Custom, Excise & Service Tax Tribunal
Commissioner Of Customs -Ii Chennai vs M/S. Mirc Electronics Limited on 6 January, 2025
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
COURT HALL - IV
Customs Appeal No.40464 of 2023
(Arising out of Order in Appeal Seaport C. Cus. II No. 299/2023 dated 1.5.2023
passed by the Commissioner of Customs (Appeals - II), Chennai)
Commissioner of Customs Appellant
Chennai II Commissionerate
Custom House, 60, Rajaji Salai
Chennai - 600 001.
Vs.
MIRC Electronics Ltd. Respondent
Onida House, G-1, MIDC Mahakali Caves Road Andheri (E), Mumbai - 400 093.
APPEARANCE:
Shri Anoop Singh, Authorised Representative for the Appellant Shri C. Ramkumar, Advocate for the Respondent CORAM Hon'ble Shri M. Ajit Kumar, Member (Technical) FINAL ORDER NO. 40024/2025 Date of Hearing : 01.10.2024 Date of Decision: 06.01.2025 Department has filed the present appeal against Order in Appeal Seaport C. Cus. II No. 299/2023 dated 1.5.2023 passed by the Commissioner of Customs (Appeals - II), Chennai (impugned order).
2. Brief facts of the case are that the respondent had imported 6680 packages of Split Air Conditioners and filed four warehouse/into bond Bill of Entry No. 6099502 dated 23.4.2018, 6099397 dated 23.4.2018, 6100960 dated 23.4.2018 and 5345748 dated 24.2.2018 for bonding of the subject goods. On 26/09/2018 around 9:45 p.m., the respondent filed four Ex-bond bills of entry though ICEGATE ['Indian 2 C/40464/2023 Customs Electronic Data Interchange Gateway' which is the national portal operated by the Central Board of Indirect Taxes and Customs (CBIC) and provides a platform for electronic filing of documents. It facilitates two way interactions between the Indian customs and the trading community on a host of services], through their Customs Broker. However, ICEGATE did not admit the Bills and the status of all Ex-bond Bills of Entry filed were shown as NEGATIVE ACKNOWLEDGEMENT WITH ERROR CODE:139. Since it was late in the evening, the respondent took up the matter with the Customs Broker. They were informed that due to non-updation of bond details in the ICES (the 'Indian Customs EDI System'), the Ex- bond Bills of Entry filed on 26.8.2018 were not accepted and showed a negative acknowledgment. In the meanwhile, vide Notification No. 67/2018 dated 26.9.2018, the duty payable structure on the split air- conditioners were enhanced from 10% of BCD to 20% BCD with effect from 27.10.2018. The respondent was required to pay duty on the imported split air conditioners under the above structure. The extra duty under the new notification worked out to Rs.42,89,795/-. On a bonafide belief, based on the communication of the Assistant Commissioner (Bonds) dated 26.11.2018, that the excess duty would be refunded by the refund section, the respondent discharged the excess duty liability of Rs.42,89,795/-. Hence refund claims were filed for refund of the excess duty amount and the same came to be rejected by the lower authority on the ground that the ex-bond bills of entry were filed only after Notification No. 67/2018 dated 26.9.2018 came into effect. Against such rejection, respondent filed appeal before the Commissioner (Appeals), who vide the impugned order, set aside the order of the lower authority and directed to process the same by 3 C/40464/2023 obtaining the relevant post-facto updates in Bonds Section following the principles of natural justice. Hence Revenue has filed the present appeal before this forum.
3. Shri Anoop Singh, learned Authorized Representative appeared for the appellant and Shri C. Ramkumar, learned Counsel appeared for the respondent.
3.1 The Ld. AR stated that the First Appellate Authority had failed to appreciate that the appellant had not provided any documentary proof that they had tried to file ex-bond Bill of Entry's on 26/09/2018 and whether it was for the entire consignment. They, neither tried to file it the next day. The ex-bond Bill of Entry's were filed on different dates in November 2018, February, March and April 2019. Hence the plea of the appellant cannot be accepted. To allow the rate of duty as on 26/09/2018 after a period of 6 - 7 months is against section 15 of the Customs Act 1962, whereas the rate change happened on 26/09/2018. He stated that as per the Hon'ble Supreme Court's judgment in Union of India vs. G.S. Chatha Rice Mills [2020 (374) E.L.T. 289 (S.C.)], a Bill of Entry shall be deemed to have been filed when after entry of declaration on the ICEGATE, a Bill of Entry number is generated. No such number has been shown to be generated in this case. Hence their plea of presentation of Bill of Entry on 26/09/2018 cannot be accepted. He hence prayed that the appeal may be allowed.
