2025 (2) TMI 277 - AT - Customs

Assessment of two or more Shipping Bills together to determine the duty or to demand differential duty - determination of Fe content on a wet basis or dry basis - law laid down by Supreme Court in Gangadhar Narisnghdas 1995 (8) TMI 73 - SUPREME COURT is required to be followed or not. HELD THAT - Section 50 of the Customs Act requires the exporter to make an entry of the export goods by filing the Shipping Bill or Bill of Export (in case of exports by land) and section 51 of the Customs Act empowers the proper officer to give clearance for the export consignments. The Shipping Bill is not only a declaration of the goods to be exported but is also the document through which export duty if any is assessed. Duty must be self- assessed by the exporter and it can be re-assessed by the proper officer under section 17 of the Customs Act. The Customs Act does not empower any officer to compel anyone to file a Shipping Bill (or Bill of Entry) or to file it in any manner or forbid anyone from filing a Shipping Bill. Once a Shipping Bill is filed the proper officer can give clearance as per section 51 if he is satisfied that the export goods are not prohibited goods and that if any export duty is to be paid it has been paid - Nothing in the Customs Act requires a single Shipping Bill to be filed in respect of all the goods exported in the same vessel- whether the goods are stored separately or in a single hatch in the vessel. The appellants were fully within their rights and committed no error in filing two or more Shipping Bills in respect of the goods exported in a single vessel and for which a single Bill of Lading was issued by the Master of the vessel. Whether two or more Shipping Bills could be considered together and assessed? - HELD THAT - There are no provision in the entire Customs Act for such an assessment. The exporter who wants to export goods must file a Shipping Bill (under section 50) and also self-assess the duty payable (under section 17) and the proper officer can re-assesss the duty and if the proper officer who is authorised to give clearance under section 51 (or LEO) is satisfied that the goods were not prohibited goods and the duty has been paid he can give clearance. There is no provision under the Customs Act under which various Shipping Bills filed by an exporter can be assessed together with respect to specifics such as weight volume or as in this case Fe content and with respect to determining the eligibility of any exemption notification. If the exporter is entitled to the benefit of a notification in one Shipping Bill that benefit cannot be taken away by combining the goods exported under that shipping Bill with the goods exported under another Shipping Bill drawing a sample of the mixture of the two goods and testing it for Fe content. The fact that the goods under both Shipping Bills were loaded in the same vessel or even in the same hatchet of the vessel or exported to the same party would make no difference. It does not give the department the power to re-determine the duty. Conversely if after mixing the goods exported under different Shipping Bills and drawing a sample the Fe content falls below the threshold the exporter cannot claim exemption for all the Shipping Bills. Each Shipping Bill must be assessed individually. Basis for determination of the Fe content - whether the Fe content should be reckoned on wet basis or on dry basis? - HELD THAT - It is evident that the case before the Supreme Court in Gangadhar Narsingdas was on identical issue and the ground taken by the Revenue that the standard testing method prescribed by ISI (now BIS) provides for determination of Fe content on dry basis were considered and rejected by the Supreme Court. When issuing the SCN the Additional Director General and while passing the impugned order the Commissioner of Customs (Adjudication) violated the norms of judicial discipline in not following Gangadhar Narsingdas. The facts of any case and whether goods cleared under different Shipping Bills were exported in the same vessel or the same hatchet of the vessel has no bearing whatsoever on how the Fe content should be tested (wet or dry basis). The testing methodology prescribed by ISI (now BIS) had been already taken as a ground to determine Fe on dry basis by the Revenue and was rejected by the Supreme Court in Gangadhar Narsingdas. The fact that invoicing was done on dry basis also is not relevant to the testing method because the eligibility of exemption notification cannot depend on how the invoice was issued. Conclusion - i) Each Shipping Bill or Bill of Entry has to be assessed and the Customs Act does not provide for assessing two or more Shipping Bills together. ii) The classification valuation or determination of any other parameter relevant to assessment also has to be for each Shipping Bill or Bill of Entry. iii) No officer of Customs including the DRI officers and the Commissioner of Customs has any power under the law to assess two or more Shipping Bills together or determine the Fe content or any other parameter combining goods covered by two or more Shipping Bills even if they are loaded in the same vessel. iv) The Bill of Lading is the document of title issued by the Master of the vessel or the shipping line to the exporter and the fact that a single Bill of Lading is issued in respect of two or more Shipping Bills does not confer any right on any officer of customs to assess two or more Shipping Bills together or to demand consequential differential duty. v) Fe content of iron ore fines for export has to be determined on wet basis as per the judgment of Supreme Court in Gangadhar Narsingdas and the CBEC s Circular that followed and the Commissioner erred in reckoning the Fe content on dry basis. The impugned order dated 30.11.2022 passed by the Commissioner cannot therefore be sustained and needs to be set aside - appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

