Kerala High Court Denies Amendment to Bill of Entry Following Section 28 Proceedings for Incorrect IGST Exemption
Overview of the Case
The Kerala High Court delivered a significant ruling in AL Kabeer Exporters Vs Deputy Commissioner of Customs (Imports), determining that an importer cannot seek amendments to the bill of entry after proceedings under Section 28 of the Customs Act have been initiated. The case centered around the importer's misclassification of semi-dried dates as fresh dates to wrongly claim IGST exemption benefits.
Background and Factual Matrix
Business Operations and Import Transaction
The petitioner operated as a partnership firm under the business name 'Al Kabeer Exporters' and was duly registered under multiple tax legislations including the Kerala Goods and Services Tax Act, 2017, Central Goods and Services Tax Act, and the Integrated Goods and Services Tax Act 2017. The firm specialized in importing dates and various food products.
On 08.05.2020, the importer filed Bill of Entry No.7617965 at Cochin Sea Port for importing various grades of semi-dried dates. While the bill of entry correctly classified the goods as semi-dried dates under CTH08041020, the importer incorrectly claimed IGST exemption meant exclusively for fresh dates. Consequently, customs clearance was granted after collecting customs duty at 20% plus Social Welfare Surcharge at 10%, but with IGST at nil rate.
Detection During Post-Clearance Audit
Subsequently, during post-clearance verification of the aforementioned bill of entry, customs authorities discovered that the IGST exemption was improperly claimed. The semi-dried dates declared in the import documents did not qualify for exemption and were actually subject to IGST at 12% according to notification No. 1/2017 dated 28.06.2017.
Initiation of Proceedings
Based on these findings, the customs department issued a show cause notice dated 06.01.2022 to the importer, proposing to commence proceedings under Section 28 of the Customs Act, 1962 and demanding interest under Section 28AA of the Customs Act 1962.
The importer failed to respond to the show cause notice and did not attend personal hearings scheduled on 14.02.2022, 21.03.2022, 31.03.2022, and 22.04.2022. As a result, an order was issued on 11.05.2022 confirming the demand.
Similar Case in Parallel Proceedings
A comparable situation arose in WP(C) No. 38951/2024, where the same importer imported semi-dried dates through Bill of Entry No.7174298 dated 21.01.2022 and similarly claimed exemption applicable to fresh dates. The importer obtained clearance without paying IGST at 12%.
Post-clearance audit revealed this discrepancy, leading to a notice dated 28.12.2022 directing payment of short-levied duty amounting to Rs.2,32,988/-. A show cause notice dated 06.02.2022 followed, requiring the importer to explain why the short levy amount plus interest under Section 28AA should not be demanded.
During hearings, the importer acknowledged incorrect classification and agreed to remit the short-levied duty. An order was subsequently passed directing payment of Rs.2,32,988/- with applicable interest.
Relief Sought Before High Court
Despite partial payments by the importers pursuant to the orders, full settlement was not achieved. Demand notices were issued for the outstanding amounts, prompting the filing of writ petitions.