Denial of IGST Exemption Correction and Bill of Entry Amendment
1. The Core Dispute: Wrongful Exemption Claim on Imported Dates
The petitioners, GST-registered importers, imported semi-dried dates but wrongly claimed an IGST exemption intended only for fresh dates.
The Error: Consignments were cleared with Nil IGST based on this misdeclaration.
The Audit: A post-clearance audit detected the error, leading to Show Cause Notices (SCNs) and orders under Section 28 demanding 12% IGST plus interest.
The Petitioner’s Prayer: While not disputing the liability, the petitioners sought to amend their Bills of Entry (BoE) under Sections 149 or 154 of the Customs Act. Their goal was to make the BoE a “valid document” for claiming Input Tax Credit (ITC) on the tax they were now forced to pay.
2. Legal Analysis: Recovery and the “Amendment” Bar
I. Validity of Recovery under Section 28
The Court upheld the department’s power to recover short-paid IGST using Customs machinery.
The Linking Law: Under Section 3(7) of the Customs Tariff Act, IGST on imports is levied as a duty of customs. Section 3(12) specifically makes all provisions of the Customs Act (including Section 28 for recovery) applicable to this levy.
Conclusion: The recovery of IGST via Section 28 was legally sound.
II. Rejection of Amendment under Section 149
Section 149 allows amendments to a BoE only if the correction is based on documentary evidence in existence at the time of clearance.
The Ruling: The petitioners had misdeclared the goods as “fresh dates” to evade tax. There was no “contemporaneous evidence” to suggest a bona fide mistake. Amendment cannot be used to regularize a misdeclaration after the audit detects it.
ITC Context: The Court noted that the petitioners delayed the challenge and had not fully paid the dues, making the request for “correction to enable ITC” unwarranted.
III. Clerical Errors vs. Misdeclaration (Section 154)
The petitioners also invoked Section 154, which covers “clerical or arithmetical mistakes.”
The Finding: A wrongful claim of an exemption notification is a substantive legal error and a misdeclaration, not a simple clerical slip or accidental omission. Therefore, Section 154 was inapplicable.
3. Impact on Input Tax Credit (ITC)
The primary motivation for the petitioners was to ensure the “re-assessed” BoE could be used as a document to claim ITC under Rule 36 of the CGST Rules.
Court’s Stance: Since the amendment of the BoE was refused, the petitioners could not obtain the necessary “corrected” document required to facilitate the credit.
Circular 16/2023: The Court clarified that CBIC Circular No. 16/2023 (which allows BoE amendments for ITC) applies to specific situations like “pre-import conditions” in Advance Authorizations and does not provide a blanket right to amend BoEs in cases of willful misdeclaration.
Key Takeaways for Importers
Self-Assessment Responsibility: Under the current regime, the burden of correct classification and exemption claims lies solely on the importer. Audits are strict regarding grade-based exemptions (e.g., fresh vs. dried).
ITC Documentation: To claim ITC on differential tax paid after an audit, you need a formally re-assessed Bill of Entry. If the court/department refuses amendment due to “misdeclaration,” you may lose the ITC benefit entirely.
Interest is Mandatory: Even if the underlying tax is accepted, interest under Section 28AA is compensatory and cannot be waived if the short-payment is established.
HIGH COURT OF KERALA
Al Kabeer Exporters
v.
Deputy Commissioner of Customs (Imports)*
ZIYAD RAHMAN A.A., J.
WP(C) Nos. 38971, 38959 OF 2024
NOVEMBER 24, 2025
Tomson T. Emmanuel, Adv. for the Appellant. P.R.Sreejith, R. Harishankar, Advs. and C. Dinesh, CGC for the Respondent.
JUDGMENT
1. In these cases, the challenge raised by the petitioners is with regard to the demand notices issued against them (Ext.P6 in W.P.(C) No. 38971 of 2024 and Ext.P5 in W.P.(C) No. 38995 of 2024), demanding the amount of IGST short-paid, when the petitioners carried out certain imports. The said demand letters were issued based on Ext.P1 orders issued in both cases under Sec.28 of the Customs Act, 1962.
