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1. Introduction

1.1 Like any other taxation statue, the Customs Act contains detailed provisions for judicial review, for

resolution of disputes, by way of appeals and review. The various appellate authorities are Commissioner (Appeal), Revision Authority, Customs Excise and Service Tax Appellate Tribunal (CESTAT), High Court and the Supreme Court. Any appeal by the department, before any appellate authority, is filed only after following a procedure of review of orders as prescribed in the Customs Act. Beside the route of appeals, an alternative dispute resolution mechanism has also been provided by way of the settlement of cases by the Settlement Commission. These provisions are contained in Chapter XV and XIVA respectively of the Customs Act, 1962.

2. Appeal to Commissioner (Appeals):

2.1 The power of adjudication of cases is bestowed on all officers of the rank of Superintendent/Appraiser and above as per specified monetary limits and other criterion. Thus, the first stage of appeal against any decision or order passed under Customs Act, 1962, by any officer below the rank of Principal Commissioner or Commissioner of Customs lies with the Commissioner (Appeals), within 60 days from the date of the communication to him of such decision or order, in terms of Section 128 (appeal by any person aggrieved by such order) or Section 129 (D)(4) [Departments appeal on review of order], as the case may be, of the Customs Act, 1962.

2.2 The procedure of filing of appeal by Department against the order/decision of officers below the rank of Commissioner is that every such adjudication order is reviewed, for legality and propriety of such order, by the Commissioner of Customs, under Section 129D(2) of the said Act. If on review, the adjudication order/decision is not found to be legal and proper, the Commissioner may direct any officer subordinate, by an order, to file an appeal to Commissioner (Appeals). The said order shall be passed by the Commissioner within 3 months from the date of communication of adjudication order and in pursuance of such order, an appeal would be filed to Commissioner (Appeals) within a period of 1 month from the date of issue of said order by the Commissioner.

2.3 The limitation period for filing of appeal to Commissioner (Appeal) is 60 days from the date of communication of order being appealed against. However, Commissioner (Appeals) may allow a further period of thirty days for filing of appeal provided he is satisfied that appellant was prevented by sufficient cause from presenting the appeal within the period of 60 days.

2.4 The procedure for filing of appeal before Commissioner (Appeals) is that the appeal is required to be filed in a Form No. CA-1 [under Section 128 of the said Act] and Form CA-2 [under Section 129D(4) of the said Act], as prescribed under rule 3 and rule 4, respectively, of the Customs (Appeals) Rules, 1982. Once (Appeal) is filed, The Commissioner (Appeals) shall give opportunity to the appellant to be heard. Commissioner (Appeals), on being shown sufficient cause, can give adjournment from hearing upto 3 times. The Commissioner (Appeals), may allow any grounds of appeal not specified in the appeal filed, provided he is satisfied that omission thereof was not willful or unreasonable.

2.5 The Commissioner (Appeals), wherever possible, would hear and decide every appeal within a period of 6 months from the date of filing of appeal, shall pass an order as he thinks just and proper,-

(a) confirming, modifying or annulling the decision or order appealed against; or

(b) referring the matter back to the adjudicating authority with directions for fresh adjudication or decision, as the case may be, in the following cases, namely:

(i) where an order or decision has been passed without following the principles of natural justice; or

(ii) where no order or decision has been passed after re-assessment under section 17; or

(iii) where an order of refund under section 27 has been issued by crediting the amount to Fund without recording any finding on the evidence produced by the applicant.]

[Substituted by the Finance Act, 2018 (Act 13 of 2018), dt. 29-3-2018.]

PROVIDED that an order enhancing any penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order.

PROVIDED FURTHER that where the Commissioner (Appeals) is of opinion that any duty has not been levied or has been short-levied or erroneously refunded, no order requiring the appellant to pay any duty not levied, short-levied or erroneously refunded shall be passed unless the appellant is given notice within the time-limit specified in section 28 to show cause against the proposed order.

2.6 The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state

the points for determination, the decision thereon and the reasons for the decision. On the disposal of the appeal, the Commissioner (Appeals) shall communicate the order passed by him to the appellant, the adjudicating authority Principal Chief Commissioner of Customs or Chief Commissioner of Customs and the Principal Commissioner of Customs or Commissioner of Customs.

