2025 (1) TMI 358 - AT - Customs

Refund of excess paid duty due to a System error - 6 7 months delay in filing the bill of entry after the record of error alluded to by the appellant - whether the appellant was indeed responsible for having caused the error by non-updation of the bond details manually? - HELD THAT - Section 11(4) states that a licensee shall file with the bond officer a monthly return of the receipt, storage, operations and removal of the goods in the warehouse, within ten days after the close of the month to which such return relates. The said provisions are reiterated in the above-mentioned Boards Circular. As stated by the appellant the provisions did not require an importer to keep the electronic bond module updated. This being so the department cannot fasten the delay in up-dation of the bond module on the importer and deny him the facility to file the bill of entry citing well known procedure which has no legal basis. Defects in linking of the bond module and ICES by the department, cannot be made a reason to deny the adherence to a statutory requirement by an importer, more so when the statute does not require the importer to enter such details in the ICES prior to filing a bill of entry. It is at best a curable defect and not a substantive one. The question arises whether the Commissioner (Appeals) was right in allowing the rate of duty as on 26/09/2018 to be applied after a period of 6 7 months, when the goods were actually cleared, which is against section 15 of the Customs Act 1962. It is true that in this case a Bill of Entry number was not generated by the Indian Customs Electronic Data Interchange System (ICES) for the said declaration and the self-assessed copy of the Bill of Entry was not electronically transmitted to the authorised person. The instruction pertains to payment of charges for late presentation of Bill of Entry, which has a discretionary element, unlike the relevant date for the rate of duty to be effective, which is fixed by the Customs statute and does not leave room for discretion. However, the issue that delays in filing of Bill of Entry happen due to system related faults is acknowledged by the instruction and has legal implications. In an era with progressive use of modern technology, the instruction take a pragmatic view of the procedure in vogue at the time the law was enacted and as applicable to the present. In such a situation the appellant should not be blamed for the delay and held responsible. Conclusion - The appellant should not be blamed for the delay and held responsible, once it is shown that an importer had attempted filing the bill of entry prior to the issue of a rate change notification. Importers should not be penalized for system-related faults. No purpose would be served in remanding the matter to the Original Authority to re-examine whether ex-bond bills of entry was filed for the entire lot of imported 6680 packages of Split Air Conditioners as claimed by the appellant or only for a part or for some other goods, as this would involve a fresh investigation of the facts which is beyond the issue on the file of the Original Authority and would result in a new proceedings - the lower authority has taken a view which is reasonable, legal and proper - Appeal disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the respondent is eligible for a refund of excess duty paid due to a system error that prevented timely filing of ex-bond bills of entry.
• What is the applicable rate of duty for the imported goods, considering the alleged delay in filing the bills of entry?
• Whether the procedural requirements for filing bills of entry were met, and if not, who is responsible for the failure?
• Whether the Commissioner (Appeals) was correct in allowing the rate of duty as on the date of the alleged filing attempt, despite the subsequent delay in actual filing.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Eligibility for Refund of Excess Duty

• Relevant Legal Framework and Precedents: The case hinges on Section 15 of the Customs Act, 1962, which determines the rate of duty based on the date of presentation of the bill of entry. The principle that "he who asserts must prove" is echoed in Section 101 of the Evidence Act, 1872.
• Court's Interpretation and Reasoning: The court found that the respondent had attempted to file the bills of entry on 26/09/2018 but was prevented by a system error. The court emphasized that the burden of proof was on the respondent to show the attempt to file, which they did by producing the ICEGATE report.
• Key Evidence and Findings: The respondent provided evidence of the attempt to file through the ICEGATE report, showing a negative acknowledgment due to error code 139.
• Application of Law to Facts: The court applied Section 15(1)(b) of the Customs Act, determining the rate of duty based on the date the bills were attempted to be filed, not when they were successfully filed.
• Treatment of Competing Arguments: The court rejected the Revenue's argument that the respondent failed to provide proof of filing attempts, accepting the ICEGATE report as sufficient evidence.
• Conclusions: The court concluded that the respondent was eligible for a refund of the excess duty paid due to the system error.

Issue 2: Applicable Rate of Duty

• Relevant Legal Framework and Precedents: Section 15 of the Customs Act, 1962, and the Bill of Entry (Electronic Integrated Declaration and Paperless) Regulation 2018 were pertinent.
• Court's Interpretation and Reasoning: The court held that the rate of duty should be based on the date the respondent attempted to file the bills, as supported by the precedent set in M. D. Overseas Limited.
• Key Evidence and Findings: The court found that the system error was due to non-updation of bond details, which was not the respondent's responsibility.
• Application of Law to Facts: The court determined that the rate of duty applicable was as of 26/09/2018, the date of the attempted filing.
• Treatment of Competing Arguments: The court dismissed the Revenue's reliance on the Chatha Rice Mills case, as it was not relevant to the issue of non-filing due to system errors.
• Conclusions: The court affirmed the lower authority's decision to apply the duty rate as on the attempted filing date.

Issue 3: Procedural Compliance and Responsibility

• Relevant Legal Framework and Precedents: The Warehousing Regulations 2016 and Board Circular 25/2016 were considered.
• Court's Interpretation and Reasoning: The court found that the responsibility for maintaining bond details in the system lay with the customs authorities, not the respondent.
• Key Evidence and Findings: The court noted that the bond details were not updated due to a lack of linkage between the Bond Warehouse Module and ICES.
• Application of Law to Facts: The court held that the respondent could not be penalized for system-related faults beyond their control.
• Treatment of Competing Arguments: The court rejected the Revenue's argument that the respondent should have ensured the bond details were updated.
• Conclusions: The court concluded that the procedural failure was not attributable to the respondent.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "The appellant should not be blamed for the delay and held responsible, as stated in M. D. Overseas Limited (supra), once it is shown that an importer had attempted filing the bill of entry prior to the issue of a rate change notification."
• Core Principles Established: Importers should not be penalized for system-related faults; the rate of duty is determined by the date of attempted filing when supported by evidence.
• Final Determinations on Each Issue: The court upheld the lower authority's decision, allowing the refund of excess duty and applying the rate of duty as of the attempted filing date.