2. The facts which led to the filing of these writ petitions are as follows:- In WP(C) 38971/2024, the petitioner is a partnership firm and conducting business under the name and style ‘Al Kabeer Exporters’. The firm is registered under the Kerala Goods and Services Tax Act, 2017, Central Goods and Services Tax Act and the Integrated Goods and Services Tax Act 2017. As part of the business of importing dates and other food products, the petitioner imported different grades of semidried dates, as per Bill of Entry No.7617965 dated 08.05.2020 through Cochin Sea Port. In the Bill of Entry furnished by the petitioner, the goods were classified as semi-dried dates and included under the CTH08041020. However, in the said bill of entry, the petitioner availed exemption from IGST that was available for fresh dates. Accordingly, the goods were cleared, by collecting duty at the rate of customs duty 20% + Social Welfare Surcharge (SWS) 10% + IGST nil. Later, during the post clearance audit of the above mentioned Bill of Entry, it was found that, IGST exemption was wrongfully availed by the petitioner, since, the semi dried dates, which was the declared goods as per the bill of entry, was not eligible for exemption and they attract IGST @ 12% as per notification No. 1/2017 dated 28.06.2017. Accordingly, a show cause notice was issued to the petitioner on 06.01.2022, proposing to initiate proceedings under Sec.28 of the Act and for demanding interest under Sec.28AA of the Customs Act 1962. The petitioner did not reply to the show cause notice dated 06.01.2022 and did not appear on the date of personal hearing on 14.02.2022, 21.03.2022, 31.03.2022 and 22.04.2022. Accordingly Ext.P1 order was issued on 11.05.2022.
3. In WP(C) No. 38951/2024 also, the similar events occurred and the petitioner brought semi-dried dates as per Bill of Entry No.7174298 dated 21.01.2022 and claimed exemption available for fresh dates. Thus, the petitioner got the goods cleared without making payment of IGST @ 12%. In this case also, on post clearance audit of the Bill of Entry, the aforesaid discrepancy came to the notice of the authorities concerned and accordingly, a notice dated 28.12.2022 was issued to the petitioner directing him to remit a short levy of duty of Rs.2,32,988/-. The importer did not reply to the prenotice consultative letter and therefore, a short cause notice was issued to the petitioner therein on 06.02.2022 asking him to show cause as to why short levy amount should not be demanded along with interest as contemplated under Sec.28AA of the Act. During the course of hearing, the petitioner therein appeared before the officer concerned, accepted the incorrect classification and agreed to pay the short-levied duty without any fail. Accordingly, Ext.P1 order was passed therein, directing the petitioner to pay Rs.2,32,988/- along with interest under Sec.28AA of the Customs Ac, 1962.
4. Even though the petitioners paid certain amounts based on the said orders, the entire amount was not settled and it was in those circumstances, the demand notices, as referred to above, were issued to the petitioners. These writ petitions were submitted in such circumstances, challenging the aforesaid notices. The reliefs sought in WP(C) No. 38959/2024 are as follows:-
| (i) | . To issue a Writ or Certiorari or any other appropriate Writ, Order or direction, in calling records leading to issuance of Ext P5 notice from 4th respondent and stay further proceeding to Ext P5 notice issued by 4th respondent, till 31.03.2025; |
| (ii) | To issue a Writ in the nature Mandamus or any other appropriate Writ, direction or order issued to respondents 1 and 4, to permit the Petitioner with the benefit of Ext P4 notification for settling arrears pursuant to Ext P1 demand, after considering Ext P2 and Ext P3 payments made; |
| (iii) | To issue a Writ in the nature Mandamus or any other appropriate Writ, direction or order, directing 1st respondent to make facility for the benefit of ITC from Ext P1 to the Petitioner; |
| (iv) | To hear this Writ Petition along with connected cases issued with Ext P6 Interim Order, pending before this Hon’ble Court, in granting stay on further proceedings to Ext P1 and Ext P4; AND |
| (v) | To grant such other relief as may be prayed for and as this Hon’ble Court may deem fit in the circumstances of the case. |
5. The reliefs sought in WP(C) No. 38971/2024 are as follows:-
| (I) | To issue a Writ or Certiorari or any other appropriate Writ, Order or direction, in calling records leading to issuance of Ext P6 notice from 4th respondent and stay further proceeding to Ext P6 notice issued by 4th respondent, till 31.03.2025; |
| (ii) | To issue a Writ in the nature Mandamus or any other appropriate Writ, direction or order issued to respondents 1 and 4, to permit the Petitioner with the benefit of ExtP5 notification for settling arrears pursuant to Ext P1 demand, after considering Ext P2 to P4 payments made; |
| (iii) | To issue a Writ in the nature Mandamus or any other appropriate Writ, direction or order, directing 1st respondent to make facility for the benefit of ITC from Ext P1 to the Petitioner; |
| (iv) | To hear this Writ Petition along with connected cases issued with Ext P7 Interim Order, pending before this Hon’ble Court, in granting stay on further proceedings to Ext P1 and Ext P4; AND |
| (v) | To grant such other relief as may be prayed for and as this Hon’ble Court may deem fit in the circumstances of the case. |
6. Statements and additional statements were submitted by the respondents denying the contentions raised in the writ petitions and opposing the reliefs sought for. It is pointed out that, it was on account of the mis-declaration by the petitioners, the amounts payable by them towards IGST were not collected and therefore, the respondent sought to justify the orders passed under Sec.28A of the Customs Act, 1968.
