PROVISIONAL ASSESSMENT UNDER CUSTOMS ACT CANNOT BE CLAIMED AS RIGHT

[Mr. M. GOVINDARAJAN]

            Section 17 of Customs Act, 1962 ('Act' for short) deals with the assessment of duty. The Act also provides for provisional assessment under Section 18. Section 18(1) of the Act provides that notwithstanding anything contained in this Act but without prejudice to the provisions contained in Section 46 of the Act:

·  where the proper officer is satisfied that an importer or exporter is unable to produce any document or furnish any information necessary for the assessment of duty on the imported goods or the export of the goods, as the case may be; or

·  where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test for the purpose of assessment of duty thereon; or

·  where the importer or exporter has produced all the necessary documents and furnished full information for the assessment of duty but the proper officer  deems it necessary to take further enquiry for assessing the duty,

the proper officer may direct that the duty leviable on such goods may, pending at the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally if the importer or the exporter, as the case may be, furnishes such security as the proper officer deem fit for the payment of the deficiency, if any, between the duty finally assessed and the duty provisionally assessed.

            Section 46 of the Act provides that the importer of any goods, other than goods for goods intended for transit or transshipment, shall make entry thereof by presenting the bill of entry for home consumption or warehousing.

            The provisional assessment is to be order only the conditions in Section 18(1) are satisfied. In 'Manickam Enterprises V. Commissioner of Customs, Trichy' - 2002 (140) ELT 16 (Mad) the High Court held that when a statute provides for provisional assessment, the same has to be done in the manner provided in the Act and not according to the whims and fancies of the Department.  As per Section 18 of the Customs Act, which provides for pending the production of such documents furnishing of such information or completion of such test enquiry, the goods be assessed provisionally if the exporter or importer, as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any.

            In this article the questions taken for consideration are;

·  whether the customs authorities are having discretion to make provisional assessment?

·  Whether the provisional assessment can be claimed as right?

The case law in 'Sachin Bhupendra  Desai V. Union of India' - 2008 -TMI - 34693 - (CALCUTTA HIGH COURT)  gives answers for the said questions. The facts of the case run as follows:

            The petitioner is the sole proprietor of a firm engaged in the business of inter-alia, import and export of stamping foils.  The Customs authorities, on information received by them that the petitioner had been indulging in under invoicing and thereby making misdeclaration of quantity and value of the goods the consignment was intercepted at the point of clearance from the deck. It was then excess quantum of goods was found to have been imported, beyond that what was declared. However, when asked to explain, the importer had admitted the mistake and produced a second set of documents being a new packing list which was not disclosed by the importer before the Special Investigation Branch Officer. A search was conducted at the office and residential premises of the petitioner from which it is alleged that several indiscriminating documents including duplicate packing list of earlier import bills were recovered under Section 108 of the Act. The Department issued summons to the petitioner six times but the petitioner did not respond and never appeared before the Customs authorities. On the other hand the Customs authorities received a communication from his father that the petitioner was busy in urgent work in Gujarat and the father of the petitioner requested the Customs Authorities to take necessary action on the basis of available documents and no other document was available with him.

                        Since the clearance was not permitted the petitioner made an application before the High Court under Article 226 of the Constitution of India challenging the action of the Customs authorities for not permitting the release of the goods on provisional assessment. The High Court held that since there is a provision under the Customs Act, 1962 for provisional assessment of duty under Section 18, in the event, petitioner satisfies the Customs Authorities for exercise of power under Section 18 for the purpose of provisional assessment of duty, the Customs authorities shall adjudicate the matter and decide the same in accordance with law.  Provisional assessment shall be ordered, provided the Customs Authorities are satisfied that sufficient case has been made out for exercise of power Section18.

            The Customs Authorities again rejected the petitioner's prayer for provisional assessment of goods and consequentially the petitioner for clearance of the goods on the basis of such provisional assessment stood also rejected.   Therefore the petitioner again filed this writ petition for a direction on the customs authorities to permit clearance of the subject goods on making provisional assessment. 

            The petitioner submitted the following contentions:

·  The petitioner has made out a clear case for mandatory direction on the customs authorities requiring him to clear the goods on the basis of provisional assessment;

·  The circular No. 22/2004, dated 03.03.2004 provides that in case of classification disputes, by and large, option is given for provisional clearance/assessment, if the inquiries are going to take time. However the Board desires that a disputed or offending consignment should also not be held up unless its import/clearance is totally prohibited or banned under any law for the time being in force or where prosecution is contemplated. At most, samples should be drawn and consignment should be allowed to be cleared on provisional basis as a matter of right;

·  The authorities ought to have considered the prayer for provisional assessment on the basis of materials available with them as the petitioner had no further document which he could produce;

The respondent Department put forth the following contentions:

§         The writ petition is not maintainable since there is an alternative forum for challenging the impugned order;

§         The designated authority is vested with discretion under the statute to make provisional assessment and the petitioner has no vested right to compel the authority to exercise such discretion in his favor;

§         The petitioner had imported identical goods from the identical supplier earlier declaring four times higher value than what was declared in the consignment which is the subject of the present proceeding;

After hearing both sides the Court rendered the following findings:

§         The petitioner has not furnished full information for assessment of duty and has not co-operated with the Customs authorities ever since the mis-declaration of quantity and value of the goods was detected and the petitioner was in possession of two packing lists indicating different quantities for the same consignment; This is in violation of the provisions of law;

§         In the event the petitioner satisfied the Customs Authorities for exercise of their jurisdiction or power under Section 18 for the purpose of provisional assessment of duty, the Customs authorities should adjudicate the matter and decide the same in accordance with the law. The order cannot be construed to be a mandatory direction for release of goods upon making provisional assessment;

§         Three conditions have been laid down in Section 18(1) of the Customs Act, and on satisfaction of any one of the se conditions the Customs authorities have been vested with the discretion to make provisional assessment;

§         The concerned authority has recorded that he has reason to believe that the importer had not furnished all relevant documents and/or full information. The petitioner did not present himself before the hearing officer, and the response of the father of the petitioner was rather evasive in nature.

§         There is no complaint on violation of the principles of natural justice in the present case;

§         The notification referred to by the petitioner does not prescribe the provisional assessment in such absolute terms;

§         It is not found the decision of the Customs Authorities to be either ex-facie illegal or perverse, in not making provisional assessment in the case of the petitioner.

Thus it is lear that-

·  The customs authorities have been vested with the discretion to make provisional assessment;

·  The assessee cannot claim the provisional assessment as right unless he fulfils the conditions for seeking provisional assessment.