The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has stated that two or more bills of entry or shipping bills cannot be taken together and assessed. The bench viewed that the exporter cannot claim an exemption for all of the shipping bills after combining the products exported under several shipping bills and taking a sample.
The assessee, Disha Realcon Pvt Ltd, exported iron ore under a number of shipping bills. Following processing, shipments covered by two or more shipping bills were placed into the vessel’s same hatch without regard to the cargo’s quality. The assessee claimed exemption and failed to pay duty in those bills where the Fe content was less than 58%. However, other bills paid export duties.
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DRI sent out a show-cause notice, suggesting that the export tariff on exported iron ore fines be recalculated. The Commissioner ( Adjudication ) made the decisions through the contested order after the assessees were asked to provide justification regarding the corresponding Shipping Bills. Before the Tribunal, the assessee contested the Commissioner’s ( Adjudication ) ruling.
The assessee argued that under certain shipping bills, they had exported iron ore fines with a Fe content below 58% and under other shipping bills, they had exported iron ore fines with a Fe content above 58%. However, the Revenue argued that by dividing the cargo into multiple Shipping Bills and taking advantage of the exemption on some Shipping Bills, the assessee had avoided paying duty. Additionally, the dry weight basis must be used to establish the Fe concentration of the exported iron ore fines.
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The Tribunal noted that both the Commissioner (Adjudication) who issued the contested decision and the DRI who issued the SCN had a complete misunderstanding of the laws and believed they had the authority to reassess the items exported under two or more Shipping Bills together. No officer is given this authority by the Customs Act.
By combining the goods exported under one shipping bill with the goods exported under another, selecting a sample of the mixture, and testing it for iron content, it was found that if the exporter is entitled to the benefit of a notification in one shipping bill, that benefit cannot be taken away.
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According to the two-member bench consisting of President Dilip Gupta and Technical P. V. Subba Rao, two or more Bills of Entry or Shipping Bills cannot be taken together and reviewed.The Project Imports under the Project Import Regulations, 1986, are the only exception to the regulation.
While allowing the appeal, the bench added that “The fact that the goods under both Shipping Bills were loaded in the same vessel or even in the same hatchet of the vessel or exported to the same party would make no difference. It does not give the department the power to re-determine the duty. Conversely, if after mixing the goods exported under different Shipping Bills and drawing a sample, the Fe content falls below the threshold, the exporter cannot claim exemption for all the Shipping Bills. Each Shipping Bill must be assessed individually,”.
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