7. Reply affidavits and additional reply affidavits were also submitted by the petitioners, in response to the averments contained in the statement and additional statements.
8. I have heard Sri. Tomson P. Emmanuel, the learned counsel for the petitioner and Sri. Sreejith, the learned Standing counsel for the respondents.
9. Even though the petitiones are not specifically disputing the liability to pay the IGST, it is their contention that the respondents are bound to amend the bill of entry so as to enable the petitioners to claim input tax credit in respect of IGST once they make the payment. It was pointed out that, the mistake that occurred in the bill of entry which resulted in availing a wrong exemption, was a bona fide one and it was not wilful at all. Since the petitioner is entitled to claim input tax credit in respect of the same, it is the obligation of the respondents to ensure that, the bill of entry is amended by the respondents by invoking the powers under Sec.149 of the Customs Act, so as to enable him to claim the same.
10. Apart from the above, the learned counsel for the petitioner also raised a contention that, as far as the demands now made as per Ext.P1 notices are concerned, the same is not sustainable in law as no proceedings under Sec.28 can be initiated in the peculiar facts and circumstances of the case. This submission is made by the learned counsel for the petitioner, mainly on the ground that, what is sought to recovered as per Ext.P1 is the short remittance of IGST and going by the stipulations contained in Sec.28 of the Customs Act, it can be seen that, the said provision is attracted only in respect of cases where, duty is not levied, or not paid, or short levied or short paid, whereas, in this case, even going by Ext.P1, all the duties payable under the Customs Act are paid. The learned counsel also places reliance upon definition of duty as contemplated under Sec.2 (15) of the Customs Act, which means duty of customs leviable under the said Act.
11. On the other hand, the learned standing counsel opposes the said contention by pointing out that, the petitioner cannot claim the amendment of the bill of entry under Sec.149 as of right, and he is not eligible to claim the input tax credit as well. It is pointed out that, as far as the amendment under Sec.149, in respect of bill of entries are concerned, it can be done only in cases where there are documentary evidence existing as on the date of the import and in this case, no such documents as referred to in Sec.149 are in existence, so as to warrant invocation of Sec.149 and amendment of the bill of entry.
12. I have carefully gone through the records. Of course, the learned counsel for the petitioner vehemently contended that, the proceedings under Sec.28 of the Customs Act, which culminated in Ext.P1 orders in both these writ petitions are not legally sustainable, in view of the fact that, short levy is that of the IGST and not a duty as defined in Sec.2(15) of the Customs Act. However, the said contention cannot be considered for more than one reason. First of all, the said contention is against the findings in the Ext.P1 order. However, in both these writ petitions, there is no challenge raised against Ext.P1 and the challenge is confined to the demand notices issued pursuant to Ext.P1.
13. Even if it is assumed that the said contention of the petitioner is to be considered in this writ petition, even in the absence of any challenge against Ext.P1, I am not inclined to accept the same on merits as well. Of course, it is true that, going through the wordings used in Sec.28 of the Customs Act, it gives an impression that what is the subject matter of Sec.28 is the duty not paid or duty not levied or duty short paid or duty short levied. As rightly pointed out by the learned counsel for the petitioner, ‘duty’ as per Sec.2(15) of the Customs Act, refers to the duty payable under the Customs Act. However, as rightly pointed out by the learned Standing counsel for the respondent, the power to realise IGST at the time of import, is contemplated under the Customs Tariff Act. The relevant provision in this regard is Sec.3 of the said Act. As per subsection 7 of section 3 thereof, any article imported to India shall, in addition, be liable to integrated tax at such rates, not exceeding 40%, as is leviable under Sec.5 of the Integrated Goods and Service Tax Act, 2017, on the value of the imported articles as determined under Sub.Sec.8 or Sub.Sec.8A, as the case may be. Thus, by virtue of the aforesaid provision, in addition to the duty payable under the Customs Act, the importer has an obligation to pay IGST as well. The subsection 12 of Sec.3 of the said Act, further provides that, the provisions of the Customs Act, 1962 (52 of 1962) and the Rules and Regulations made thereunder, including those relating to drawbacks, refunds and exemptions from duty shall, so far as may be apply to the duty or tax or cess, as the case may be, chargeable under the section as they apply in relation to the duties leviable under that Act.