[The relevant provisions contained in Sections 128 and 128A of the Customs Act and the Customs (Appeals) Rules, 1982.]

3. Appeal to CESTAT:

3.1 The Customs Excise and Service Tax Appellate Tribunal (CESTAT) has been constituted by the Central Government under Section 129(1) of the said Act.

3.2 In terms of Sections 129A(1) (appeal by any person aggrieved by such decision or order) or Section 129D(4) [departments appeal on review of order of Commissioner of Customs, by the Committee of Chief Commissioner] of the said Act any person may file appeal to CESTAT, if aggrieved by:

(a) a decision or order passed by the Principal Commissioner of Customs or Commissioner of Customs as an adjudicating authority; or

(b) an order passed by the Commissioner (Appeals) under section 128A.

3.3 Appeal cannot be filed before CESTAT and the Appellate Tribunal shall not have jurisdiction to decide any appeal in respect of any order referred to in clause (b), if the matter relates to:

(i) import or export of goods as baggage;

(ii) import goods loaded in a conveyance for importation into India, but which are not unloaded, not landed or short landed at place of destination;

(iii) payment of drawback as provided in chapter X, and the rules made thereunder.

3.4 The CESTAT may refuse to admit an appeal in respect of an order where

(i) the value of goods that have been confiscated without option having been given to the owner of the goods to pay a fine in lieu of confiscation under section 125; or

(ii) in any disputed case, other than a case where the determination of any question having a relation to the rate of duty, value of goods for the purpose of assessment, difference in duty involved or the duty involved, is in issue or is one of the points in issue; or

(iii) the amount of fine or penalty determined by such order, does not exceed two lakh rupees.

3.5 In terms of Sections 129A(2), the Committee of Commissioners of Customs may, if it is of opinion that an order passed by the Commissioner (Appeals) under section 128A, is not legal or proper, direct the proper officer to appeal on its behalf to the Appellate Tribunal against such order. PROVIDED that where the Committee of Principal Commissioners of Customs or Commissioners of Customs differs in its opinion regarding the appeal against the order of the Commissioner (Appeals), it shall state the point or points on which it differs and make a reference to the jurisdictional Principal Chief Commissioner of Customs or Chief Commissioner of Customs who shall, after considering the facts of the order, if is of the opinion that the order passed by the Commissioner (Appeals) is not legal or proper, direct the proper officer to appeal to the Appellate Tribunal against such order.

3.6 The limitation period for filing of appeal to CESTAT is 3 months from the date of communication of order being appealed against. The Tribunal may admit appeal after the expiry of this period if it is satisfied that there was sufficient cause for not presenting it within the limitation period.

3.7 In accordance with Sections 129A, 129B and 129C of the Customs Act, 1962 read with the Customs (Appeals) Rules, 1982 and the CESTAT (Procedure) Rules, 1982, the procedure for filing of appeal before CESTAT and disposal thereof is as follows:

(a) The appeal is required to be filed in a Form No. CA 3 [Section 129A(1) of the said Act] and Form CA-5 [Section 129 D(4) of the said Act], prescribed under rule 6(1) and rule 7, respectively, of the Customs (Appeals) Rules, 1982.

(b) On receipt of notice of appeal the respondent may file a memorandum of cross objection within 45 days of receipt of notice [Section 129A(4) of the said Act]. The memorandum of cross examination is required to be filed in Form CA 4, prescribed under rule 6 (2) of the Customs (Appeals) Rules, 1982. In the memorandum of cross objections, the respondent can agitate against any part of the order appealed against and such cross objections are disposed of by the Tribunal as if it were an appeal. Rules 15 and 15A of the CESTAT (Procedure) Rules, 1982 allow filing of reply to such appeal within a month by the respondent, and rejoinder to the reply within a month by the appellant.

(c) The CESTAT shall give opportunity to the appellant to be heard, and on being shown sufficient cause, can give adjournment from hearing. In terms of proviso to Section 129B(1A) of the said Act, no such adjournment shall be granted more than three times to a party during hearing of the appeal. After hearing the case, CESTAT, pass such orders thereon as it thinks fit, confirming, annulling or modifying the decision or order appealed against or may refer / remand the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision.

