioner for correction of inadvertent mistake or error in the self-assessed Bills of Entry and consequential passing of orders for re-assessment is legal and valid? - availability of remedy of appeal. HELD THAT - The scheme of section 17 from the perspective of the importer (since in this case we are dealing with imports) is that an importer upon entering his imported goods is required to self assess the duty leviable on such imported goods. This is subject to verification and examination by the proper officer. If upon verification or examination etc. the proper officer fnds that the self assessment is not done correctly he may re-assess the duty leviable on such goods. In a case where re-assessment is contrary to self assessment and where the importer does not confirm his acceptance of such re-assessment the proper officer shall pass a speaking order on the reassessment - therefore it is quite evident that though duty is cast upon an importer to self assess the customs duty leviable on the imported goods a corresponding duty is also cast upon the proper officer to verify and examine such self assessment. Such verification and examination has to be done in good faith and in the process of verification or examination if the proper officer finds that there is mis-classification of tariff head or wrong classification of tariff head of the imported goods leading to lesser levy of customs duty or excess levy of customs duty he has the power and authority under sub-section (4) to make re-assessment and re-assess the duty leviable on such goods. 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. In the instant case petitioner has not sought for any refund on the basis of the self-assessment. It has sought re-assessment upon amendment of the Bills of Entry by correcting the customs tariff head of the goods which would then facilitate the petitioner to seek a claim for refund. This distinction though subtle is crucial to distinguish the case of the petitioner from the one which was adjudicated by the Supreme Court and by this Court - Grievance of the petitioner is not on the merit of the self-assessment as the petitioner is aggrieved by the failure on the part of the respondents to carry out amendment in the Bills of Entry by replacing the incorrect CTH by the correct one namely by replacing CTH 85176990 with 85176930 which was declared inadvertently by the petitioner at the time of fling the Bills of Entry. This request of the petitioner falls squarely within the domain of section 149 read with section 154 of the Customs Act. Upon amendment in the Bills of Entry by correcting the CTH consequential re-assessment order under section 17(4) of the Customs Act would be in order. Madras High Court in M/S. HEWLETT PACKARD ENTERPRISE INDIA PRIVATE LIMITED VERSUS JOINT COMMISSIONER OF CUSTOMS DEPUTY COMMISSIONER OF CUSTOMS THE PRINCIPAL COMMISSIONER OF CUSTOMS UNION OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE 2020 (10) TMI 970 - MADRAS HIGH COURT correctly held that in a case of correction of inadvertent error the appropriate remedy would be seeking an amendment to the Bills of Entry and not fling of appeal because there is no legal flaw in the order of self-assessment amenable to appeal but only a factual mistake which can be rectified by way of amendment or correction. The 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 - Direction issued. Petition disposed off.

Summary

Issues Presented and Considered

The core legal questions considered by the Court were:

1. Whether the petitioner's request for correction of an inadvertent error in the Customs Tariff Heading (CTH) declared in the self-assessed Bills of Entry is legally permissible and valid under the Customs Act, 1962.

2. Whether the customs authorities have the power and jurisdiction to amend or correct the Bills of Entry post clearance of goods for home consumption, specifically under sections 17(4), 149, and 154 of the Customs Act.

3. Whether the petitioner is required to exhaust the appellate remedy under section 128 of the Customs Act before seeking correction or reassessment of the Bills of Entry.

4. The scope and applicability of the Supreme Court decision in ITC Ltd. Vs. Commissioner of Central Excise regarding the necessity of appeal before claiming refund or correction in self-assessment cases.

Issue-wise Detailed Analysis

Issue 1: Legality and Validity of Correction of Inadvertent Error in Self-assessed Bills of Entry

The petitioner imported routers and declared the CTH as '85176990' instead of the correct '85176930', leading to excess payment of customs duty. Upon discovering the typographical error, the petitioner sought correction and reassessment.

The Court examined section 17 of the Customs Act, which mandates self-assessment of duty by importers but empowers proper officers to verify and reassess if self-assessment is found incorrect (section 17(4)). The Court noted that the petitioner's grievance was not about challenging the correctness of self-assessment on merits but about rectifying a factual, inadvertent mistake in classification.

