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2021 (7) TMI 856 - AT - CustomsFailure to file EGM - responsibility of the appellant to file the EGM to the proper officer before departure of the conveyance from the Customs station - violation of Section 41 of the Customs Act, 1962 - penalty under Section 117 of the Act - HELD THAT - The appellant is not master of the vessel but only vessel operator / shipping line who has filed the EGM on behalf of the master of the vessel. As per Rule 96 of the CGST Rules, 2017, the shipping bill filed by an exporter shall be deemed to be an application for refund of integrated tax paid on the goods exported, out of India, once both EGM and valid return in Form GSTR-3/GSTRB are furnished by the applicant. The IGST Refund module for exports has an inbuilt procedure to automatically grant refund after validating the Shipping Bill date against the GST Returns. The common errors and combination of errors hinders the problem of refund of IGST paid against exports. In Circular No.1/2019-Cus., F.No.450/119/2017-Cus-IV, dated 02.01.2019, the department has put forward resolutions to solve the problem of EGM errors which hamper IGST refund processing - only for continued non-compliance beyond 1.4.2019 the penalty is required to be imposed. In the present case, on receiving the notice from the department, the appellant has immediately rectified the defect. There is no allegation of continued non-compliance. The facts brought to light established that the error was only due to inadvertent omission / system error etc. Penalty u/s 117 of CA - HELD THAT - Penalty is a form of punishment by recovery of an amount from the offender. It is a form of pecuniary punishment inflicted by law for its violation. If there was no willful intention / wrongful mind for violating the law and such violation occurred was only due to inadvertent omission / system error, imposition of penalty is unwarranted. If there was continued non-compliance even after the errors being pointed out by the department, the circumstances would have been different and penalty may be imposable. It is also to be stated that after the amendment to Section 41, the section itself provides for penalty not exceeding ₹ 50,000/-. That too only if proper officer is satisfied that there is no sufficient cause for delay in filing EGM. This being so, the invocation of Section 117 is not legal or proper. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Violation of Section 41 of the Customs Act, 1962. 2. Imposition of penalty under Section 117 of the Customs Act, 1962. 3. Responsibilities and duties of the person-in-charge of the conveyance. 4. Interpretation and application of SCMT Regulations. 5. Amendments and corrections to Export General Manifest (EGM). 6. Transition from filing EGM within 7 days to before departure of the vessel. 7. Impact of non-filing of EGM on IGST refunds. Issue-wise Analysis: 1. Violation of Section 41 of the Customs Act, 1962: The appellants were alleged to have violated Section 41 of the Customs Act, 1962, which mandates the delivery of an export manifest to the proper officer before the departure of the conveyance from a customs station. The failure to file the Export General Manifest (EGM) for seven shipping bills led to the issuance of show cause notices and the imposition of penalties. 2. Imposition of penalty under Section 117 of the Customs Act, 1962: Penalties were imposed under Section 117 of the Customs Act, 1962, for the contravention of the Act where no express penalty is provided. The original authority imposed a penalty of ?1 lakh against each shipping bill, which was subsequently reduced to ?30,000/- per shipping bill by the Commissioner (Appeals). 3. Responsibilities and duties of the person-in-charge of the conveyance: Section 41 places the duty on the person-in-charge of the conveyance to file the EGM. The definition of "person-in-charge" includes the master of the vessel, commander or pilot-in-charge of the aircraft, conductor or guard of a train, or driver of any other conveyance. The appellant, being a vessel operator or shipping line, filed the EGM on behalf of the master of the vessel. 4. Interpretation and application of SCMT Regulations: The Sea Cargo Manifest and Transhipment Regulations (SCMT) of 2018 introduced new requirements for filing departure manifests. The definitions of 'Authorized Sea Carrier' and 'Departure Manifest' were highlighted, and the SCMT Regulations superseded previous regulations. The appellant's responsibilities under these regulations were discussed, noting that the occurrences of non-filing of EGM were prior to the amendment of Section 41 on 1.8.2019. 5. Amendments and corrections to Export General Manifest (EGM): Section 41(3) allows for the amendment or supplementation of an incorrect or incomplete EGM if there was no fraudulent intention. The appellant rectified the errors when pointed out by the department, indicating no malicious intent. The law foresees that errors/omissions can occur, and the appellant's actions were seen as a rectifiable omission rather than a willful violation. 6. Transition from filing EGM within 7 days to before departure of the vessel: Previously, EGMs could be filed within seven days from the date of sailing of the vessel, as per the Export Manifest (Vessels) Regulations, 1976. Public Notices No. 39/2017 and No. 17/2018 highlighted the transition to filing EGMs before the departure of the vessel, in line with the SCMT Regulations. The shipping bills in question were during this transition period, and the sudden shift in practice was noted. 7. Impact of non-filing of EGM on IGST refunds: Rule 96 of the CGST Rules, 2017, links the filing of shipping bills and EGMs to the refund of integrated tax paid on exported goods. Circular No. 1/2019-Cus. indicated that penal provisions for non-filing of EGMs would not be invoked until 31.01.2019, and only continued non-compliance beyond this date would attract penalties. The appellant rectified the defects upon receiving notice, and there was no allegation of continued non-compliance. Conclusion: The penalties imposed under Section 117 of the Customs Act were deemed unwarranted and unsustainable. The appellant's omissions were considered rectifiable and not willful violations. The impugned orders were set aside, and the appeals were allowed with consequential relief as per law. The operative portion of the judgment was pronounced in open court.
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