(d) The CESTAT may, at any time within six months from the date of the order, amend its order to rectify any mistake apparent from the record that is brought to its notice by the Principal Commissioner of Customs or Commissioner of Customs or the other party to the appeal. PROVIDED that an amendment which has the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the other party shall not be made unless the Appellant Tribunal has given notice to him of its intention to do so and has allowed him a reasonable opportunity of being heard.

(e) A prescribed fee is required to be paid for filing of appeal or rectification of mistake (ROM) or for restoration of appeal. The fee prescribed at present is (i) Rs 1000, where amount of duty, interest and penalty is upto Rs 5 lakh; (ii) Rs 5000, where amount of duty, interest and penalty is between Rs 5 lakh to Rs 50 lakh; (iii) Rs 10000, where amount of duty, interest and penalty is more than Rs 50 lakh; (iv) Rs 500 for any other purposes, including ROM or restoration of appeal. However, no fee is payable in case of appeal or ROM or restoration of appeal application by department.

(f) The Appellate Tribunal, wherever possible, would hear and decide every appeal within a period of three years from the date of filing of appeal,

4. Review of orders passed by Commissioner of Customs and Commissioner (Appeals) and filing of appeal by Department:

4.1 The process of review of the order of Principal Commissioner of Customs or Commissioner of Customs and Commissioner of Customs (Appeals), by the Department is prescribed in Section 129 D(1) and Section 129A(2) of the Customs Act, respectively.

4.2 As prescribed in section 129D(1) of the Customs Act, 1962, the Committee of Principal Chief Commissioner of Customs or Chief Commissioner of Customs may call for and examine the records of any proceedings in which Principal Commissioner of Customs or Commissioner of Customs has passed any decision or order as an adjudicating authority, for satisfying itself as to the legality or propriety of any such decision or order. The Committee of Principal Chief Commissioners of Customs or Chief Commissioner of Customs, that consists of two, one of them being Jurisdictional Chief Commissioners, wherein, may direct, by an order, the Commissioner to file an appeal to the Appellate Tribunal. In case the Committee differs in its opinion as to the legality or propriety of the decision or order it shall make a reference to the Board, and the Board will examine such order, and if it is of the view that order is not legal and proper, may, by order, direct the concerned Commissioner to appeal to the Tribunal.

4.3 As prescribed in section 129D(2) of the Customs Act, 1962, the Principal Commissioner of Customs or Commissioner of Customs may call for and examine the record of any proceedings in which an adjudicating authority subordinate to him has passed any decision or order under Customs Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such authority or any officer of customs subordinate to him to apply to the Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Principal Commissioner of Customs or Commissioner of Customs in his order.

4.4 Every order under sub-section (1) or sub-section (2) has to be passed within three months from date of communication of the decision or order of the adjudicating authority; PROVIDED that the Board may, on sufficient cause being shown, extend the said period by another thirty days. An appeal would be filed by the adjudicating authority or any officer of customs authorized in this behalf makes an application to the Appellate Tribunal or the Commissioner (Appeals) within a period of one month from the date of communication of the order under the said sub-sections.

4.5 The Committee of Chief Commissioners is notified by the Board under Section 129A(1B) of the said Act vide Notification No. 39/2005-Cus.(NT), dated 13-5-2005.

4.6 In terms of Sections 129A(2), the Committee of Commissioners of Customs may, if it is of opinion that an order passed by the Commissioner (Appeals) under section 128A, is not legal or proper, direct the proper officer to appeal on its behalf to the Appellate Tribunal against such order. PROVIDED that where the Committee of Principal Commissioners of Customs or Commissioners of Customs differs in its opinion regarding the appeal against the order of the Commissioner (Appeals), it shall state the point or points on which it differs and make a reference to the jurisdictional Principal Chief Commissioner of Customs or Chief Commissioner of Customs who shall, after considering the facts of the order, if is of the opinion that the order passed by the Commissioner (Appeals) is not legal or proper, direct the proper officer to appeal to the Appellate Tribunal against such order.

