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ReForming Customs

ReForming Indian Customs Field Formations:

Drfaft:

Section 142: Recovery of sums due to government [Arrears of Revenue]

Critical Points:

  • ·       Proper Officer to recover sums due to government is AC/DC
  • ·       AC/DC may recover arrears of revenue in any one of five methods u/s 142
  • ·       Sums due to government vide adjudication or appellate order may be recovered u/s 142 (1) (a) or (b)
  • ·       If no money or goods under control of customs, adjudication or appellate authorities to specify time limit to pay the duty / fine in lieu of confiscation / penalty
  • ·       Failure to specify time limit by adjudication / appellate authorities cannot be cured by sending demand notice
  • ·       Addendum to the adjudication / appellate order is to be issued specifying time limit.
  • ·       Writing to or visiting defaulters as persuasive or coercive action to collect arrears of revenue does not find favour in the Act.
Relevant Sections of the Customs Act, 1962:

142. RECOVERY OF SUMS DUE TO GOVERNMENT. –

(1) 1[Where any sum payable by any person] under this Act 2[including the amount required to be paid to the credit of the Central Government under section 28B] is not paid,—

(a) the proper officer may deduct or may require any other officer of customs to deduct the amount so payable from any money owing to such person which may be under the control of the proper officer or such other officer of customs; or

(b) the 3Assistant Commissioner of Customs may recover or may require any other officer of customs to recover the amount so payable by detaining and selling any goods belonging to such person which are under the control of the Assistant Commissioner of Customs or such other officer of customs; or

5(c) if the amount cannot be recovered from such person in the manner provided in clause (a) or clause (b) –

(i) the 4Assistant Commissioner of Customs may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any Property or resides or carries on his business and the said Collector on receipt of such certificate shall proceed to recover from such person the amount specified there under as if it were an arrear of land revenue; or

(ii) the proper officer may, on an authorisation by a Commissioner of Customs and in accordance with the rules made in this behalf, distain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus, if any, to such person.

6[Provided that where the person (hereinafter referred to as predecessor), by whom any sum payable under this Act including the amount required to be paid to the credit of the Central Government under section 28B is not paid, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by the proper officer, after obtaining written approval from the Commissioner of Customs, for the purposes of recovering the amount so payable by such predecessor at the time of such transfer or otherwise disposal or change.]

(2) Where the terms of any bond or other instrument executed under this Act or any rules or regulations made there under provide that any amount due under such instrument may be recovered in the manner laid down in sub-section (1), the amount may, without prejudice to any other mode of recovery, be recovered in accordance with the provisions of that sub-section.

Section 142 becomes operational only where any sum payable by any person under the Customs Act is not paid.  So, it is incumbent on the authority demanding any amount by way of assessment, adjudication or imposing penalty or fine in lieu of confiscation, to specify the time limit within which the amount is to be paid.  S.142 cannot be invoked where no such time limit is specified and exhausted. In the absence of any time limit is specified, separate demand notice has to be issued specifying the time limit within which the amount is to be paid.

The authority passing such orders may order payment of such sum without giving any time but order forfeiture of

 

Only after the sums due to government is not paid within that time allowed, recovery proceedings either under section 142 (1) (a) or section 142 (1) (b) could be initiated. 

 

It could be looked at as a lapse on the part of the Adjudicating or Appellate Authority who has failed to specify the time limit within which the duty or penalty or fine in lieu of confiscation has to be paid so that the sums due to government could be recovered u/s 142 immediately thereafter. Had it been done, there is no need to issue a separate demand notice which is avoidable waste of time, energy and infrastructure.

In respect of goods which are under the control of the customs authorities, the parties need not be given time beyond the time limit specified in the Order and the sums recovered u/s 142 (1) or u/s 142 (2) which reads as follows: -

(i) (1) 1[,—

(a) the proper officer may deduct or may require any other officer of customs to deduct the amount so payable from any money owing to such person which may be under the control of the proper officer or such other officer of customs; or

 

(b) the Assistant Commissioner of Customs may recover or may require any other officer of customs to recover the amount so payable by detaining and selling any goods belonging to such person which are under the control of the Assistant Commissioner of Customs or such other officer of customs;

(ii) waiver of predeposit of sums due to government u/s 192 E is not available in respect of  goods which are not under the control of the customs authorities. 

