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TMI Blog2013 (8) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... s having been exported so far as the exporter was concerned. The clearance had to be made after goods were physically verified as provided in Customs Manual Chapter 3(II) 40 to 245 - The goods did not go outside the territory of India, it could not be said that there could have been any export of the goods before examination and testing of the goods as provided in Section 17(2) of the Act - Thus export was not complete by presentation of paper of bill of export - The procedures prescribed make it clear that examination of the goods was sine qua non for the clearance of the goods – Decided in favor of revenue. - APO No. 158 of 2012 with W.P. No. 64 of 2011 - - - Dated:- 13-2-2013 - Arun Mishra and Joymalya Bagchi, JJ. Shri P.K. Ghose, Sr. Advocate, Arjak Dutta and S. Moitra, Advocates, for the Appellant. Shri N.C. Roychowdhary, Sr. Advocate and P.D. Mukherjee, Advocate, for the Respondent. ORDER The Court : The appeal questions the legality of the order passed by a Single Bench allowing the writ petition filed by the respondent. There was dispute with respect to the goods presented for the purpose of clearance, physical verification of the goods as envisaged un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for shipment till the goods under reference is cleared at the border . Thus permission was not accorded and it was observed that the clarifications may be obtained from their parent administrative ministry i.e. Ministry of Finance, Department of Revenue. Ultimately the goods were not cleared under Section 51 of the Customs Act on the ground that goods were presented on 16-12-2010 for physical verification after the expiry of period of EARC on 15-12-2010. 5. In the petition filed before the Single Bench by the petitioner exporter it is averred that it had completed all the formalities of presentation of bill of export etc. which were required. The export authorisation certificate was issued during October, 2010 was valid for a period up to 45 days from the date of registration or date of allowing export as the case may be. In the circumstances unless the goods are exported within 45 days of registration the export becomes void and no export is possible beyond the period stipulated in the said EARCs. Actual date of commencement of export was from 1-11-2010 and EARC was valid for 45 days i.e. up to 15-12-2010. The petitioner further averred in paragraph 18 of the petition that go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments was appraised there was an endorsement made which reads as follows : Please inspect the consignment and verify Marks and Nos. thereon and certify whether those agreed with the Invoice P/List B/E (2) Open Examine any 5% of your choice and see that the goods are as per invoice, Packing List Bill of Export (3) Allow Export, if found in order in all respect. 9. It was further contended in para-5(k) to the effect that - In the instant case, when the goods were inspected for exports the said licence, of the petitioner had expired. The reference is to validity of Export Authorization Registration Certificate. 10. It was further contended in paragraph 8 to the following effect : The said goods of the petitioner was inspected by the Customs authorities only after they arrived at the customs station on 16-12-2010 and on that date the said Licence of the petitioner had expired. As the Licence had expired the goods of the petitioner would not be allowed to be exported. 11. In the reply filed by the petitioner to the affidavit in opposition, the petitioner has not denied the aforesaid specific statement made in the affidavit in opposition. The denial is general and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods as per provisions contained in Section 51 of the Customs Act. Procedure for export, process of shipping bill, arrival of goods have been dealt with in paragraph 38 to 45 of the CBSE Customs Manual in Chapter 3(II) relating to the export. According to the provision, physical verification is one of the essential ingredients so as to permit the export. Without that export cannot be permitted. In the instant case goods were presented on 16th December, 2012 after expiry of the validity period of EARCs. Thus export could not have been allowed. The guidance was sought from the Ministry of Textiles. However, clearance was not given. It was observed that presentation of the bill of export is only one of the export requirement, there are other various formalities which have to be followed. It was advised to take further instructions from the Ministry of Finance. In the circumstances, as goods were presented on 16th December, 2010, they could not have been permitted to be exported. The Single Bench has not gone into various material aspects of the case. In spite of specific pleadings made in the affidavit in opposition, as to presentation of goods for physical verification on 16- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Under Section 17(2) of the Act, after such examination and testing, the duty, if any, leviable on such goods shall, save as otherwise provided in Section 85 be assessed. The provisions contained in Sections 17(1) and 17(2) make examination of the goods and testing as mandatory requirement, in both cases where duty is leviable or not leviable on such goods. Other procedural aspects for assessment have been provided in Section 17(3). Section 17(4) deals with the provisional assessment subject to examination or testing of the goods. Provisions contained in Section 17 being relevant read thus :- 17. Assessment of duty.