2009 (10) TMI 492 - HC - Customs

Provisional Assessment - Discretion vested in proper officer to allow provisional assessment if on account of grounds specified under section 18(1) of Act not able to make final assessment. Discretion limited to 1% by C.B.E.&C. Circular No. 11/2001-Cus., dated 23.02.2001. Held that - department themselves earlier allowed provisional assessment without revenue deposit. Board s Circular set out when proper officer will demand duty and when such officer is to withdraw demand for extra duty deposit. Not within jurisdiction of proper officer to deviate from said circular. Order for withdrawal of waiver of extra duty deposit, without jurisdiction.

Issues:
1. Interpretation of Circular No. 11/01-Cus., dated 23rd February, 2001 regarding extra duty deposit.
2. Validity of demanding 1% revenue deposit for imports.
3. Compliance with Customs regulations and Circulars in provisional duty assessment.
4. Jurisdiction and discretion of proper officer in finalizing duty assessment.
5. Applicability of Circulars issued by the Central Board of Excise and Customs.

Issue 1: Interpretation of Circular No. 11/01-Cus., dated 23rd February, 2001 regarding extra duty deposit:
The petitioners challenged the withdrawal of the waiver of 1% revenue deposit by the Assistant Commissioner of Customs, arguing that it was arbitrary and not in line with the Circular. They contended that the withdrawal was unjustified, and no opportunity was given before the decision. The Circular specified that if final assessment is not completed within four months, the extra duty deposit should be discontinued. The petitioners argued that the withdrawal of the waiver was arbitrary and a nullity at law.

Issue 2: Validity of demanding 1% revenue deposit for imports:
The respondent, Assistant Commissioner of Customs GATT Valuation Cell, justified the demand for 1% revenue deposit based on the investigation findings that the petitioners undervalued their imports. Referring to Section 18 of the Customs Act, the respondent argued that provisional duty assessment was permissible when final assessment could not be made. The respondent maintained that they acted within jurisdiction in demanding the 1% revenue deposit as security due to the ongoing investigations and the need for provisional assessment.

Issue 3: Compliance with Customs regulations and Circulars in provisional duty assessment:
The Court highlighted the Customs (Provisional Duty Assessment) Regulations, 1963, which allow for provisional duty assessment when final assessment cannot be made. The Circular restricted the revenue deposit to 1% and required discontinuation if the final assessment was not completed within four months. The Court emphasized that Circulars issued by the Central Board of Excise and Customs are binding on officers, limiting their discretion in demanding duty deposits.

Issue 4: Jurisdiction and discretion of proper officer in finalizing duty assessment:
The Court noted that the respondent had allowed provisional assessment without revenue deposit earlier, acknowledging their inability to finalize the assessment within the stipulated time frame. The Court emphasized that the proper officer's discretion in demanding duty was limited by the Circular, which dictated when to demand or discontinue the extra duty deposit. The Court held that the Circular must be followed, and the officer had no jurisdiction to deviate from its directives.

Issue 5: Applicability of Circulars issued by the Central Board of Excise and Customs:
The Court concluded that the communication withdrawing the waiver of 1% revenue deposit was without jurisdiction as it contravened the Circular's provisions. The Court allowed the petition, making it absolute in favor of the petitioners, with no order as to costs. The judgment underscored the binding nature of Circulars issued by the Board on customs officers and the importance of adhering to prescribed procedures and timelines in duty assessments.

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