PENALTY FOR NON-FINALISATION OF PROVISIONALLY ASSESSED BILLS OF ENTRY

[DR.MARIAPPAN GOVINDARAJAN]

Provisional assessment

Section 17(1) of the Customs Act, 1962 (‘Act’ for short) provides that an importer entering any imported goods or an exporter entering any export goods shall self-assess the duty, if any, leviable on such goods.  Section 18(1) of the Act provides that-

• where the importer or exporter is unable to make self-assessment makes a request in writing to the proper officer for assessment; or
• where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test; or
• where the importer or exporter has produced all the necessary documents and furnished full information but the proper officer deems it necessary to make further enquiry; or       
• where necessary documents have not been produced or information has not been furnished and the proper officer deems it necessary to make further enquiry, the proper officer may direct that the duty leviable on such goods be assessed provisionally if the importer or the exporter, as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty as may be finally assessed or re-assessed, as the case may be and the duty provisionally assessed.

Regulation 4(2) of the Customs (Finalisation of Provisional Assessment) Regulations, 2018 provides that the proper officer shall within 15 days from the date of such order of provisional assessment, inform the importer or the exporter, in writing, the specific details of the information to be furnished or the documents to be produced.  The documents or information required to be furnished by the importer or the exporter or requisitioned by the proper officer may be submitted in one instance.

Finalisation of provisional assessment

Regulation 5 provides that the proper officer shall finalise the provisional assessment within 2 months of receipt of-

• an intimation from the importer or the exporter or his authorised representative or Customs Broker; or
• a chemical or other test report, where the provisional assessment was ordered for that reason; or
• an enquiry or investigation or verification report, where the provisional assessment was ordered for that reason.

Penalty

Regulation 7 provides that if any importer or exporter or his authorised representative or Customs Broker contravenes any provision of these regulations or abets such contravention, or fails to comply with any provision of these regulations, he shall be liable to a penalty which may extend to Rs.50000/-.

Case laws

In M/S JAI BALAJI INDUSTRIES LTD. VERSUS COMMR. OF CUSTOMS (PREVENTIVE), BHUBANESWAR - 2021 (1) TMI 767 - CESTAT KOLKATA the appellant imported coal through Dhamra Port in Odisha. Since the coal was purchased on high sea sale basis, the appellant could not file all the import documents, like commercial invoice, bill of lading, certificate of weight, certificate of quality, etc.  All the Bills of Entry were assessed provisionally under section 18 the Act read with the Regulations.  The appellant duly executed the bond with bank guarantee as prescribed under the Regulations.  The Department issued a show cause notice dated 06.04.2016 proposing penalty under regulation 5 on the ground that the appellants had not submitted all the import documents, timely, as was required to be filed within 30 days.  he show cause notice came up for adjudication, the appellant submitted all the requisite documents in respect of 27 Bills of Entry which were then duly finalised by the department. In other words, only 8 Bills of Entry remained to be finalised.

The Adjudicating Authority took a lenient view imposed a penalty of Rs. 20,000/- The appellant did not challenge the order and paid this amount.  However, the Department filed an appeal challenging the order of Adjudicating Authority before the Commissioner of Customs (Appeals).  The Commissioner of Customs enhanced the penalty to Rs.4 lakhs – each bill Rs.50,000 x 8 bills.  The appellant filed the present appeal before the CESTAT, Kolkata, challenging the order of Commissioner (Appeals).  The appellant contended that   the Commissioner (Appeals) has not given any reason as to why it was necessary to impose the maximum penalty in this case.  There is no revenue involved in the whole case and, at best, the matter relates to some procedural lapses.  No penalty can be imposed for procedural lapses.

The CESTAT observed that the department has not been able to establish any deliberate delay or any mala fide intention on the part of the appellant.   The adjudicating authority took a fair decision and imposed a nominal penalty of Rs. 20,000/- which comes to Rs.2,500/- for each of the remaining 8 Bills of Entry yet to be finalised for want of all the documents. This amount has already been paid by the appellant. The order of the Commissioner (Appeals) does not establish any ground for enhancing the penalty to the maximum of ₹ 50,000/- per Bill of Entry yet to be finalised.  The CESTAT allowed the appeal setting aside the order of Commissioner (Appeals).

In M/S. VISA STEEL LTD. VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE), BHUBANESWAR - 2025 (3) TMI 792 - CESTAT KOLKATA, the Appellant in the present appeal,  has imported 16 consignments under various Bills of Entry during the period 2011-2012 to 2014-2015.  The Department issued show cause notice to the appellant as to why penalty should not be imposed on the appellant for non-finalization of provisionally assessed Bills of Entry.  The appellant submitted all necessary documents in respect of 33 Bills of Entry.  The Department made final assessment in respect of 25 bills of entry and yet to finalise the remaining 8 bills.  The Adjudicating Authority after going through the facts of the case, imposed a penalty of Rs.20,000/- under Regulation 5 by taking a lenient view.

 The Revenue filed an appeal before the Commissioner (Appeals) seeking to enhance the penalty of Rs. 4,00,000/- on the ground that in respect of the 8 Bills of Entry yet to be finally assessed, the Adjudicating Authority should have imposed penalty @ of 50,000/- for each Bill of Entry.  The Commissioner (Appeals) allowed the appeal filed by the Department.

Against the order of Commissioner (Appeals), the appellant filed the present appeal before CESTAT.  The appellant contended that there is no fault on it for non-finalisation of bills.    The Adjudicating Authority has correctly taken a lenient view and imposed penalty of Rs. 20,000/-   The appellant relied on the order of CESTAT in ‘Jai Balaji Industry’ (supra).  The CESTAT followed the rulings given by it in ‘Jai Balaji Industry’ (supra) allowed the appeal.  The CESTAT held that the Adjudicating Authority was correct in taking a lenient view imposing penalty of Rs.20,000/-.