2024 (3) TMI 84 - AT - Customs

Amendment of bill of entries allowed for HSN Code correction under Section 149 Customs Act

M/s Ceramic Tableware Pvt. Ltd. Versus The Commissioner of Customs (Appeals) Customs Commissionerate Jodhpur Hqrs. at Jaipur, Jaipur

CESTAT New Delhi allowed appellant's application for amendment of bill of entries under Section 149 of Customs Act. The case involved mis-declaration of ... Rejection of application seeking amendment of the bill of entries u/s 149 - mis-declaration of the HSN Code due to clerical error - imported consignments of Calcium Phosphate - interest and penalty - HELD THAT:- From the fact that soon after detection on 26.11.2020, the appellant paid the differential duty along with interest and penalty on 4.12.2020 without any protest. From the nature of amendment sought by the appellant in Bills of Entry, the same is liable to be allowed since only a paper declaration was sought for amending the Customs Tariff Heading from 25 to 28. The observations made by the Delhi High Court in CC Vs. M.D. Overseas [2023 (9) TMI 1271 - DELHI HIGH COURT] are relevant in the present context on the applicability of Section 149 of the Act. Thus, it would well be considered as a mistake which has been rectified at the first available opportunity and therefore there is no error in allowing the application made by the appellant u/s 149 of the Act seeking amendment of the bill of entries. The amendment sought by the appellant in the facts of the present case is justified and therefore the impugned order is liable to be set aside. The Department is directed to amend the Bill of Entries by exercising power u/s 149 of the Customs Act and pass appropriate orders on the appellant depositing the requisite fee under Notification No. 36/2017-Customs (NT). The appeal is, accordingly allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether an application to amend Bills of Entry under Section 149 of the Customs Act, 1962 can be allowed where the mis-declaration of Customs Tariff Heading (CTH/HSN) was discovered during a departmental search and the importer admits the mis-declaration. 2. Whether Section 149 permits amendment of Bills of Entry after clearance for home consumption where the amendment is sought to correct tariff classification from one chapter to another, and what role 'documentary evidence which was in existence at the time the goods were cleared' plays. 3. Whether the commercial conduct of the importer (payment of differential duty, interest and penalty after detection and without protest) affects the availability of amendment under Section 149. 4. Whether an admission by a director during search that the mis-declaration was a 'clerical error' renders the mistake non-bonafide for the purpose of allowing amendment under Section 149 or Customs Manual guidance. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Amendment under Section 149 where mis-declaration discovered in search Legal framework: Section 149 authorises the proper officer, in his discretion, to authorise amendment of documents presented in the customs house; proviso restricts post-clearance amendment except on the basis of documentary evidence existing at the time of clearance. Customs Manual (Chapter-3, Para-7) allows rectification of bonafide mistakes after submission with approval of Deputy/Assistant Commissioner. Precedent treatment: High Court and Supreme Court decisions have held that Section 149 permits amendment even after goods are cleared, subject to the proviso. Relevant authorities recognise the proviso's documentary-evidence requirement as the operative safeguard for post-clearance amendments. Decisions emphasise that Section 149 read with procedural notifications provides the domain for such amendments and possible consequential reassessment. Interpretation and reasoning: The Court reasons that Section 149 vests discretionary power to amend post-clearance but conditions it on documentary evidence existing at clearance. The purpose of the proviso is to prevent after-the-fact self-serving alterations unless supported by contemporaneous documentary proof. The Tribunal finds that the present amendment (CTH 25 ? CTH 28) is a paper correction of classification and squarely falls within the scope of Section 149 when documentary evidence supports the classification existing at the time of import. Ratio vs. Obiter: Ratio - Section 149 authorises post-clearance amendment where documentary evidence existed at the time of clearance; such amendment can lead to reassessment under statutory provisions. Obiter - general observations about the interaction with procedural notifications and internal Manuals, insofar as they restate established statutory constraints. Conclusions: Amendment under Section 149 is permissible in principle despite detection via search, provided documentary evidence in existence at clearance supports the corrected classification. Issue 2 - Documentary evidence requirement and classification change between chapters Legal framework: Proviso to Section 149 and Para-7 of Customs Manual; Notification prescribing fee regime and permitted amendments. Precedent treatment: Courts have required documentary evidence to exist