2023 (3) TMI 1290 - HC - Customs

Provisional assessment on the bills of entry - alleged misclassification of the imported BSP platforms - Non-generation of DIN - Change in the basis of the enquiry to classification of the BSP platform, on the premise that such classification would be under Customs Tariff Entry 8517 62 90 instead of Customs Tariff Entry 8471 50 00 - HELD THAT - Impugned communication dated 04.08.2020 constitutes a demand that had been raised on the petitioner for the differential duty of Rs.3,91,60,068/- along with interest under Section 28AA of the Customs Act, 1962. The communication, styled as a letter, refers to the provisional assessment on the bills of entry and the alleged misclassification of the imported BSP platforms - In light of the admitted position that the demand has not been preceded by either a show cause notice or order revising the bills of entry (self assessments) such demand has no basis in law and is set aside. The question of bills of entry having been assessed as stated in the counter thus does not arise. The non-generation of a DIN is fatal to the communication itself. Section 151A of the Act enables the Board to issue Instructions to officers of Customs and such Instructions bind the officers, barring in two situations - The exceptions are, that no order, instruction or direction will require any officer of Customs to make a particular assessment or dispose a particular case in a specified manner and no instructions shall be issued so as to interfere with the discretion of the Commissioner of Customs (Appeals) in the exercise of appellate functions. Both exceptions thus concern the conduct of judicial duties only. As far as administrative duties are concerned the Board has the final word to prescribe guidelines that are mandatory qua the officers. In fact, the judgments cited by learned Standing Counsel stand testimony to the aforesaid settled position of law. The respondents cannot thus attempt to wriggle out of the requirements imposed under Circular Nos.37/2019 and 43/2019. Incidentally, Circulars issued on 05.11.2019 and 23.12.2019 by the Board have not been brought to the notice of the Hon'ble Supreme Court. The thrust of the exercise is to ensure that every communication issued by the State, including e-mails, must contain an authorisation. The move is a progressive one backed by the avowed objects of transparency and accountaibility, the crying need of the day. The impugned communication dated 04.08.2020 is set aside - petition allowed.

Summary

Issues involved:
The issues involved in the judgment are related to the finalization of provisional assessments, misclassification of imported goods, demand for differential duty, non-generation of Document Identification Number (DIN) in official communications, and the binding nature of Circulars issued by the Central Board of Indirect Tax of Customs.

Finalization of Provisional Assessments:
The petitioner, a Telecommunications Solutions provider, imported Blade Server Platforms (BSP) from a related overseas party, Ericson AB, Sweden. The Directorate of Revenue Intelligence (DRI) investigated the imports and changed the basis of the enquiry to the classification of the BSP platform. The DRI forwarded an investigation report to the Customs Assessing Officer, leading to the finalization of provisional assessments on certain bills of entry without providing the report to the petitioner.

Demand for Differential Duty:
The DRI concluded that the petitioner misclassified the imported goods, resulting in a differential duty of Rs.3,91,60,068. A communication was issued demanding this amount along with interest under the Customs Act, 1962. However, the demand lacked a show cause notice or order revising the bills of entry, rendering it baseless in law and subsequently set aside by the Court.

Non-Generation of DIN in Official Communications:
The impugned communication dated 04.08.2020 lacked a Document Identification Number (DIN) as mandated by Circulars issued by the Central Board of Indirect Tax of Customs. The absence of a DIN was considered fatal to the communication itself, as it did not comply with the guidelines aimed at ensuring authenticity and accountability in official proceedings.

Binding Nature of Circulars:
The Court emphasized that Circulars issued by the Board are binding on Customs officers for administrative duties, except in situations concerning judicial functions. The respondents' argument that leniency should be granted due to the pandemic was rejected, highlighting the necessity of compliance with Circulars to maintain transparency and accountability in official communications.

Judicial Precedents and Conclusion:
The Court referred to various judgments to establish that Circulars do not bind the Court but are mandatory for Customs officers in administrative functions. The judgment set aside the impugned communication due to the absence of a DIN, emphasizing the importance of transparency and accountability in official communications as mandated by Circulars. The writ petition was allowed, with no costs awarded.

Judge's Separate Judgement:
No separate judgment was delivered by the Judge in this case.