14. Thus, in respect of the charges payable under the Customs Tariff Act,1975 at the time of import, and for realising the aforesaid amount, the procedure contemplated under the Customs Act, 1962 are specifically made applicable. Therefore, even if, Sec.28 by itself does not contemplate for initiating any proceedings for short levy and short payment of duty other than payable under the Customs Act, by virtue of Sub.Sec.3(12) of the Customs Tariff Act, 1975, the aforesaid provisions are made applicable for the purpose of realising the amounts under the Customs Tariff Act 1975. Therefore, as far as the Department is concerned, the only provision that enables them to address the question of short levy, short payment or failure to make payment or failure to levy, is to initiate the proceedings under Sec.28 of the Customs Act,1962, even in respect of the matters covered under Customs Tariff Act, 1975.
15. Therefore, the contention raised by the learned counsel for the petitioner cannot be accepted, as evidently the short levy of IGST is something that is leviable at the time of import and short levy of the same can be addressed by invoking the procedure contemplated under Sec.28 of the Customs Act.
16. When it comes to the question of reliefs sought by the petitioner for directing the respondents to amend the bill of entry also, I am not inclined to accept the same. This is particularly because, the amendment of any document is contemplated under Sec. 149 of the Customs Act, and said provision to reads as follows:-
“Save as otherwise provided in section 30 and 41, the proper officer may, in his discretion, suthorise any document, after it has been presented in the customs house to be amended:
Provided that no amendment of a bill of entry or a shipping bill or bill of export shall be so authorised to be amended after the imported goods have been cleared for home consumption or deposited in a warehouse, or the export goods have been exported, except on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported, as the case may be.”
17. Going by Sec.149, the amendment of bill of entry or a shipping bill or bill of export are contemplated only in exceptional cases where there exist any documentary evidence which was in existence at the time when the goods were cleared, deposited or exported as the case may be. In this case, it is an undisputed position that, the petitioner had availed an exemption which was not otherwise available to the petitioner. To be precise, despite the fact that the tax payable in respect of semi-dried dates was 12% as per the IGST Act, an exemption was claimed, which was available for fresh dates. Thus, there is a mis-declaration to that extent, as far as the bill of entry is concerned. The petitioner did not take any steps to get the same corrected and only when proceedings were initiated by the Department under Sec.28 and an order was passed based on the notices issued under the said provision, the petitioner paid some amount towards the same.
18. Moreover, the Ext.P1 orders passed under Sec.28 were passed in the year 2022 and only in the year 2024, the petitioner approached this Court, seeking a relief for directing the respondents to amend the bill of entry. Going by the statutory stipulations contained in Sec.149 of the Customs Act, it can be seen that, the circumstances, which are existing in this case, would not enable the party concerned to seek an amendment as contemplated under the said provisions, as there were no documents, as mentioned in the proviso to section 149, in existence, at the time of the transactions, to warrant an amendment. Of course, the learned counsel for the petitioner placed reliance upon Ext.P10 judgment rendered by this Court, where a direction was issued by this Court to the authorities, to amend the bill of entry so as to enable them to get the input tax credit. However, the facts and circumstances in the batch of cases which were dealt with by this Court in Ext.P10 judgment, were completely different and in those cases, the parties, on their own volition, made the payments of IGST after realising the mistake, and sought for amendment of the bill of entry.
19. In this case, no such circumstances are in existence and despite the fact that an order was passed in the year 2022, the petitioner never paid the amount payable under the IGST and had approached this Court only in the year 2024, i.e., after more than two years. Even at the time of seeking the said relief, the IGST amount and the interest payable thereon, have not been paid in full. In such circumstances, I do not find any justifiable reason to entertain the contentions raised by the petitioner in this regard.
20. Of course, the learned counsel also brought the attention of this court to Ext.P12 Circular, issued by the Central Board of Indirect Taxes & Customs (Circular No. 16/2023 dated 07.06.2023). However, in the said circular also, the amendment of the bill of entry contemplated were in a complete different circumstance and it was not a case of misdeclaration.
21. Thus, in the light of the aforesaid aspects, I find no justifiable reasons to interfere with the orders passed by the authorities concerned and to issue a direction to the respondents to amend the bill of entry as claimed by the petitioner. First of all, Section 149 of the Act is not attracted in the given facts and circumstances of the case. Moreover, even though the learned counsel for the petitioner contended that, it could be a case where Section 154 of the Customs Act, would be attracted, I am not inclined to accept the said contention as well. As far as Sec.154 is concerned, the same is to correct the clerical and arithmetical mistakes and in this case, this is is not a case that falls within the same.
Thus, after considering all relevant aspects, I do not find any merit in these writ petitions and these writ petitions are accordingly dismissed. However, the petitioners are granted time to make the payment of the balance amount of IGST along with interest, for a period of one month from the date of receipt of copy of this judgment. In case the petitioners fail to make the said payment, the respondents shall be at liberty to initiate appropriate proceedings to recover the same from the petitioners