3.2 The Ld. Counsel for the respondent stated that the key issue involved is whether the appellant is eligible for refund of excess duty paid by them or not. He stated that;
1) They had filed four Ex-bond bills of entry though ICEGATE on 26.9.2018 around 9:45 p.m. The system did not admit the Bills and 4 C/40464/2023 the status of all Ex-bond Bills of Entry filed were shown as NEGATIVE ACKNOWLEDGEMENT WITH ERROR CODE:139. As per bill of entry Report Job no 1715, 1716, 1717 and 88, bills of entry details were fed in to the system but negative acknowledgment was received. This was purely a system related fault and they cannot be held liable to pay extra duty on this account
2) As per Section 15(1)(b) of the Act, 1962 the respondent is liable to pay duty at the rate on the date on which the bill of entry is presented for home consumption and not at the rate on any other date as decided by Commissioner Appeals.
3) On verification with the department, it was ascertained that the error was on account of the fact that bond details were not updated by the bond section.
4) As per the Warehousing Regulations 2016, 11(4) and Board Circular 25/2016 08/06/2016, -para 2 and 3, it is the responsibility of the warehouse licensee for mandatory maintenance of records in digital form and not that of the importer.
5) Revenue cannot take a ground which is contrary to the circular.
6) The Ld. Counsel relied on the following judgments;
a) Madras High Court decision M/s Lakshmi Dall Mill reported in 2018 TIOL 185 HE MAD EUS
b) Madras High Court decision in the case of M/s Rangsuganth Manufacturing Pvt Ltd Vs Asst Commissioner of Customs Chennai reported in 2022 (2) TMI 212 MAD HC CUS
c) Ratan Wire Melting reported in 2005 (3) SCC 57
d) Commissioner of Customs New Delhi Vs MD Overseas Ltd reported in 2021 (8) TMI-704 CESTAT NEW DELHI 5 C/40464/2023 The Ld. Counsel prayed that the appeal may be dismissed.
4. Having heard the rival contentions, perused the record and after going through the relevant case law relied upon by the parties, I find that this is a case where the respondent has allegedly paid excess duty due to a System error. Revenue has contested the claim citing a lack of proof shown.
5 The general rule in legal proceedings is that "he who asserts must prove". This principle finds echo in Section 101 of the Evidence Act - 1872, as was prevalent during the relevant time, 'Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.'
6. It is the appellants claim that ICEGATE, did not admit the Bills after they attempted to file the same and the status of all Ex-bond Bills of Entry filed were shown as NEGATIVE ACKNOWLEDGEMENT WITH ERROR CODE:139 for job numbers 1717, 1715, 1716 & 88. The appellant has stated that they were informed that the error was on account of the non-updation of the bond details by the appellant in the Indian Customs EDI System (ICES), manually. While no correspondence in this regard was produced, it is seen from the OIO that the said reason has been confirmed as the cause of the error as shown in the ICEGATE report.
7. The appeal filed by revenue is on a mixed question of fact and law. The application of law, which pertains to the rate of duty applicable, would depend on the fact of the date on which the Bills of Entry were 'presented'. The rate of duty applicable is as provided for in section 15 of the Customs Act, 1962, which is reproduced below:
"15. Date for determination of rate of duty and tariff valuation of imported goods. - (1) The rate of duty and tariff valuation, if any, 6 C/40464/2023 applicable to any imported goods, shall be the rate and valuation in force, -
(a) in the case of goods entered for home consumption under section 46, on the date on which a bill of entry in respect of such goods is presented under that section;
(b) in the case of goods cleared from a warehouse under section 68, on the date on which a bill of entry for home consumption in respect of such goods is presented under that section;
(c) in the case of any other goods, on the date of payment of duty:
Provided that if a bill of entry has been presented before the date of entry inwards of the vessel or the arrival of the aircraft or the vehicle by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards or the arrival, as the case may be (2) The provisions of this section shall not apply to baggage and goods imported by post."