a) Whether two or more Shipping Bills can be assessed together to determine the duty or to demand differential duty.

b) Whether the Commissioner was correct in not following the law laid down by the Supreme Court in Gangadhar Narsingdas and also the instructions in CBEC's Circular regarding the determination of Fe content on a wet basis.

2. ISSUE-WISE DETAILED ANALYSIS

a) Assessment of Multiple Shipping Bills Together

- Relevant Legal Framework and Precedents: The Customs Act requires that each Shipping Bill be assessed individually. Section 50 mandates the filing of a Shipping Bill for export, and Section 51 allows clearance if the goods are not prohibited and duty is paid. The Act does not provide for assessing two or more Shipping Bills together.

- Court's Interpretation and Reasoning: The Court found that the Customs Act does not empower any officer to compel the filing of a single Shipping Bill for all goods exported in the same vessel. Each Shipping Bill must be assessed individually, and the Act does not allow for combining multiple Shipping Bills for assessment.

- Key Evidence and Findings: The appellants filed separate Shipping Bills for consignments loaded in the same vessel. The Commissioner attempted to assess these collectively, which the Court found had no basis in the Customs Act.

- Application of Law to Facts: The Court held that the appellants were within their rights to file multiple Shipping Bills and that the Commissioner erred in assessing them together.

- Treatment of Competing Arguments: The Revenue argued that the goods were essentially the same consignment split into different Shipping Bills to evade duty. The Court rejected this, stating that the Customs Act does not allow for such collective assessment.

- Conclusions: The impugned order was set aside on the grounds that the Customs Act does not permit the collective assessment of multiple Shipping Bills.

b) Determination of Fe Content on Wet vs. Dry Basis

- Relevant Legal Framework and Precedents: The Supreme Court in Gangadhar Narsingdas ruled that Fe content should be determined on a wet basis. CBEC Circular No. 04/2012-Cus reinforced this directive.

- Court's Interpretation and Reasoning: The Court emphasized that the Supreme Court's decision in Gangadhar Narsingdas is binding and that the Commissioner erred by not following it. The Court noted that the method of determining Fe content on a dry basis, as argued by the Revenue, had already been rejected by the Supreme Court.

- Key Evidence and Findings: The Commissioner relied on the Bureau of Indian Standards method, which prescribes dry basis determination, and the fact that invoices were issued on a dry basis. The Court found these reasons insufficient to deviate from the Supreme Court's ruling.

- Application of Law to Facts: The Court applied the Supreme Court's ruling and CBEC's Circular to conclude that Fe content must be determined on a wet basis.

- Treatment of Competing Arguments: The Revenue's argument that the facts differed from Gangadhar Narsingdas due to the mixing of iron ore grades was dismissed as irrelevant to the method of Fe content determination.

- Conclusions: The impugned order was set aside for not adhering to the Supreme Court's judgment and CBEC's Circular regarding the determination of Fe content on a wet basis.

3. SIGNIFICANT HOLDINGS

- "The Customs Act does not empower any officer to compel anyone to file a Shipping Bill (or Bill of Entry) or to file it in any manner or forbid anyone from filing a Shipping Bill."

- "Each Shipping Bill or Bill of Entry has to be assessed and the Customs Act does not provide for assessing two or more Shipping Bills together."

- "Fe content of iron ore fines for export has to be determined on wet basis as per the judgment of Supreme Court in Gangadhar Narsingdas."

- Core Principles Established: The Customs Act requires individual assessment of Shipping Bills, and Fe content for export duty purposes must be determined on a wet basis.

- Final Determinations on Each Issue: The Court set aside the impugned order, allowing the appeals and granting consequential relief to the appellants.