Case Law Details
Ajwa Dry Fruit Impex Vs Union of India (Kerala High Court)
The writ petition was filed challenging an order in original dated 30.03.2023 passed by the Joint Commissioner (Appraising Import). The dispute arose from the import of goods declared as “wet dates” (processed dates) under multiple bills of entry. The importer classified the goods under CTH 0804 1020 and claimed exemption from IGST, paying Basic Customs Duty at 20% and Social Welfare Surcharge at 10%, while treating IGST as nil under a specific exemption notification.
During post-clearance audit by Customs Receipt Audit, it was observed that the imported goods, with an assessable value of ₹85,91,498, did not qualify for the IGST exemption claimed. The exemption applied only to “fresh dates,” whereas “wet/processed dates” were liable to IGST at 12% under a different notification. A show cause notice was issued demanding ₹12,57,795 as short-levied IGST along with interest. The petitioner initially did not respond to the notice or attend multiple scheduled hearings, though later sought time and eventually filed a reply. After providing an opportunity for personal hearing, the authority passed the impugned order confirming the IGST demand and applicable interest.
The petitioner challenged the order primarily on jurisdictional grounds. It was argued that even if the exemption claim was incorrect, the authority under Section 28 of the Customs Act did not have the power to assess or demand IGST. According to the petitioner, IGST matters should be dealt with under the IGST Act, and the term “duty” under the Customs Act referred only to customs duty and not IGST. Therefore, it was contended that the order was passed without jurisdiction and was void.
The Revenue opposed these arguments, contending that the definition of “assessment” under the Customs Act was broad and included determination of any duty, tax, cess, or other sum payable on imported goods. It was submitted that the assessing authority under Section 28 was empowered to deal with short payment or non-payment of not only customs duty but also other taxes applicable on imports, including IGST. It was further argued that the dispute involved classification of goods, and the petitioner should have approached the appellate authority rather than invoking writ jurisdiction.
The Court examined the statutory provisions, particularly the definition of “assessment” under Section 2(2) of the Customs Act, which includes determination of dutiability and the amount of duty, tax, cess, or any other sum payable under the Act, the Customs Tariff Act, or any other law. The Court also considered Section 28, which empowers authorities to recover duties not levied, short levied, or erroneously refunded.
The Court held that the scope of assessment under the Customs Act is not limited to customs duty alone. It extends to all duties, taxes, or sums payable on imported goods, including IGST. Since the petitioner had claimed exemption from IGST under a notification, the assessing authority was competent to examine the validity of such claim and to recover any short levy under Section 28.
Rejecting the petitioner’s argument, the Court concluded that the authority had jurisdiction to pass the impugned order. It found no merit in the contention that IGST could not be assessed under the Customs Act framework. The writ petition was held to be misconceived and was dismissed.
However, the Court observed that the petitioner may pursue the statutory remedy of appeal. It further directed that the time spent in prosecuting the writ petition should be considered for condonation of delay if an appeal is filed.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
1. The present writ petition has been filed by the petitioner under Article 226 of the Constitution of India impugning the order in original dated 30.03.2023 in Exhibit P-1 passed by the 4th respondent Joint Commissioner (Appraising Import).
2. petitioner had imported items declared as ‘Wet Dates’ (Processed dates) vide five bill of entries mentioned in the order in original. The petitioner classified the imported goods under CTH 0804 1020 and assessed the same with duty @ BCD (Basic Custom Duty) 20% + SWS (Social Welfare Surcharge) 10% + IGST nil under Si. No.51 of the Notification No.02/2017-Integrated tax (Rate) dated 28.06.2017.
3. On post clearance audit of the above mentioned bills of entry by Customs Receipt Audit (CRA), Customs House, Cochin, it was observed that the importer had imported dates having an assessable value of Rs.85,91,498/-. The IGST exemption claimed under Si. No.51 of the IGST exemption Notification No.02/2017-Integrated tax (Rate) dated 28.06.2017 was applicable to “fresh dates” under Chapter 0804 wet/processed dates attracted 12% IGST against Si. No.16 of Schedule II of Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017. The petitioner was issued show cause notice on 10.03.2022 asking him to show cause as to why short levied duty of Rs.12,57,795/- (the IGST exemption) should not be demanded from the importer/petitioner under Section 28(1) of the Customs Act, 1962 along with applicable interest under Section 28AA of the Customs Act, 1962. But the petitioner did not filed any reply to the show cause notice dated 10.03.2022. Four times dates were given i.e., on 12.08.2022, 23.08.2022, 13.01.2023 and 03.02.2023. However, the petitioner does not chose to turn up for personal hearing. Vide letter dated 25.01.2023 the petitioner had requested one week time to file reply against the show cause notice and one more opportunity to attend the personal hearing. The petitioner filed the reply and after affording the opportunity of personal hearing to the petitioner on 17.03.2023, the impugned order Exhibit P-1 in original came to be passed saying that the “wet dates” attract IGST of 12% against Si. No.16 of Schedule II of Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017 and the demand of Rs.12,57,795/- was confirmed. The interest on short levy of Rs.12,57,795/- under Section 28AA of Customs Act, 1962 was also confirmed.
4. The Learned Counsel for the petitioner submits that even if it is assessed, when the petitioner did not claim wrong exemption from payment of the IGST, the assessing authority under Section 28 of Customs Act is not empowered to assess the IGST and it is the authority under the IGST Act which could have proceeded with the matter. He therefore submits that the impugned order is without jurisdiction inasmuch as it has been passed by an authority which is not empowered to assess the tax/duty under the provisions of IGST Act.
5. The Learned Counsel for the petitioner also submits that under definition clause Sub-section (15) to Section 2, duty means the custom duty and it does not include the IGST tax/duty. He has also brought attention of this Court to the provision of Section 28 to submit that only in case of non payment/short payment revision of the Customs duty, the provisions of Section 28 of the Customs Act could be invoked and not for short payment/non payment or wrong exemption on evasion of IGST, Section 28 could have been invoked.
He therefore submits that since the order has been passed by an incompetent authority, the impugned order Exhibit P-1 in original is void ab initio and is liable to be set aside.
6. Mr. Ajoy P. B., Learned Counsel for the Revenue opposed the contention of the Learned Counsel for the petitioner that Subsection (2) of Section 2 defines the assessment order. If the definition of assessment order is considered, it is not confined only to the Customs duty but, it is in respect of every duty, cess or tax which is applicable on the imported goods. Therefore, the contentions raised by the Learned Counsel for the petitioner that the impugned Exhibit P-1 assessment order passed under Section 28 is without jurisdiction has no substance. Learned Counsel for the respondents has also placed reliance on the case of Canon India Private Limited (M/s.) v. Commissioner of Customs (2021 KHC 6151) in support of his contention to say that the assessing authority under the provisions of Section 28 is empowered to assess evasion/non payment of not only Customs duty but, any other tax, cess levied or duty on which imported goods attract. Learned Counsel for the petitioner also submits that this is a question of classification of the goods and therefore instead of filing the writ petition, the petitioner ought to have been approached the appellate authority against the said order.
7. I have considered the submissions. This Court is required to consider whether the order impugned in Exhibit P-1 is without jurisdiction and void ab initio. Sub-section (2) to Section 2 of the Customs Act, 1962 defines the assessment order which reads as under;
“assessment” means determination of the dutiability of any goods and the amount of duty, tax, cess or any other sum so payable, if any, under this Act or under the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as the Customs Tariff Act) or under any other law for the time being in force, with reference to-
(a) the tariff classification of such goods as determined in accordance with the provisions of the Customs Tariff Act;
(b) the value of such goods as determined in accordance with the provisions of this Act and the Customs Tariff Act;
(c) exemption or concession of duty, tax, cess or any other sum, consequent upon any notification issued therefor under this Act or under the Customs Tariff Act or under any other law for the time being in force;
(d) the quantity, weight, volume, measurement or other specifics where such duty, tax, cess or any other sum is leviable on the basis of the quantity, weight, volume, measurement or other specifics of such goods;
(e) the origin of such goods determined in accordance with the provisions of the Customs Tariff Act or the rules made thereunder, if the amount of duty, tax, cess or any other sum is affected by the origin of such goods;
(f) any other specific factor which affects the duty, tax, cess or any other sum payable on such goods, and includes provisional assessment, self-assessment, re-assessment and any assessment in which the duty assessed is
8. Sub-section (15) of Section 2 defines duty which means customs duty. Section 28 empowers the assessing authority to assess and recover the duties not levied, not paid, short levied or short paid or erroneously refunded. Section 28 therefore is not only in respect of duty which means customs duty but, it is in respect of duties which may be applicable on imported item/goods. Even otherwise, the assessment order is defined under Sub-section 2 of Section 2 of the Customs Act empowers the assessing authority to determine the dutiability of any goods and the amount of duty/tax, cess or any sum so payable under the Customs Act or Customs Tariff Act, 1975 (51 of 1975) or under any other law for the time being in force, with reference to exemption or concession of duty, tax, cess or any other sum, consequent upon any notification issued therefor under the said Act or under the Customs Tariff Act or under any other law for the time being in force.
9. The petitioner has claimed exemption from payment of IGST under the Notification No.02/2017-Integrated tax (Rate) dated 28.06.2017. Therefore, the competent authority is empowered to make assessment regarding claim of exemption from the IGST under Section 28 of the Act.
10. In the above view and circumstances of the case, I find no substance in the writ petition. This writ petition appears to be wholly misconceived, and it is hereby dismissed.
11. The petitioner may however have the scope to the remedy of appeal. If the petitioner files the appeal, the time period in prosecuting this writ petition shall be taken into account for condoning the delay in filing the appeal.
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