4.7 The Committee of Commissioners is notified by the Board under Section 129A(2) of the said Act vide Notification No. 40/2005-Cus.(NT), dated 13-5-2005.

5. Revision Application:

5.1 The Central Government may, on the application of any person aggrieved by the order of Commissioner or Commissioner (Appeals), in cases of baggage, Drawback and short-landing/ not landing of goods, annul or modify such orders as prescribed under Section 129DD of the Customs Act, 1962. However, the Central Government may refuse to admit an application in respect of an order where the differential duty or fine or penalty involved determined by such order does not exceed Rs.5,000/-.

5.2 The filing of an application for Revision by Central Government need to be made within three months from the date of communication to the applicant of order against which the application is being made. The Central Government may allow a further period of three months, if it is satisfied that there was sufficient cause for not presenting it within the limitation period.

5.3 In terms of Sections 129A and 129DD of the Customs Act, 1962 and the Customs (Appeals) Rules, 1982 the Revision Application is required to be filed in a Form No. CA 8, prescribed under Rules 8A and 8B of the said Rules. The fee prescribed is

(a) Rs.200/-, where the amount of duty and interest demanded, fine or penalty levied is upto Rs.1 lakh;

(b) Rs.1,000/-, where the amount of duty and interest demanded, fine or penalty levied is more than Rs.1 lakh. However, no fee is to be paid in case Revision Application is filed by the Department.

6. Deposit of certain percentage of duty demanded and Penalty imposed before filing Appeal:

6.1 Under section 129 E, the Tribunal or Commissioner (Appeals) as the case may be shall not entertain any appeal:

(i) under sub-section (1) of Section 128, unless the appellant has deposited seven and a half percent of the duty demanded or penalty imposed or both, in dispute, in pursuance of a decision or an order passed by an officer of Customs lower in rank than Principal Commissioner of Customs or Commissioner of Customs;

(ii) against the decision or order referred to in clause (a) of sub section(1) of Section 129 A, unless the appellant has deposited seven and a half percent of the duty demanded or penalty imposed or both, in dispute, in pursuance of the decision or order appealed against;

(iii) against the decision or order referred to in clause (b) of sub section (1) of Section 129A, unless the appellant has deposited ten percent of the duty demanded or penalty imposed or both, in dispute, in pursuance to the decision or order appealed against.

PROVIDED that the amount required to be deposited does not exceed Rs.10 crores.

PROVIDED further that the provisions of this section shall not apply to stay applications and appeals pending before any appellate authority prior to the commencement of Finance ( No2 ) Act , 2014.

6.2 Section 129EE prescribes that if the pre-deposit made by the party under Section 129E is required

to be refunded consequent upon the order of the Appellate Authority, the interest shall be paid to the appellant at such rate, not below five percent and not exceeding thirty six percent per annum as is for the time being fixed by the Central Government, by notification in the Official Gazette, on such amount from the date of payment of amount till, the date of refund of such amount.

7. Appeal to High Court:

7.1 Against any order passed in appeal by the Appellate Tribunal (CESTAT), on or after 1-7-2003, which is not relating to determination of rate of duty or value of goods for the purposes of assessment, appeal lies to the High Court if the High Court is satisfied that the case involves a substantial question of law. However, where the issue involved relates to determination of rate of duty or value for the purpose of assessment, [and order passed by the Appellate Tribunal before the establishment of the National Tax Tribunal] appeal lies to Supreme Court.

7.2 The limitation period for filing of appeal to High Court is one hundred and eighty days from the date when the order being appealed against was received by the Principal Commissioner of Customs or Commissioner of Customs or the other party. The High Court may admit appeal after the expiry of this period if it is satisfied that there was sufficient cause for not presenting it within the limitation period.

7.3 If appeal is filed by the other party, it needs to be accompanied by a fee of Rs. 200.

7.4 Where High Court is satisfied that question of law is involved, it shall formulated the question of law. The High Court may hear any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. The High Court may determine any issue that has not been determined by the Appellate Tribunal or has been wrongly determined by the Appellate Tribunal.