Hence as per section 15(1)(b), which is applicable to this case, the rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force, in the case of goods cleared from a warehouse under section 68, on the date on which a bill of entry for home consumption in respect of such goods is presented under that section.
8. The presentation of an electronic bill of entry is covered by the Bill of Entry (Electronic Integrated Declaration and paperless) Regulation 2018. Regulation 4(2) provides that the Bill of Entry shall be deemed to have been filed and self-assessment completed when after entry of the electronic integrated declaration, a Bill of Entry number is generated by the Indian Customs Electronic Data Interchange System (ICES) for the said declaration and the self- assessed copy of the Bill of Entry may be electronically transmitted to the authorised person.
9. It is revenue's case that there was a 6 - 7 months delay in filing the bill of entry after the record of error alluded to by the appellant, 7 C/40464/2023 the claim has to be tested on the anvil of fact and law. While the burden of proof in this case is on the appellant to show that they had indeed filed the ex-bond bills of entry for the entire quantity of 6680 packages of the split air conditioners on 26/09/2018, as stated above, the appellant has done so by producing ICEGATE 'Bill of Entry Report, User-CAMAA', which has not been disputed by revenue.
10. There is essential distinction between burden of proof and onus of proof. The burden of proof lies upon the person who has to prove a fact and it never shifts. However, the onus of proof shifts. Onus means a duty of adducing evidence. [See Phoenix Mill Ltd. Vs. Union of India, 2004 (168) ELT 310]. Once the appellant discharged the onus of proof of having filed the bills of entry it was for revenue to rebut the claim or show it to be insufficient and shift back the onus of proof regarding the description of goods and quantity, to the appellant. Instead by allowing the claim to go uncontested they have accepted the averment of fact made by the appellant, discharging his burden. Revenue has instead claimed that the error which prevented the non- filing of the bills of entry was on account of the non-updation of the bond details by the appellant in ICES, manually.
11. The question which arises is whether the appellant was indeed responsible for having caused the error by non-updation of the bond details manually. Para 10 of the OIO dated 17/06/2021 states the departments position and is reproduced below:-.
To understand the procedure followed by the bond section in updating the bond details in the ICES, a note was sent to the Bond section. In reply notes dated 24.05.2021 and 11.06.2021, the A.C. (Bonds) intimated that as a practice that has been in vogue for a long time, the CHA/ importer after warehousing the cargo approaches the bond section and requests the Bond Superintendent to upload the date of warehousing in the ICES. On such a request, the Bonds Superintendent from his work module, feeds the warehousing date 8 C/40464/2023 in the ICES. Normally, such requests for updation are made by the CHA/Importer after warehousing the goods or when they want to pay the duty and clear the cargo. Every transaction regarding bonded cargo is also recorded/uploaded separately in a software called "Bond Warehouse Module as per the requirement of Circular No. 25/2016-Customs but the Bond Warehouse Module and the ICES have not been linked so far. In this scenario, the details regarding date of warehousing etc. will be uploaded in the module by the Bonds section on the one hand and also by the warehouse licensee on the other. The updation of the warehousing date needs to be done manually separately in the ICES by the Bonds Superintendents on information/request from the importer/CHA. Until ICES and the Bonded Module are linked, this is required to be done in this way only. It is not practice or feasible for the Bond section to update the warehousing date in the ICES as a matter of daily routine. The Trading public knows this procedure very well which has been in vogue for a long time.
12. The appellant has drawn attention to Warehouse (Custody and Handling of Goods) Regulations, 2016 provision 11(4) along with para 2 and 3 of Board's Circular No 25/2016-Customs issued from F. No. 484 / 03 / 2015 - LC (Pt 1), dated: 08/06/2016. It is seen that the Regulation requires that every licensee shall maintain records in a warehouse. Section 11(4) states that a licensee shall file with the bond officer a monthly return of the receipt, storage, operations and removal of the goods in the warehouse, within ten days after the close of the month to which such return relates. The said provisions are reiterated in the above-mentioned Boards Circular. As stated by the appellant the provisions did not require an importer to keep the electronic bond module updated. This being so the department cannot fasten the delay in up-dation of the bond module on the importer and deny him the facility to file the bill of entry citing 'well known procedure' which has no legal basis. Defects in linking of the bond module and ICES by the department, cannot be made a reason to deny the adherence to a statutory requirement by an importer, more so when the statute does not require the importer to 9 C/40464/2023 enter such details in the ICES prior to filing a bill of entry. It is at best a curable defect and not a substantive one.
