Customs Dept has No Power to Merge Shipping Bills u/s 50 and 51 for Duty Assessment: CESTAT Sets Aside ₹55 Crore Export Duty Demand [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has ruled that Customs authorities lack statutory authority under Sections 50 and 51 to jointly assess multiple Shipping Bills for the determination of export duty.

The appeals were filed by M/s Disha Realcon Pvt. Ltd. and M/s S.M. Ayat Niryat Pvt. Ltd., iron ore exporters, along with two individuals, against a common order passed by the Commissioner of Customs (Adjudication), New Delhi.

The Directorate of Revenue Intelligence (DRI) alleged that the appellants had adopted a modus operandi to evade export duty by splitting consignments of iron ore fines, some declared with Fe content below 58% (exempt) and others above 58% (dutiable), but loading them together in the same vessel.

The DRI argued that the combined Fe content of these mixed consignments exceeded 58%, and therefore, the exports were liable to duty. On this basis, a Show Cause Notice dated 3 January 2020 was issued proposing to reassess the exports on a combined basis. The Commissioner confirmed a total duty demand of ₹55.25 crore (₹52.44 crore against S.M. Niryat and ₹2.80 crore against Disha Realcon), along with equivalent penalties under Sections 114A and 114AA.

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Aggrieved, the appellants challenged the legality of clubbing multiple Shipping Bills for joint assessment and re-determination of export duty.

The appellants argued that the Customs Act does not authorise clubbing of Shipping Bills, as each represents an independent assessment. It was submitted that Section 50 mandates the exporter to “make entry” of goods for export through a distinct Shipping Bill, and Section 51 empowers the proper officer to grant clearance only after verifying the duty liability, if any, on that specific Shipping Bill.

Thus, once the Let Export Order (LEO) is given, the assessment is finalised for that bill alone. There is no statutory provision permitting reassessment by aggregating separate Shipping Bills merely because the goods were shipped on the same vessel or covered under a single Bill of Lading.

It was further argued that any reassessment or demand under Section 28 must pertain to the particular Shipping Bill where duty was short-paid, not through a collective computation of multiple transactions.

The Department contended that the exporters deliberately split high-grade and low-grade iron ore consignments to claim exemption on part of the cargo. Evidence from the jetty showed that both grades were mixed using JCBs before loading, defeating the distinction between Shipping Bills. It was submitted that since the blended cargo formed a single consignment, Customs was justified in computing the Fe content and export duty collectively.

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The Bench comprising Dilip Gupta (President) and P.V. Subba Rao (Technical Member) rejected the Department’s approach, holding that the Customs Act nowhere permits the assessment of multiple Shipping Bills together.

It was observed that each Shipping Bill is a self-contained export declaration and the fundamental unit of assessment. The Tribunal held that the Commissioner’s action amounted to reassessment beyond jurisdiction, as no officer is empowered to combine Shipping Bills even for practical convenience.

Even if goods were shipped in the same vessel or covered by a single Bill of Lading, each export transaction remains distinct under the Act. Accordingly, the entire ₹55.25 crore duty demand, penalties, and the confiscation orders were set aside.

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