Customs Can Rely On Additional Documents Showing Wrong Export Declarations For Reassessment: CESTAT Hyderabad

The Hyderabad Bench of the CESTAT has held that Customs authorities can rely on subsequently obtained documents to revisit self-assessed export shipping bills if those documents reveal wrong declarations made at the time of export.

A bench of Judicial Member Angad Prasad and Technical Member A.K. Jyotishi observed:

“Essentially, on the issue of whether in the case of re-assessment, the department can resort to various other information, which came to their knowledge subsequently and demand differential duty, we find that they can rely on additional documents, which are relevant and also indicating wrong declaration at the time of export covered under self-assessed shipping bills.”

The issue arose from an appeal by iron ore exporter RB Seth Shreeram Narsingdas against a customs duty demand, interest and penalty arising from exports made between 2008-09 and 2011-12.

At the time of export, the exporter had filed self-assessed shipping bills based on provisional invoices, declaring parameters such as Fe percentage, moisture content, and unit value. Later, Customs called for final invoices and analytical reports and found discrepancies between what had been declared at the time of export and what was reflected in discharge-port reports and other records.

The department alleged that certain quantities declared as iron ore fines were in fact iron ore lumps attracting higher export duty, and that there were discrepancies in the declared moisture and Fe content. It thereafter sought reassessment of the shipping bills and recovery of differential duty.

While partly agreeing with the department, the Tribunal held that mixed consignments containing iron ore fines and lumps could not be split for separate duty treatment.

The tribunal held, “Mixed consignment of Iron ore fines and lumps has to be treated as that of Iron Ore fines and applicable rate of duty has to be applied.”

On limitation and penalty, the tribunal held that the extended period had been rightly invoked because the exporter had misdeclared certain parameters at the time of export.

The tribunal observed, “There is clearly misdeclaration at the time of export in respect of certain parameters, which came to the knowledge of the department only when the final invoice or other relevant reports of discharge port were submitted to them. Therefore, at the time of export, by resorting to final assessment (self-assessment), whatever declarations were made were not correct assessment and thus, there was deliberate withholding of information of the fact that invoices were provisional or it is subject to certain variation in terms of contract, etc.”

Accordingly, the tribunal remanded the matter to the adjudicating authority for fresh re-determination of differential duty, if any.

For Appellant: Advocates Lakshman Kumar & Shri Srimannarayana, 

For Respondent: B. Subhas Chandra Bose, AR for the Respondent.