at time of clearance; they have allowed corrections of tariff headings where documentary material contemporaneous with import supports the corrected heading; distinctions drawn from cases denying relief where self-assessment relief/refund claims were at issue. Interpretation and reasoning: The Tribunal follows established authority that the documentary evidence requirement is the only substantive statutory constraint for post-clearance amendment. A mere change of classification from one chapter to another can be allowed if contemporaneous documents (e.g., technical specifications, supplier communications, composition details) validate the corrected classification as the state of affairs at import. The Tribunal distinguishes scenarios where an importer seeks a refund or a self-assessment groundlessly; here the amendment facilitates legitimate reassessment and availment of IGST credit subject to proof and fee payment. Ratio vs. Obiter: Ratio - Documentary evidence in existence at time of clearance is decisive; it suffices even for cross-chapter classification corrections when proven. Obiter - procedural elaboration on how departmental manuals or notifications interplay with Section 149 (administrative approval tiers, fee payment) where not determinative of statutory right. Conclusions: The documentary-evidence proviso does not preclude amendment of classification between chapters provided contemporaneous documentary support exists; the proper officer should allow amendment on production of such evidence and on payment of prescribed fees. Issue 3 - Effect of payment of differential duty, interest and penalty after detection Legal framework: Section 149 (amendment), Sections relating to assessment/reassessment and duty payment, and Notification prescribing amendment fees. Precedent treatment: Courts have treated payment of differential duty/penalty without protest as a factor supporting bona fides and as protective of revenue interest, permitting consequential amendment and reassessment. Interpretation and reasoning: The Tribunal gives weight to the undisputed fact that differential duty, interest and penalty were deposited soon after detection and without protest. This conduct demonstrates no attempt to evade revenue and ensures the revenue is not prejudiced. Therefore, refusal to allow amendment on the narrow ground that the mis-declaration was not voluntarily disclosed by the importer is unjustified when the revenue has been protected and documentary evidence supports the requested correction. Ratio vs. Obiter: Ratio - Payment of duty/interest/penalty and absence of protest are relevant factors favouring allowance of amendment under Section 149 when documentary evidence exists; they serve to protect revenue and justify discretionary relief. Obiter - comments on timing and online/offline challan reflection issues. Conclusions: The voluntary deposit of differential duty, interest and penalty without protest supports allowance of the Section 149 amendment and does not bar relief merely because the mis-declaration was revealed during search. Issue 4 - Admission of 'clerical error' during search and application of 'bonafide mistake' standard Legal framework: Customs Manual para on bonafide mistakes; Section 149 discretion; principle distinguishing bona fide clerical/innocent mistakes from mala fide evasion. Precedent treatment: Administrative guidance and judicial decisions require bonafide error to be bona fide in fact; however, an admission during search does not per se convert a rectifiable mistake into an unpermissible one if documentary evidence and payment protect revenue. Interpretation and reasoning: The Tribunal finds that an admission of clerical error by a director during search cannot alone constitute valid grounds to deny amendment under Section 149 where contemporaneous documentary evidence supports the corrected classification and revenue is protected by payment. The Customs Manual's reference to bonafide mistakes guides discretion but does not rigidly preclude amendment merely because disclosure followed detection rather than being suo-motu. Ratio vs. Obiter: Ratio - Admission during search does not automatically preclude Section 149 relief; the decisive tests remain documentary evidence at clearance and protection of revenue. Obiter - remarks clarifying that 'bonafide' in the Manual must be read with statutory proviso and relevant authorities. Conclusions: The 'clerical error' admission does not disqualify the applicant from amendment if statutory conditions are met; rejection solely on the basis that the mistake was not revealed suo-motu is improper. Final Disposition (operative conclusion) The Tribunal concludes that the amendment sought to the Bills of Entry under Section 149 is justified on the facts: documentary evidence supported the corrected classification, differential duty/interest/penalty were paid without protest thereby protecting revenue, and the statutory proviso to Section 149 is satisfied. The impugned refusal to allow amendment is set aside and the proper officer is directed to amend the Bills of Entry under Section 149 and pass consequential orders, subject to payment of prescribed amendment fees.