- (1) After an importer has entered any imported goods under section 46 or an exporter has entered any export goods under Section 50 the imported goods or the export goods, as the case may be, or such part thereof as may necessary, without undue delay, be examined and tested by the proper officer. (2) After such examination and testing, the duty, if any, leviable on such goods shall, save as otherwise provided in Section 85, be assessed. (3) For the purpose of assessing duty under sub-section (2). the proper officer may require the importer, expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be produced and verified by the exporter in the manner prescribed in Section 50(2). Clearance of the goods for exportation is dealt with under Section 51 of the Act. It appears that the proper officer is to be satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under the Act in respect of the same. The proper officer on being satisfied as to aforesaid aspects may make an order permitting clearance and loading of the goods for exportation. However, final clearance and loading of the goods for exportation can be done only after physical verification and satisfaction that goods entered for export are not prohibited goods and goods can be finally released only after physical verification has been made and not before that. Sections 50 and 51 of the Act are quoted below :- 50. Entry of goods for exportation. - (1) The exporter of any goods shall make entry thereof by presenting to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in the prescribed form. (2) The exporter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir observations as well as sample of goods, if needed. The export department re-considers the case and decide whether export can be allowed, or amendment in description, value etc. is required before export and whether any other action is required to be taken under the Customs Act, 1962 for misdeclaration of description of value etc. 42. Under EDI System, declarations in prescribed format are to be filed through the Service Centers of Customs. A checklist is generated for verification of data by the exporter/CHA. After verification, the data is submitted to the System by the Service Center operator and the System generates a Shipping Bill Number, which is endorsed on the printed checklist and returned to the exporter/CHA. For export items which are subject to export cess, the TR-6 challans for cess is printed and given by the Service Center to the exporter/CHA immediately after submission of shipping bill. The cess can be paid on the strength of the challan at the designated bank. No copy of shipping bill is made available to exporter/CHA at this stage. 43. The quota allocation label is required to be pasted on the export invoice. The allocation number of AEPC is to be entere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms Station is one of the procedural requirements and only a part of the various formalities to be followed right from handing over of the goods by the exporter for shipment till the goods are cleared at the border, meaning thereby that other formalities were also required to be completed within validity period of EARCs. It was not the case at that stage that for physical verification goods were presented on or before 15th December, 2010 and not on 16-12-2010. Apart from that when we come to the endorsement made on the Bill of Export at page 154 of the Paper Book, we find that there is only endorsement as mentioned in paragraph 5J of the Return mentioning that consignment were still to be inspected and Verify Marks and Numbers thereon and certify whether those agreed with the Invoice. 5% of the goods were to be checked so as to reach to the satisfaction for the purpose of grant of ultimate clearance and loading for export was to be allowed only in case if goods are found in order in all respects. There was another column which provided inspected the consignment with the assistance of Cargo Inspector. This was not in fact done and signed by anybody on behalf of the Customs as no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the goods even if duty is not leviable and the provisions contained in Section 16 also reinforce our opinion that the date of determination of duty is when the order permitting clearance and loading of the goods for exportation under Section 16 is passed, is the clinching one. Physical verification of the goods is necessary for the purpose of final clearance and endorsement is required to be made for final clearance within validity period of export authorization; but no such endorsement had been made in the instant case. 27. Thus, it could not be said that the provisions of sub-sections (1) and (2) of Section 17 of the Act which provide for goods to be examined and tested by the proper office stood complied with in the instant case. Merely by presentation of the bills of export within validity period of EARCs., it could not have been successfully contended that the goods were examined and tested by the proper officer. The satisfaction envisaged in Section 51 is not capable of being reached finally without such examination and testing by the proper officer even if the duty is not leviable as provided for in Section 17(2) of the Act. 28. Section 17(4) of the Act also mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y emerge are that the goods reached a place in the high seas which is outside India and the title of the goods also passed to the purchasers. It is true that the goods did not land in any place because of the defect in the ship. But the expression taking out to a place outside India would also mean a place in high seas. It is beyond the territorial waters of India. 31. Thus, the Hon ble Supreme Court came to the conclusion that there was export of the goods in terms of Section 75 of the Act. The fact that the ship was brought back to India because of damages in the ship does not affect the position. 32. When we apply the ratio of the aforesaid case, the goods in the instant case did not go outside the territory of India, it could not be said that there could have been any export of the goods before examination and testing of the goods as provided in Section 17(2) of the Act as also paragraphs 38 to 45 of the Manual. Thus export was not complete by presentation of paper of bill of export before 15-12-2010 The procedures prescribed in paragraphs 38 to 45 of the Manual make it clear that examination of the goods is sine qua non for the clearance of the goods. In this case, the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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