2025 (6) TMI 1604 - AT - Customs

Revised tariff notification cannot apply retrospectively to imports cleared before official publication or website upload

Kotak Mahindra Bank Ltd. Versus The Commissioner of Customs, Air Cargo Complex, Bengaluru

The Tribunal held that a revised tariff value notification dated 26.04.2013 could not be applied retrospectively to imports cleared on the same date when ... Valuation of imported goods - whether the revised tariff value could be applied to the imports against Bill of Entry No. 9967123 dated 26.04.2013 and No.50/2013-Customs (N.T) dated 26.04.2013 which was not uploaded on the website and brought on public domain by Gazette notification on the said date? - HELD THAT:- The said issue is no more res integra and addressed by the Hyderabad Bench of this Tribunal in Bank of Nova Scotia’s case [2024 (11) TMI 1468 - CESTAT HYDERABAD], wherein it is observed that 'Moreover, this is a case of RMS clearance and self-assessment where the system itself would have applied revised tariff Value, which admittedly was not done in the present case. In fact, the revised Tariff rate was available in system with effect from 01.06.2013 and that is why the present appellant finally had to pay revised rate for import on and after 01.06.2013. Accordingly, in view of the settled law position cited supra, there is no merit in Department's insistence on demanding duty as per the revised tariff rate in respect of these 3 Bill of Entries.' The appellant did not contest the amount of Rs.12,807/- being insignificant. Consequently, the impugned order is modified to the extent of setting aside the duty of Rs.7,74,560/- with interest and penalty. Conclusion - The revised tariff value notification dated 26.04.2013 was not effective on the date of import clearance and hence could not be applied for duty assessment on the Bill of Entry dated 26.04.2013. Appeal allowed in part. ISSUES PRESENTED AND CONSIDERED 1. Whether a revised tariff value notification not published or otherwise brought to public notice (e.g., not uploaded on official website or gazetted) on the date of filing of the Bill of Entry can be applied retrospectively to assess customs duty on imports. 2. Whether the use of transaction value (ad valorem) in assessment, when a tariff value notification effective on the date of filing existed but was not made available to importers via official publication/website, permits post-facto application of the revised tariff value resulting in demand for differential duty, interest and penalty. 3. Whether a demand for differential duty, interest and penalty under the Customs Act can be sustained where the revised tariff value was not available in the public domain or the departmental system at the time of clearance/self-assessment (RMS). ISSUE-WISE DETAILED ANALYSIS Issue 1 - Effectiveness of tariff value notifications: Legal framework Legal framework: Notifications under the Customs valuation regime take effect in accordance with their terms and as governed by principles of public notice and statutory publication; tariff values fix assessable value for specified goods when in force on the date of filing of a Bill of Entry. Administrative publication (gazette, official website, offer for sale of notification/gazette or comparable means) is a necessary precondition for a notification to be effective as against importers. Precedent Treatment: The Tribunal relied on its own prior decision (Hyderabad Bench) applying settled law that a notification is effective from the date it is brought to public notice (publication/gazette/official website/offer for sale), absent explicit statutory language to the contrary in the notification itself. Interpretation and reasoning: The Court reasoned that where a revised tariff value notification was not uploaded on the CBEC website nor gazetted on the date of filing of the relevant Bills of Entry, the revised tariff value could not be treated as effective against importers who filed their Bills of Entry before such publication. The availability of the revised value only after the date of filing, or only within the departmental system at a later date, cannot retrospectively alter the assessable value for earlier filings. Ratio vs. Obiter: Ratio - A tariff value notification not published or otherwise brought to public notice on the date of filing of the Bill of Entry is not effective for determining assessable value for that import; thus the revised tariff value cannot be applied to imports cleared prior to such publication. Conclusions: The Tribunal concluded that the revised tariff value could not be applied to the import transactions in question because the notification implementing the revised rate was not in the public domain on the relevant dates of filing. Issue 2 - RMS/self-assessment, availability in departmental system, and consequences for assessment Legal framework: The Customs regime recognizes RMS clearance and self-assessment mechanisms where importers declare value and the system applies notifications and tariff values available at the time of filing/clearance. Assessments depend on what was effectively in force and brought to the notice of the trade at that time. Precedent Treatment: The Tribunal followed the principle that, in RMS/self-assessment contexts, a system will apply only those tariff values that are in force and available in the system on the date of filing; if a revised rate is not present in the system until a later date, it cannot be retrospectively enforced for earlier filings. Interpretation and reasoning: The Tribunal observed that the revised tariff value was not applied by the system for the Bills of Entry in question and that the revised tariff rate became effectively available in the system only from a later date (cited as 01.06.2013 in analogous precedent). Because the RMS/self-assessment process did not (and could not) implement a tariff notification that had not been publicly notified or uploaded, the Department's insistence on demanding duty as per the revised rate for those entries lacked warrant. Ratio vs. Obiter: Ratio - Where RMS/self-assessment clearance occurred and the departmental system did not contain the revised tariff value because it was not made available/publicly notified at that time, the Department cannot demand differential duty based on a subsequently published tariff notification for those prior entries. Conclusions: The Tribunal held there was no merit in the Department's demand for duty based on the revised tariff rate for the relevant Bills of Entry, given the lack of public availability and absence of system application of the revised rate at the time of filing. Issue 3 - Validity of demand for differential duty, interest and penalty where revised tariff value was not publicly available Legal framework: Recovery of differential customs duty and imposition of interest and penalty arises only where assessable value has been improperly declared or notifications in force on the date of filing justified reassessment. Penalties under Section 114A (and interest) presuppose a valid demand based on applicable law and notice to the importer. Precedent Treatment: The Tribunal applied prior authority holding that demands grounded on notifications not brought to public notice are unsustainable; accordingly, consequential penalties and interest predicated on such demands cannot be sustained. Interpretation and reasoning: Because the revised tariff value notification was not in the public domain on the dates of filing, the Tribunal found the foundational premise for the demand absent. Consequently, the appropriations of duty and interest and the imposition of penalty could not be maintained to the extent they related to the disallowed application of the revised tariff value. The Tribunal noted the appellant's concession on a nominal amount and adjusted relief accordingly. Ratio vs. Obiter: Ratio - A demand for differential duty, interest and penalty premised on a tariff notification that was not publicly available on the date of filing is not sustainable; such demands and penalties must be set aside to the extent premised on the unavailable notification. Conclusions: The Tribunal set aside the substantive demand for differential duty, the related interest and the penalty insofar as they depended on application of the revised tariff value not in the public domain on the relevant dates; a nominal concession by the appellant on an insignificant amount was accepted and the appeal was allowed in part to that extent. Cross-reference See Issues 1-3 above: the conclusions on effectiveness of notifications, RMS/self-assessment application, and unsustainability of consequent demands, interest and penalties are interdependent and collectively form the operative reasoning for modifying the impugned order.