BUDGETARY CHANGES IN CUSTOMS ACT, 1962

[DR.MARIAPPAN GOVINDARAJAN]

The present Finance Bill brings some amendments, insertions of sub sections etc.  in Customs Act, 1962 (‘Act’ for short).

• Amendment of Section 18 – Provisional Assessment of duty;
• Insertion of new Section 18A – Voluntary revision of entry, post clearance;
• Amendment of Section 27 – claim of refund duty;
• Amendment of Section 28 – Recovery of duties not levied or short levied or erroneously refunded;
• Amendment of Section 127A – Definitions;
• Amendment of Section 127B – Application for settlement of cases;
• Amendment of Section 127C – Procedure on receipt of application under Sectio 127B;
• Amendment of Section 127D – Power of Settlement Commission to order for provisional assessment;
• Amendment of Section 127F – Power and procedure of Settlement Commission;
• Amendment of Section 127G – Inspection etc, of reports;
• Amendment of Section 127H – Power of Settlement Commission to grant immunity from prosecution and penalty;

Provisional Assessment of duty

After amendment Section 18(1) provides that the proper officer may assess the duty leviable on such goods provisionally in such manner.

A new sub sections 18(1A), (1B) and (1C) have been introduced by the Bill.  According to this section-

• the proper officer shall finalize the duty provisionally assessed, within 2 years from the date of provisional assessment. 
• the Principal Commissioner of Customs or the Commissioner of Customs may, on sufficient cause being shown and for reasons to be recorded in writing, extend the said period to a further period of one year.
• in respect of any provisional assessment pending as on the date on which the Finance Bill, 2025 receives the assent of the President, the said period of two years shall be reckoned from the date on which the said Finance Bill receives the assent of the President.
• Where the proper officer is unable to assess the duty finally within the time for the reason that-

• an information is being sought from an authority outside India through a legal process; or
• an appeal in a similar matter of the same person or any other person is pending before the Appellate Tribunal or the High Court or the Supreme Court; or
• an interim order of stay has been issued by the Appellate Tribunal or the High Court or the Supreme Court; or
• the Board has, in a similar matter, issued specific direction or order to keep such matter pending; Or
• the importer or exporter has a pending application before the Settlement Commission or the Interim Board,

the proper officer shall inform the importer or exporter concerned, the reason for non-finalisation of the provisional assessment and in such case, the time specified in sub-section (1B) shall apply not from the date of the provisional assessment but from the date when such reason ceases to exist.

Voluntary revision

The Bill inserts a new Section 18A.  This section provides that notwithstanding anything contained in section 149 (amendment of documents), the importer or exporter of the goods, after the clearance, may revise an entry already made in relation to the goods, in such form and manner, within such time and subject to such conditions as may be prescribed.  On revision of the said entry the importer or exporter of the goods shall self-assess the duty.

If the revised entry and self-assessment results in-

• any duty short-levied, not levied, short-paid or not paid, then the same may be paid voluntarily by the importer or exporter of such goods along with the interest under section 28AA;
• duty paid in excess of that payable on such goods or whole of the duty paid, requiring refund, then, such revised entry shall be deemed to be a claim for refund under section 27.

The proper officer may-

• verify the revised entry and self-assessment made in cases selected primarily on the basis of risk evaluation through appropriate selection criteria;
• re-assess the duty leviable on such goods in cases where the self assessment is not done correctly.

No revision of entry shall be made in the following cases,-

• cases where any audit or search, seizure or summons has been initiated and intimated to the importer or the exporter concerned;
• cases requiring refund where the proper officer has re-assessed the duty under section 17 or assessed the duty under section 18 or under section 84;
• any other case which the Board may specify by notification in the Official Gazette.

Claim of refund of duty

The bill inserts a second Explanation to Section 27(1) of the Act.  The proposed second explanation clarifies that  the period of limitation of one year in case of claim of refund under clause (b) of sub-section (3) of section 18A or amendment of documents under section 149, shall be computed from the date of payment of such duty or interest.

Amendment to Section 28

Section 28 has four explanations clarifying various aspects.  Explanation 1 defines the expression ‘relevant date’ as-

(a) in a case where duty is not levied or not paid or short-levied or short-paid, or interest is not charged, the date on which the proper officer makes an order for the clearance of goods;

(b) in a case where duty is provisionally assessed under section 18, the date of adjustment of duty after the final assessment thereof or re-assessment, as the case may be;

*(ba) in a case where duty is paid under clause (a) of sub-section (3) of section 18A, the date of payment of duty or interest. 

      (c) in a case where duty or interest has been erroneously refunded, the date of refund;

      (d) in any other case, the date of payment of duty or interest.

*This clause is inserted by the Bill.

Amendment of Sections 127A to 127H

This amendment brings two further definitions – interim board and ‘pending application’. 

The expression ‘interim board’ is defined under Section 127(da) as the Interim Board for Settlement constituted under section 31A of the Central Excise Act, 1944;

The expression ‘pending application is defined under Section 127(ea) as  an application filed under section 127B before the 1st day of April, 2025 and fulfils the following conditions, namely:––

1. it has been allowed under section 127C; and
2. no order under sub-section (5) of section 127C was issued on or before the 31st day of March, 2025 with respect to such application.

The gist of amendments brought in Sections 127B to Section 127H are as below-

• No application for settlement shall be made under this section on or after 01.04.2025.
• On and from 01.04.2025, the functions of the Settlement Commission under this section shall be performed by the Interim Board and the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission.
• The Interim Board may, within three months from the date of its constitution under section 31A of the Central Excise Act, 1944, for the reasons to be recorded in writing, extend the time limit referred to in sub-section (8A), by such further period not exceeding twelve months from the date of such constitution.
• On and from the 01.04.25, the power of the Settlement Commission under section 127D (Power to order for provisional attachment to protect the interest of revenue) shall be exercised by the Interim Board and the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission.
• On and from the 01, the powers and functions of the Settlement Commission under section 127F (power and procedure of settlement commission) shall be exercised by the Interim Board and the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission.
• On and from the 1st day of April, 2025, the functions of the Settlement Commission under section 127G (inspection) shall be performed by the Interim Board and the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission.
• On and from the 1st day of April, 2025, the power of the Settlement Commission under section 127H (power to grant immunity from prosecution and penalty) shall be exercised by the Interim Board and the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission.