S.K. Brothers Vs Commissioner of Customs (CESTAT Chandigarh)
Summary: The Chandigarh Bench of CESTAT allowed five appeals filed by S.K. Brothers, Sanjeevani Foods Pvt. Ltd. and TLG Overseas against orders confirming customs duty, interest, penalties and redemption fines concerning exports of rice declared as parboiled rice under CTH 10063010. Samples drawn from the export consignments were sent to CRCL, New Delhi, and the test reports stated that the samples exhibited characteristics of non-parboiled rice, leading the Department to propose classification under CTH 10063090 and levy of 20% export duty. The Department alleged mis-declaration and initiated proceedings under Section 28(4) of the Customs Act, 1962.
The appellants contended that the goods had been allowed to be exported provisionally after execution of bonds under Section 18 of the Customs Act, 1962 and that the provisional assessments had never been finalized. They argued that, under the Customs (Finalization of Provisional Assessment) Regulations, 2018, the proper officer was required to finalize the assessment within two months from receipt of the test reports. Consequently, a Section 28 demand issued before finalization was premature. The Department disputed this position, maintaining that the matter involved reassessment under Section 17 rather than provisional assessment under Section 18.
CESTAT examined the bonds executed by the appellants and found that their express terms demonstrated that they had been furnished under Section 18 and that the exporters had undertaken to pay the duty finally assessed if the test reports were adverse. The Tribunal therefore rejected the Department’s contention that the matter involved reassessment under Section 17. It held that once provisional assessment had been made, the assessment was required to be finalized in accordance with the 2018 Regulations before recovery proceedings under Section 28 could be initiated.
