2016 (6) TMI 659 - AT - Customs

Improper calculation of the duty liability by Customs applying a wrong rate of exchange - inaction of customs Authority to dispose application filed by it under section 149 read with Section 17 (5) of Customs Act, 1962 - Held that - It is noticed that appellant had not agreed to the assessment under Section 17 (2) in writing. This situation warranted application of Section 17 (5) of the Act. The authority should have passed a proper order as required by that subsection. But there was a total failure to exercise the power as well as discharge public duty. We are surprised to know how the ld. DR argues that for a proper speaking order, the appellant has to approach the Commissioner. We also fail to understand how that kind of interpretation to be encouraged to defeat the object of the statute and also encourage dereliction of duty. When the provision uses the word shall in the sub-section (5) of section 17, it cannot be read as directory provisions but shall be construed to be mandatory provisions requiring Public Officer to discharge his public duty publicly. It may be appreciated that Court are not powerless to make a litigant remediless. - When public officer is required to discharge his public duty, it is mandatory for him to do so without a reminder by public for to discharge such duty. In view of the appellant s protest which is visible from the application stated above, the authority should rise to the occasion and pass a proper order under Section 17 (5) of Customs Act, 1962 within 15 days from the receipt of this order stating whether inappropriate exchange rate was followed to value the goods and if so, the reasons why the authority acted so. If such an order is passed under section 17 (5) of the Act that shall give rise to a proper order and public duty is said to have been discharged by the Public Authority. - Decided in favor of assessee.

Summary

Issues:
Improper calculation of duty liability due to wrong exchange rate application by Customs and failure to pass a speaking order under Section 17 (5) of Customs Act, 1962.

Analysis:
1. The Appellant contested the incorrect duty liability calculation by Customs, attributing it to the wrong exchange rate application. The Appellant sought a refund of ?1,18,55,807 due to this error. Customs failed to pass a speaking order within the stipulated time frame of 15 days from the Bill of Entry assessment, as mandated by Section 17 (5) of the Customs Act, 1962. The Appellant, to address this issue, filed both a refund claim and an application under Section 149 read with Section 17 (5) before the Assistant Commissioner.

2. The Appellant argued that the duty liability should have been assessed based on the exchange rate in force on the Bill of Entry presentation date, as per the third proviso to Section 14 (1) of the Customs Act, 1962. Customs, by using an incorrect exchange rate, failed in its duty to properly assess the bill of entry. Despite the lack of confirmation from the Appellant on reassessment, Customs did not issue a speaking order under Section 17 (5). The Revenue contended that the Appellant's failure to request a speaking order or challenge the reassessment precluded the refund claim. The rejection of the refund application was based on established law that no refund arises without a consequential order.

3. Upon hearing both sides and reviewing the records, the issue centered on whether the cause of action for a refund arose during the Bill of Entry filing. The relevant section, Section 14 (1) of the Customs Act, 1962, emphasizes the importance of the correct exchange rate application for goods valuation and clearance.

4. The Appellant, upon discovering the incorrect exchange rate application, filed an application under Section 17 (5) of the Customs Act, 1962, highlighting the duty to pass a speaking order in case of valuation discrepancies. The failure to obtain written agreement on assessment invoked the necessity of Section 17 (5), which the authority neglected to implement.

5. The Tribunal noted the mandatory nature of Section 17 (5), emphasizing the duty of Public Officers to discharge their responsibilities without external reminders. The Appellant's protest and application served as reminders to Customs to fulfill its obligation under the Act. The Tribunal emphasized the need for a proper order under Section 17 (5) to address the exchange rate discrepancy and discharge public duty.

6. Consequently, the impugned order was set aside, and the matter was remanded to the Adjudicating authority to pass a suitable order under Section 17 (5), resolving the dispute effectively at its core level. The appeal was disposed of accordingly.