C.C.E. and C., Aurangabad vs CTR Manufacturing Industries

The appeal is directed against the order passed by the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (hereinafter referred to as "CESTAT", for the sake of brevity) in Appeal No. C/29/08-MUM.

A show cause notice was issued to the assessee, i.e. the respondent herein on 13th July, 2005. The notice mentioned that the assessee had not maintained records in respect of the imported inputs procured on availing of the concession under Notification No. 25/1999, dated 28-2-1999, properly. Besides this, on verification of the physical stock of the raw material it was found that there was a shortage of imported plastic film valued at Rs. 19,64,389/-. The notice further mentions that the senior Officers of the assessee had accepted the lapses when their statements were recorded and they had agreed to pay differential duty on the shortage noticed. Accordingly, Rs. 6,00,000/- were deposited for provisional release of the material which was seized by the Department. The notice further mentioned that the assessee had suppressed facts which had resulted in shortage of payment of customs duty. The respondent was, therefore, directed to show cause (i) why the amount of Rs. 3,92,878/- being the differential customs duty payable should not be recovered from it as in accordance with the proviso to Section 28 of the Customs Act read with Rule 7 of the Customs (Import at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996; (ii) interest u/s 28AB of the Customs Act should not be recovered and (iii) penalty u/s 114A of the Customs Act read with Rule 7 of the aforesaid Rules should not be imposed.

The respondent replied to the show cause notice. The Assistant Commissioner, Central Excise and Customs, Aurangabad held that the Department had not produced any evidence to the effect that short payment of the duty had resulted because of any collusion or willful mis-statement or suppression by the respondent. The Assistant Commissioner accepted the contention of the respondent that the proviso to Section 28(1) was not applicable and, therefore, duty could have been demanded only within six months from the date of payment of duty under the respective bill of entry. Accordingly, the Assistant Commissioner dropped the show cause notice as it was issued beyond the period of limitation.

Being aggrieved by this order of the Assistant Commissioner, the Department preferred an appeal before the Commissioner (Appeals). By the order dated 15-10-2007, the appeal was dismissed. The appellate authority found that the issue arises because of certain contraventions in respect of import of goods and hence the appeal ought to have been filed under the provisions of the Customs Act. It was further held that the Department had found a shortage to the extent of 0.066%. No verification was made by the Department after the assessee had informed the Department regarding the shortage of customs duty. Since the shortage was marginal, the Commissioner (Appeals) found that the shortage could be ignored in absence of any evidence regarding any clandestine removal of the goods. In these circumstances, the appeal of the Department was dismissed.

The Department then filed an appeal before the CESTAT. The Tribunal has confirmed the orders passed by the lower authorities and dismissed the appeal filed by the Department. It is held that the adjudicating authority had found that the Department had not produced any evidence to the effect that there was short payment of duty caused by any mala fide act of the assessee. The CESTAT found that even in the appeal before it the Department had not placed any evidence on record to indicate that there was any suppression on the part of the respondents. The CESTAT accepted the view of the lower authorities that the demand was made beyond the period of limitation and, therefore, dismissed the appeal.

In our view, the appeal filed by the Department does not deserve to be admitted as there is no substantial question of law raised in the appeal. Apart from the fact that all the authorities below have found that the demand was hit by limitation, the fact that the appeal ought to have been filed under the Customs Act is not disputed by the Department. On merits, the authorities have considered the case of the Department and have found that assuming there was a shortage of payment of customs duty, it was marginal being only 0.066%, which had been discovered after the assessee had informed the Department of the shortage.

In our opinion, no jurisdictional error has been committed by any of the authorities below. Apart from this, as already mentioned, no substantial question of law arises for our consideration in the present appeal. Hence, appeal is dismissed.