Section 129 E categorically says, “Where in any appeal under this Chapter, the decision or order appealed against relates to any duty and interest demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal deposit with the proper officer duty and interest demanded or penalty levied.”

 

129E. DEPOSIT, PENDING APPEAL, OF DUTY AND INTEREST DEMANDED OR PENALTY LEVIED. –

1[129E. Deposit, pending appeal, of 2[duty and interest], demanded or penalty levied. —Where in any appeal under this Chapter, the decision or order appealed against relates to any 2 [duty and interest] demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal deposit with the proper officer 2[duty and interest] demanded or penalty levied:

Provided that where in any particular case, the 3[Commissioner (Appeals)] or the Appellate Tribunal is of the opinion that the deposit of 2 [duty and interest] demanded or penalty levied would cause undue hardship to such person, the 3 [Commissioner (Appeals)] or, as the case may be, the Appellate Tribunal may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue:

4[Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty and interest demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing.] ]

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72. GOODS IMPROPERLY REMOVED FROM WAREHOUSE, ETC. –

(1) In any of the following cases, that is to say, –

(a) where any warehoused goods are removed from a warehouse in contravention of section 71;

(b) where any warehoused goods have not been removed from a warehouse at the expiration of the period during which such goods are permitted under section 61 to remain in a warehouse;

(c) where any warehoused goods have been taken under section 64 as samples without payment of duty;

(d) where any goods in respect of which a bond has been executed under 1[section 59 2[***]] and which have not been cleared for home consumption or exportation are not duly accounted for to the satisfaction of the proper officer,

(2) If any owner fails to pay any amount demanded under sub-section (1), the proper officer may, without prejudice to any other remedy, cause to be detained and sold, after notice to the owner (any transfer of the goods notwithstanding) such sufficient portion of his goods, if any, in the warehouse, as the said officer may select.

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75A. INTEREST ON DRAWBACK. –

1[75A. Interest on drawback.—(1) Where any drawback payable to a claimant under section 74 or section 75 is not paid within a 2[period of 3[one month]] from the date of filing a claim for payment of such drawback, there shall be paid to that claimant in addition to the amount of drawback, interest at the rate fixed under section 27A from the date after the expiry of the said 2[period of 3[one month]] till the date of payment of such drawback:

4[***]

5[(2) Where any drawback has been paid to the claimant erroneously or it becomes otherwise recoverable under this Act or the rules made thereunder, the claimant shall, within a period of two months from the date of demand, pay in addition to the said amount of drawback, interest at the rate fixed under section 28AB and the amount of interest shall be calculated for the period beginning from the date of payment of such drawback to the claimant till the date of recovery of such drawback.]

125. In section 75A of the Customs Act, in sub-section (2), for the word, figures and letters “section 28AB”, the word, figures and letters “section 28AA” shall be substituted and shall be deemed to have been substituted with effect from the 8th day of April, 2011.FA2012

 

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127C. PROCEDURE RECEIPT OF APPLICATION UNDER SECTION 127B. –

(8) The order passed under sub-section (5) shall provide for the terms of settlement including any demand by way of duty, penalty or interest, the manner in which any sums due under the settlement shall be paid and all other matters to make the settlement effective and in case of rejection contain the reasons therefor and it shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud, or misrepresentation of facts:

Provided that the amount of settlement ordered by the Settlement Commission, shall not be less than the duty liability admitted by the applicant under section 127B.

(9) Where any duty, interest, fine and penalty payable in pursuance of an order under sub-section (5) is not paid by the applicant within thirty days of receipt of a copy of the order by him, the amount which remains unpaid, shall be recovered along with interest due thereon, as the sums due to the Central Government by the proper officer having jurisdiction over the applicant in accordance with the provisions of section 142.

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s.59(1)(b) to pay on or before a date specified in a notice of demand, –

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