7.5 Sub-section (7) of section 130 and section 130C (1) and (2) provides that, when an appeal has been filed before the High Court, it shall be heard by a bench of not less than two Judges of the High Court, and shall be decided in accordance with the opinion of such Judges or of the majority, if any, of such Judges. Further, subsection (8) of the section provides, where there is no such majority, the Judges shall state the point of law upon which they differ and the case shall, then, be heard upon that point only by one or more of the other Judges of the High Court and such point shall be decided according to the opinion of the majority of the Judges who have heard the case including those who first heard it.

7.6 The Code of Civil procedure, 1908 applies to the Appeal so filed to the High Court except as otherwise provided in the said Act.

7.7 In respect of order passed by CESTAT prior to 1-7-2003, Section 130A of the Customs Act, 1962 provides that within 180 days of receipt of order of Tribunal passed under Section 129B of the said Act, a person could have filed an application if the order of the Tribunal does not relate to determination of any question having relation to the rate of duty of Customs or the valuation of goods for purposes of assessment.

[Refer Circular No. 935/25/2010-CX, dated 21-9-2010]

8. Appeal to Supreme Court:

8.1 Under Section 130E of the Customs Act, 1962 an appeal lies to the Supreme Court from:

(a) Any judgment of the High Court delivered

(i) in an appeal made under Section 130; or

(ii) a reference made under section 130 by the Appellate Tribunal before 1-7-2003;

(iii) on a reference made under section 130A, provided the High Court certifies, on its own motion or on an oral application made by the party aggrieved, to be a fit case for appeal to Supreme Court; or

(b) any order passed [before the establishment of the National Tax Tribunal] by the Appellate Authority relating, among other things, to the determination of any question having a relation to the rate of duty of Customs or to the value of goods for purposes of assessment.

8.2 The time limit for filing civil appeal before the Supreme Court is 60 days from the date of receipt of order.

8.3 Normally no application is made by the aggrieved party before the High Court, to certify that case is fit for filing of appeal before the Supreme Court. Therefore in such cases, the aggrieved party can agitate the order / judgment of the High Court before the Supreme Court by way of filing a Special Leave Petition under Article 136 of the Constitution of India. The limitation for filing of SLP is 90 days from the date of the High Court’s order. The time taken by the Court from the date of filing of application for certified copy of the order till the copy is ready for delivery is excluded from the computation of the period of limitation.

8.4 The proposal for filing of SLP and Civil Appeal are examined and processed in the Board, on receipt of proposals from field formations duly approved by the Chief Commissioner.

[Refer Circular No. 935/25/2010-CX, dated 21-9-2010]

9. Disputes between Central Government Department and PSU/ other Government Departments:

9.1 In cases where disputes arise between two Central Government Departments or a Government Department and Public Sector Undertaking, there is no requirement of obtaining approval of the Committee on Disputes for pursuing litigations. Field formations may pursue their appeals in the respective Tribunals / Courts.

[Refer Instruction F.No.390/R/262/09-JC, dated 24-3-2011]

10. Monetary limits for filing appeals to CESTAT, High Courts and Supreme Court:

10.1 In exercise of the powers conferred by Section 35R of the Central Excise Act, 1944 made applicable to Service Tax vide Section 83 of the Finance Act, 1994 and Section 131BA of the Customs Act, 1962 and in partial modification of earlier Instruction dated 17.08.2011 from F No 390/Misc/163/2010-JC and in accordance with the National Litigation Policy that is aimed at reducing Government litigation and also expedite the dispute resolution process, the Board has fixed the following monetary limits as given below in Table 31.1, which appeal shall not be filed in the Tribunal, High Court and the Supreme Court in respect of Customs cases:

Tabel 31.1: Monetary limits for filing appeals to CESTAT, High Courts and Supreme Court

S. No. Appellate Form Monetary Limit
1 CESTAT Rs. 10,00,000/-
2 High Court Rs. 15,00,000/-
3 Supreme Court Rs. 25,00,000/-

For ascertaining whether a matter would be covered within or without the aforementioned limits, the determinative element would be duty/ tax under dispute. To illustrate it further a case involving duty upto Rs. 10 lakhs whether with penalty and interest or otherwise, as the case may be, no appeal shall be filed in the Tribunal. However, where the imposition of penalty is the subject matter of dispute and the said penalty exceeds the limit prescribed, then the matter could be litigate further. Similarly, where the subject matter of dispute is the demand of interest and the amount of interest exceeds the prescribed limit, then the matter may require further litigation.

