S.99A Customs Act | Final Report Containing Audit Findings Can Be Drawn Only After Apprising Auditee Of 'Objections': Delhi High Court

The Delhi High Court has held that pursuant to an audit in respect of assessment of imported or exported goods under Section 99A of the Cutoms Act, 1962, the proper officer is liable to apprise the auditee of the objections which according to it arise in respect of the assessment. However, before such a report is finally drawn or issued, the proper officer by virtue of Audit Regulation 5 is obliged to place the auditee on notice of its intent to conduct such an audit. In its 91-page judgment, the High Court said, “As is evident from a reading of Regulation 5, the proper officer, after having apprised the exporter or the importer, as the case may be, of its intent to initiate an audit, is obliged to apprise the auditee of the objections before preparing the audit report. In case the auditee disagrees with the findings that appear in that report, a demand could be validly raised or created.” It added, “As we read Audit Regulation 5, it becomes apparent that it is only after the disposal of any such objections that may have been invited that a final report containing the audit findings would come to be drawn.” In the case at hand, the Petitioners were aggrieved by the audit objection issued by the Customs with respect to classification of its goods and availing of Merchandise Exports from India Scheme.