The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no officer of Customs including the DRI officers and the Commissioner of Customs has any power under the law to assess two or more Shipping Bills together or determine the Fe content or any other parameter combining goods covered by two or more Shipping Bills, even if they are loaded in the same vessel.
The bench of Justice Dilip Gupta (President) and P. V. Subba Rao (Technical Member) has observed that each Shipping Bill or Bill of Entry has to be assessed and the Customs Act does not provide for assessing two or more Shipping Bills together. Consequently, the classification, valuation or determination of any other parameter relevant to assessment also has to be for each Shipping Bill or Bill of Entry.
The bench noted that the Additional Director General of DRI who had issued the SCN and the Commissioner (Adjudication) who issued the impugned order completely mis-understood the provisions and assumed that they had the power to re-assess the goods exported under two or more Shipping Bills together. Nothing in the Customs Act confers such power on any officer. The order deserves to be set aside on this ground alone.
In the SCN, DRI proposed re-determination of the export duty on iron ore fines exported by the Disha Realcon and SM Niryat through several Shipping Bills filed in custom houses falling under the jurisdictions of Commissioner of Customs, Bhubaneshwar and the Commissioner of Customs, Kolkata, recovering the differential export duty and imposing penalties.
The appellants were asked to show cause to the two Commissioners in respect of the respective Shipping Bills. Notifications dated 20.3.2020 and 31.3.2022 appointed the Commissioner (Adjudication) New Delhi as the common adjudicating authority who decided the proposals in the SCN through the order.
The appellant exporters had exported iron ore fines under various Shipping Bills and after the Shipping Bills were processed and after LEO were given by the Customs, consignments covered by two or more Shipping Bills were loaded in the same hatch (hold of Vessel) of the Vessel without any distinction as to the quality of cargo and all the fines were exported. In those Shipping Bills, where the Fe content was below 58%, the appellant exporters had claimed exemption and did not pay duty but paid export duty in other Shipping Bills.
DRI felt that the appellant exporters had evaded duty by splitting the consignment into different Shipping Bills and availing the benefit of exemption on some Shipping Bills.
DRI also felt that the Fe content of the exported iron ore fines must be determined on dry weight basis and not on wet basis as was done by the appellant. For instance, if 100 kg of wet iron ore fines has, say, 10 kg moisture and 57 kg iron, the Fe content on wet basis shall be 57/100×100=57% and the export consignment would be exempted from duty. However if it is calculated on a dry basis, it shall be 57/90×100 = 63.33% and export duty would have to be paid.
The tribunal held that the Bill of Lading is the document of title issued by the Master of the vessel or the shipping line to the exporter and the fact that a single Bill of Lading is issued in respect of two or more Shipping Bills does not confer any right on any officer of customs to assess two or more Shipping Bills together or to demand consequential differential duty.
The tribunal held that order passed by the Commissioner cannot, therefore, be sustained and needs to be set aside.
Case Details
Case Title: M/S Disha Realcon Pvt Ltd Versus Commissioner Of Customs-Adjudication
Case No.: Customs Appeal No. 54710 Of 2023
Date: 07/02/2025
Counsel For Appellant: Alok Aggarwal
Counsel For Respondent: S.K. Rahman