Section 149 grants discretion to the proper officer to amend any document presented in the customs house, including Bills of Entry, even after clearance of goods, provided documentary evidence existed at the time of clearance. Section 154 allows correction of clerical or arithmetical mistakes or errors arising from accidental slips or omissions at any time.

The Court reasoned that these provisions collectively empower customs authorities to amend Bills of Entry to correct inadvertent errors, such as misclassification of tariff heads, which is precisely the relief sought by the petitioner.

Issue 2: Power and Jurisdiction of Customs Authorities to Amend Bills of Entry Post Clearance

The respondents contended that since the goods were cleared under the Risk Management System (RMS) and self-assessed, the assessment order stood final unless challenged by appeal.

The Court analyzed section 149's proviso, which restricts amendment after clearance except on documentary evidence existing at the time of clearance. The petitioner's request was supported by such documentary evidence, satisfying the proviso's condition.

Section 154's power to correct clerical errors or accidental slips was also emphasized as a distinct mechanism from appellate proceedings, allowing correction of mistakes in orders or documents at any time.

Thus, the Court concluded that the customs authorities do possess jurisdiction and power to amend the Bills of Entry post clearance to rectify inadvertent errors, and refusal to do so amounted to abdication of statutory duty.

Issue 3: Requirement of Exhaustion of Appellate Remedy under Section 128

The respondents relied heavily on the Supreme Court decision in ITC Ltd., which held that an order of self-assessment is appealable under section 128 and that refund claims cannot be entertained without modification of the assessment order through appeal or other relevant provisions.

The Court carefully distinguished the present case from ITC Ltd., noting that the Supreme Court's ruling pertained to claims for refund and the necessity of modifying the assessment order before refund claims could be entertained.

In contrast, the petitioner here sought correction of a factual mistake in classification to enable reassessment, not a refund claim per se. The Supreme Court itself acknowledged that modification of orders could be effected not only through appeals under section 128 but also through other relevant provisions such as sections 149 and 154.

Therefore, the Court held that the petitioner was not required to first appeal under section 128 before seeking correction of the Bills of Entry under sections 149 and 154, as the relief sought was correction of an inadvertent error, not challenge of the order's merit.

Issue 4: Interpretation and Application of Precedents and Legal Framework

The Court referred to several precedents including the Division Bench decision in Maharashtra Cylinders Pvt. Ltd., which emphasized that refund claims require variation of assessment orders, and decisions of the Kerala and Madras High Courts which held that correction of inadvertent errors in Bills of Entry is permissible without resorting to appeal.

The Madras High Court decision in Hewlett Packard Enterprise India Pvt. Ltd. was particularly relied upon, which held that factual mistakes apparent on the record can be rectified by amendment rather than appeal.

The Court observed that the power to amend or correct documents under sections 149 and 154 is vested in the same officer who passed the original order or an officer of equivalent rank, unlike appellate jurisdiction which is exercised by a superior authority.

This distinction underscored the appropriateness of the petitioner's remedy by way of amendment and reassessment rather than appeal.

Significant Holdings

"Though duty is cast upon an importer to self assess the customs duty leviable on the imported goods, a corresponding duty is also cast upon the proper officer to verify and examine such self assessment."

"The 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."

"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 documentary evidence which was in existence at the time of clearance of the goods."

"The 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."

"The 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."

"In a case of correction of inadvertent error, the appropriate remedy would be seeking an amendment to the Bills of Entry and not filing of appeal because there is no legal flaw in the order of self-assessment amenable to appeal but only a factual mistake which can be rectified by way of amendment or correction."

"Refusal of the respondents to look into the aforesaid grievance of the respondents is therefore not justified."

Final Determinations

The Court directed the customs authorities to consider the petitioner's request for amendment of the Bills of Entry by correcting the CTH from '85176990' to '85176930' under sections 149 and 154 of the Customs Act and thereafter pass an appropriate reassessment order under section 17(4) after affording the petitioner an opportunity of hearing.

The exercise was ordered to be completed within six weeks from the date of receipt of the judgment.

The writ petition was disposed of accordingly, with no order as to costs.