Customs Can Recover Differential Duty Without Challenging Importer's Self-Assessment: CESTAT Ahmedabad

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 23 September held that the Customs Department can demand differential duty under Section 28 of the Customs Act without first challenging an importer's self-assessment.

A Bench comprising Judicial Member Dr. Ajaya Krishna Vishvesha and Technical Member Satendra Vikram Singh partly allowed an appeal filed by Famous Steel, observing that anti-dumping duty is a customs duty on which IGST is payable, while reducing the penalty imposed on the importer from Rs. 4 lakh to Rs. 1 lakh. The Tribunal stated:

“..there is no bar in issuance of show cause notice by the department under Section 28 of the Customs Act for demanding differential customs duty without challenging self-assessment of goods.”

The dispute concerned two consignments of cold-rolled flat stainless steel products imported from China under Bills of Entry dated 30 January 2019 and 27 May 2019. The goods were cleared after self-assessment under CTH 7219.

The Department subsequently found that the goods attracted anti-dumping duty at 57.39% under Notification No. 61/2015-Cus (ADD), which had not been paid. It raised a demand for Rs. 20.95 lakh towards anti-dumping duty and Rs. 3.77 lakh towards IGST, along with interest and penalty.

Famous Steel argued that the Department could not reopen the self-assessment without challenging it in appellate proceedings. It relied on the Supreme Court's decision in ITC Ltd. v. Commissioner of Central Excise, Kolkata-IV and the CESTAT Mumbai decision in Axiom Cordages Ltd. v. Commissioner of Customs.

The Tribunal distinguished the Supreme Court's decision in ITC Ltd., noting that the case concerned a refund claim, where modification of the underlying self-assessment was required before the refund could be granted. The present dispute, however, concerned recovery of duty that had not been levied or paid. It relied on the Supreme Court's decision in Union of India v. Jain Shudh Vanaspati Ltd., which held that a show-cause notice for recovery could be issued after clearance of goods.

On IGST, the Bench noted that the value for calculating IGST on imported goods includes customs duties. It held that anti-dumping duty imposed under the Customs Tariff Act is a duty of customs and, therefore, IGST is leviable on such duty. It observed:

“... Anti-dumping duty levied under Section 9A of the Customs Tariff Act, 1975 is a duty of customs. Therefore, as per Section 3(7) read with Section 9A of the Customs Tariff Act, 1975 and further read with Section 12 of the Customs Act, 1962, IGST is leviable on Anti-dumping duty which was not paid in this case by the appellant at the time of self-assessment..”

In reaching this conclusion, the Tribunal relied on the CESTAT Mumbai decision in Korpan Ltd. v. Commissioner of Customs, Nhava Sheva, which held that duties levied under the Customs Tariff Act fall within the expression “duties of Customs”.

On the penalty, it referred to the Karnataka High Court's decision in Rajesh Exports Limited v. Principal Commissioner of Customs, which held that imposition of penalty under the relevant provision is discretionary.

The Bench noted that the imports took place in January and May 2019, when the maximum penalty was Rs. 1 lakh. The maximum penalty was increased to Rs. 4 lakh with effect from 1 August 2019. It therefore reduced the penalty from Rs. 4 lakh to Rs. 1 lakh and upheld the demand for anti-dumping duty and IGST along with interest.

Accordingly, the CESTAT partly allowed the appeal.

For Appellant: Shri Vikas Mehta, Consultant 

For Respondent: Shri R Kumar, Superintendent (AR)