However, adverse judgments relating to the following should be contested irrespective of the amount involved:

(a) Where the constitutional validity of the provisions of an Act or Rule is under challenge.

(b) Where notification/instruction/order or Circular has been held illegal or ultra vires.

(c) Classification and refunds issues which are of legal and/or recurring nature.

[Refer Instruction F No. 390/Misc/163/2010-JC, dated 17-12-2015 and F No. 390/Misc/116/2017-JC, dated 04-4-2018]

10.2 In such cases wherever it is decided not to file appeal, such cases shall not have any precedent value. In such cases, it should specifically be record that “even though the decision is not acceptable, appeal is not being filed as the amount involved is less than the monetary limit prescribed by the Board.”. Further, in such cases, there will be no presumption that the Department has acquiesced in the decision on the disputed issues in the case of same assessee or in case of any other assessees, if the amount involved exceeds the monetary limits.

[Refer Instruction F No. 390/170/92-JC, dated 13-1-1993 and F.No. 390/Misc./163/2010-JC, dated 20-10-2010]

11. Settlement of Cases/ Settlement Commission:

11.1 Chapter XIV-A of Customs Act, 1962 provides an alternative channel for resolution of dispute for assessees without prolonged litigation in adjudication/appeals/revisions etc. by constituting “Settlement Commission” under section 32 of the Central Excise Act 1944 (1 of 1944). Presently, four Benches of the Settlement Commission function at Delhi, Mumbai, Chennai and Kolkata. Provisions relating to Settlement Commission are contained in Sections 127A to 127N of the Customs Act, 1962 In terms of Section 127B of the Customs Act, 1962, any importer, exporter or any other person, may file an application before the Settlement Commission to have the case settled, before adjudication of case. The application needs to be in such manner as may be specified by rules, and containing a full and true disclosure of his duty liability which has not been disclosed before the proper officer, the manner in which such liability has been incurred, the additional amount of customs duty accepted to be payable by him or such other particulars like admission of short levy on account of misclassification, undervaluation or inapplicability of exemption notification. It is also specified that no application can be made unless the appellant has filed a Bill of Entry, or a Shipping Bill, or a bill of export, or made a baggage declaration, or a label or declaration imported or exported through post or courier and in relation to such document or documents, a Show Cause Notice has been issued to him by the Proper Officer. Provided the additional amount of duty accepted by the applicant in his application exceeds Rs.3 lakhs. Provided further the applicant has paid the additional amount of customs duty accepted by him along with interest due under section 28AA. Provided further that no application shall be entertained by the Settlement Commission in cases which are pending in the Appellate Tribunal or in any Court. Similarly, the matters relating to interpretation of classification of the goods under the Customs Tariff Act, 1975, cannot be applied before the Commission. Also no application shall be made in relation to goods to which Section 123 of the Act applies or to goods in relation to which any offence under the Narcotics Drugs and Psychotropic Substances Act, 1985 has been committed.

11.2 The application made under sub-section (1) for settlement of cases shall be accompanied by fees specified by rules and an application once made under sub-section (1) shall not be allowed to be withdrawn by the applicant.

11.3 Sub-section (5) of section 127B prescribes that any person other than an applicant referred to in sub-section (1), may also make an application to the Settlement Commission in respect of a show cause notice issued to him in a case relating to the applicant which has been settled or is pending before the Settlement Commission and such notice is pending before an adjudicating authority.

[Inserted by Finance Act, 2017 (7 of 2017), dt. 31-3-2017.]