13. The question arises whether the Commissioner (Appeals) was right in allowing the rate of duty as on 26/09/2018 to be applied after a period of 6 - 7 months, when the goods were actually cleared, which is against section 15 of the Customs Act 1962. It is true that in this case a Bill of Entry number was not generated by the Indian Customs Electronic Data Interchange System (ICES) for the said declaration and the self-assessed copy of the Bill of Entry was not electronically transmitted to the authorised person. However, a similar matter was examined by a Coordinate Bench of this Tribunal at New Delhi in the case of Principal Commissioner of Customs, ACC (Import) Commissionerate, New Delhi Vs M/s M. D. Overseas Limited [FINAL ORDER NO. 51727/2021, Dated: 13.08.2021 / 2021 (8) TMI- 704 CESTAT NEW DELHI]. The Principal Bench held as under;
29. The above discussion leads to the inevitable conclusion that the respondent had submitted all the four Bills of Entry with the relevant documents on 05.07.2019 before 5 PM and the respondent cannot be blamed if for three consignments, Bills of Entry numbers were not generated because of some fault with the ICEGATE portal of the appellant on which the respondent was required to enter the Electronic Integrated Declaration and the supporting documents. The rate of Basic Customs Duty as applicable on 05.07.2019 would, therefore, be applicable and not the Basic Customs Duty as applicable on 20.07.2019, on which date the respondent had resubmitted the Bills of Entry with documents in view of the instructions issued by the Department. There is, therefore, no error in the order passed by the Commissioner (Appeals) requiring the Department to re-assess the three Bills of Entry with respect to the rate of Basic Customs Duty applicable on 05.07.2019. (emphasis added)
14. It is also noted that the board vide its Instruction No.12/2017-Customs dated 31.08.2017, on the subject 'Clarification on difficulties related to recent amendments in Customs Act, 1962 - reg.', held as under;
10
C/40464/2023 "3. Board has examined the issue and accordingly following clarification is given.
Board is of the view that importer should not be penalised for delay happening due to any system related fault. In this regard section 46 of the Customs Act 1962 provides that payment of charges for late presentation of the Bill of Entry is subject to existence of sufficient cause to the satisfaction of proper officer." (emphasis added) The instruction pertains to payment of charges for late presentation of Bill of Entry, which has a discretionary element, unlike the relevant date for the rate of duty to be effective, which is fixed by the Customs statute and does not leave room for discretion. However, the issue that delays in filing of Bill of Entry happen due to system related faults is acknowledged by the instruction and has legal implications. In an era with progressive use of modern technology, the instruction take a pragmatic view of the procedure in vogue at the time the law was enacted and as applicable to the present. In such a situation the appellant should not be blamed for the delay and held responsible, as stated in M. D. Overseas Limited (supra), once it is shown that an importer had attempted filing the bill of entry prior to the issue of a rate change notification and no aspect of the claim made by the appellant (description or quantity etc.) was challenged by revenue. The judgment in the case of Chatha Rice Mills (supra) cited by Revenue was not about non-filing / non-generation of Bills of Entry numbers, which is the issue in the present case. Hence the judgment is not relevant as far as the fact of filing of bill of entry is concerned.
15. Further no purpose would be served in remanding the matter to the Original Authority to re-examine whether ex-bond bills of entry was filed for the entire lot of imported 6680 packages of Split Air Conditioners as claimed by the appellant or only for a part or for some 11 C/40464/2023 other goods, as this would involve a fresh investigation of the facts which is beyond the issue on the file of the Original Authority and would result in a new proceedings. These issues should have been dealt with at the time of processing the claim / issuing a SCN.
16. In the circumstances I find that the lower authority has taken a view which is reasonable, legal and proper and I find myself in agreement with the same. The impugned order hence merits to be upheld and is so ordered. The appeal fails and is disposed of accordingly.
(Order pronounced in open court on 06/01/2025) Sd/-
(M. AJIT KUMAR) Member (Technical) Rex