11.4 The procedure prescribed for the Settlement Commissions essentially requires examination of the application for its acceptability, payment of additional duty admitted by the applicant, calling and examination of records from jurisdictional the Commissioner of Customs or Principal Additional Director General of Revenue Intelligence or Additional Director General of Revenue Intelligence, getting further enquiries/investigations caused from Commissioner of Customs or Commissioner (Investigation) attached to Settlement Commission, giving opportunity for detailed submission to the applicant and passing order by the Commission. 1[The settlement Commission may at any time within three months from the date of passing of the order under sub-section (5), may amend such order to rectify any error apparent on the face of record, either suo motu or when such error is brought to its notice by the jurisdictional Principal Commissioner of Customs or Commissioner of Customs of Customs or the applicant, PROVIDED that no amendment which has the effect of enhancing the liability of the applicant shall be made without given notice for such intention to the applicant and the jurisdictional Principal Commissioner of Customs or Commissioner of Customs of Customs and given them a reasonable opportunity of being heard.

[Inserted by Finance Act, 2017 (7 of 2017), dt. 31-3-2017.]

11.5 The amount of settlement ordered by the Settlement Commission, shall not be less than the duty liability admitted by the applicant under section 127B while filing for settlement application. Where any duty, interest, fine and penalty payable in pursuance of an order under, is not paid by the applicant within thirty days of receipt of the order of Settlement Commission, such unpaid amount along with interest shall be recoverable in accordance with the provision of Section 142 of the Customs Act, 1962.

11.6 Section 127D of the Customs Act, 1962 prescribes that, where, during the pendency of any proceedings before it, the Settlement Commission is of the opinion that for the purpose of protecting the interests of the revenue it is necessary so to do, it may, by order, attach provisionally any property belonging to the applicant in such manner as prescribed by the rules.

11.7 The Settlement Commission have all the powers which are vested in an officer of the Customs under the Act or the rules made thereunder. Also, where, an application made has been allowed to be proceeded with under section 127C, the Settlement Commission shall, until an order is passed have, exclusive jurisdiction to exercise the powers and perform the functions of any officer of Customs or Central Excise Officer under the said Acts.

11.8 Any proceedings before the Settlement Commission shall be deemed to be a judicial proceeding and every order passed by the Settlement Commission under Section 127J of the Customs Act, 1962 is conclusive in respect of the matters stated therein and no matter covered by such order, save as otherwise provided in chapter XIV-A, be reopened in any proceeding under the Customs Act, 1962 or under any other law for the time being in force. The Settlement Commission can consider immunity from prosecution proceedings if the applicant cooperates with the Commission in the proceedings before it and makes full and true disclosure of his duty liability. Even grant of immunity, whole or part, from imposition of penalty, fine and interest may also be considered.

[Refer Circulars No. 935/25/2010-CX, dated 21-9-2010, No. 27/27/94-CX, dated 2-3-1994, No.156/67/95-CX, dated 17-11-1995, No.515/11/2000-CX, dated 18-2-2000 and No.578/15/2001-CX, dated 20-6-2001 and Instructions F.No. 390/Misc./163/2010-JC, dated 20-10-2010 and F.No.390/170/92-JC, dated 13-1-1993]

12. Customs Authority for advance Rulings:

12.1 A scheme of advance rulings was incorporated in Chapter V-B of the Customs Act 1962 by the Finance Act of 1999 for issue of binding rulings in advance, on customs matters. Vide section 28E, the scheme is intended to provide certainty to intending investors. Statutory changes have been brought out to expand the ambit of authority over a period of time.

12.2 Section 28E states that, “advance ruling” means a written decision on any of the questions referred to in section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation;

12.3 Customs Authority for Advance Ruling means the Customs Authority for Advance Rulings appointed by the Board under section 28EA who shall be of the rank of Principal Commissioner of Customs or Commissioner of Customs.

12.4 Section 28F prescribes that there shall be Authority for advance rulings. – constituted under section 245-O of the Income-tax Act, 1961 and that shall be the Appellate Authority for deciding appeal under this Chapter and the said Appellate Authority shall exercise the jurisdiction, powers and authority conferred on it by or under this Act. Provided that the Member from the Indian Revenue Service (Customs and Central Excise), who is qualified to be a Member of the Board, shall be the revenue Member of the Appellate Authority for the purposes of this Act.

12.5 Under the scheme section 28H states the procedure for application:

(1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and in such manner as may be prescribed, stating the question on which the advance ruling is sought.

(2) The question on which the advance ruling is sought shall be in respect of, –

(a) classification of goods under the Customs Tariff Act, 1975 (51 of 1975);

(b) applicability of a notification issued under sub-section (1) of section 25, having a bearing on the rate of duty;

(c) the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act.

(d) applicability of notifications issued in respect of tax or duties under this Act or the Customs Tariff Act, 1975 or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of customs leviable under this Act or the Customs Tariff Act;

(e) determination of origin of the goods in terms of the rules notified under the Customs Tariff Act, 1975 (51 of 1975) and matters relating thereto.

(f) any other matter as the Central Government may, by notification, specify.

(3) The application shall be made in quadruplicate and be accompanied by a fee of ten thousand rupees.

(4) An applicant may withdraw his application within thirty days from the date of the application.

(5) The applicant may be represented by any person resident in India who is authorised in this behalf.

12.6 As prescribed in section 28I, on receipt of an application, the Authority shall call for relevant records, examine the application and the records called for, and by order, either allow or reject the application. PROVIDED that the Authority shall not allow the application where the question raised in the application is already pending in the applicant’s case before any officer of customs, the Appellate Tribunal or any Court or the same as in a matter already decided by the Appellate Tribunal or any Court. Provided further that no application shall be rejected under this sub-section unless an opportunity has been given to the applicant of being heard and that where the application is rejected, reasons for such rejection shall be given in the order.

12.7 Where an application is allowed under sub-section (2), the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the Authority, pronounce its advance ruling on the question specified in the application. On a request received from the applicant, the Authority shall, before pronouncing its advance ruling, provide an opportunity to the applicant of being heard, either in person or through a duly authorised representative.

12.8 The Authority shall pronounce its advance ruling in writing within three months of the receipt of application

12.9 Section 28J states the Applicability of advance ruling.

(1) The advance ruling pronounced by the Authority under section 28-I shall be binding only –

(a) on the applicant who had sought it;

(b) in respect of any matter referred to in sub-section (2) of section 28H;

(c) on the Principal Commissioner of Customs or Commissioner of Customs, and the customs authorities subordinate to him, in respect of the applicant.

(2) The advance ruling referred to in sub-section (1) shall be binding as aforesaid unless there is a change in law or facts on the basis of which the advance ruling has been pronounced.

12.10 Section 28K states that Advance ruling to be void in certain circumstances

(1) Where the Authority finds, on a representation made to it by the Principal Commissioner of Customs or Commissioner of Customs or otherwise, that an advance ruling pronounced by it under sub-section (6) of section 28-I has been obtained by the applicant by fraud or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act shall apply to the applicant as if such advance ruling had never been made.

(2) A copy of the order made under sub-section (1) shall be sent to the applicant and the Principal Commissioner of Customs or Commissioner of Customs.

12.11 Section 28KA provides for Appeal in cases of Advance Rulings, which states that –

(1) Any officer authorised by the Board, by notification, or the applicant may file an appeal to the Appellate Authority against any ruling or order passed by the Authority, within sixty days from the date of the communication of such ruling or order, in such form and manner as may be prescribed:

Provided that where the Appellate Authority is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the period so specified, it may allow a further period of thirty days for filing such appeal.

(2) The provisions of sections 28-I and 28J shall, mutatis mutandis, apply to the appeal under this section.

12.12 Section 28L of the Customs Act, 1962 defines the Powers of Authority or Appellate Authority –

(1) The Authority or Appellate Authority shall, for the purpose of exercising its powers regarding discovery and inspection, enforcing the attendance of any person and examining him on oath, issuing commissions and compelling production of books of account and other records, have all the powers of a civil court under the Code of Civil Procedure, 1908 (5 of 1908).

(2) The Authority or Appellate Authority shall be deemed to be a civil court for the purposes of section 195, but not for the purposes of Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974), and every proceeding before the Authority or Appellate Authority shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860).

[Substituted/ inserted by Finance Act, 2017 (Act 7 of 2017) dt. 31-3-2017; Finance Act, 2018 (Act 13 of 2018) dt. 29-3-2018.]

Source – Custom Duty Manual 2023

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