Customs House vs M/s. Lalchand Bhimraj

Chitra Venkataraman, J.—This Civil Miscellaneous Appeal is filed at the instance of the Revenue as against the order of the Customs,

Excise & Service Tax Appellate Tribunal, South Zonal Bench at Chennai, by raising the following substantial questions of law:-

Whether the Appellate Tribunal was right in holding that the demand notice dated 1.12.2000 is time barred when the said notice is in time in

pursuance of the provisions of Sections 28 and 153 of the Customs Act, 1962 and Sections 8, 9 and 27 of the General Clauses Act, 1897?

The importer herein filed three bills of entry dated 26.5.2000, 4.5.2000 and 28.8.2000 classifying the goods imported viz., Ascorbic Acid BP 98

USP 23 Vitamin C as falling under Customs Tariff Heading 2936.37 which attracted 35% of basic Customs Duty plus 10% surcharge plus 16%

countervailing duty. The respondent had sought clearance under Customs Notification NO. 34/97.

The Deputy Commissioner of Customs passed an adjudication order after issuing show cause notices, raising demands for payment of anti

dumping duty amounting to Rs. 1,68,531/- on the assessee. It was stated that anti dumping duty of Rs. 10,53,320/- paid by the assessee was not

taken into account for the purpose of levying countervailing duty. The assessee contended that the demand of duty being served beyond the period

of six months from the dates of payment of duties of Customs on the imported goods, the proceedings taken for the alleged balance of anti

dumping was without jurisdiction. The assessee contended that the limitation period had already lapsed to assume further jurisdiction to demand

duty.

It is a matter of record that, apart from the assessee, notices were also served within the time limit on the Customs Clearing Agent. However,

considering the fact that the service on the Clearing Agent was not a valid service as held in Collector of Customs, Cochin Vs. Trivandrum Rubber

Works Ltd., question arose as to the validity of service of notice on the importer assessee that the demand notices to the assessee was beyond the

limitation period of six months as given u/s 28 Customs Act read with Section 153 of the Customs Act. The Adjudicating Authority referred to the

decision of the Kerala High Court reported in 2000 (125) E.L.T. 50 Ker. Ambali Karthikeyan v. Collector of Customs and Central Excise and

held that to find out whether the notice has been served within the limitation period, the date of issue of demand notice had to be taken as a

limitation point. Thus, quite apart from the fact that the notice was served on the clearing agent well in time, the notice on the importer served on

the assessee was held as well within six months as contemplated u/s 28 of the Customs Act.

Aggrieved by this, the unsuccessful importer canvassed the case before the first Appellate Authority. The first Appellate Authority rejected the

case of the importer. Aggrieved by the same, the importer went on further appeal before the Customs, Excise and Service Tax Appellate Tribunal.

A reading of the Tribunal shows that the issue in appeals before the Tribunal related to three bills of entry, which are as follows:-

Table

The Tribunal held that admittedly, the bill of entry No. 14797 was despatched by registered post on 1.12.2000, the date on which the period of

limitation expired. Admittedly, the notice was served on the assessee on 2.12.2000. In the circumstances, the demand, being served beyond the

six months period from the relevant date of payment of duty, was time barred. This was the state of affairs in respect of other two bills of entries

too. Having regard to the above, the Tribunal held that on the aspect of limitation, the adjudicating authority had no case. Thus, the appeals by the

importer was allowed. In considering the claim of the importer as well as the Revenue, the Tribunal rejected the reliance placed by the Revenue on

Section 27 of the General Clauses Act and held that the same was of no relevance. Considering the fact that section 28(1) of the Customs Act

prescribed the period of limitation as six months for the purpose of initiation of any action u/s 28 of the Customs Act, the period of limitation of six

months started from the date of payment of duty by the importer and going by Section 153 of the Customs Act, which provides mode of service,

the Tribunal thus came to the conclusion that the proceedings were totally time barred. Aggrieved by this, the Revenue is on appeal before this

Court.

In the present appeal, learned Standing Counsel submitted that the State is challenging the order of the Tribunal only as regards the bill of entry

No. 14797 dated 26.5.2000, when the date of payment of duty was 1.6.2000. On the date of expiry of period of limitation i.e. on 1.12.2000, the

demand notice was despatched. Learned Senior Central Government Standing Counsel appearing for the Revenue however fairly submitted that

notice was served on the assessee only 2.12.2000. Nevertheless, he sought to sustain the notice as one within the period of limitation based on the

understanding of Section 153 of the Customs Act, which principally dealt with mode of service of order, decision etc. The said provision reads as

follows:-

Service of order, decision etc. - Any order or decision passed or any summons or notice issued under this Act, shall be served -

(a) by tendering the order, decision, summons or notice or sending it by registered post to the person for whom it is intended or to his agent; or

(b) if the order, decision, summons or notice cannot be served in the manner provided in clause (a), by affixing it on the notice board of the

customs house.

Thus, the Revenue sought to support its contention on the strength of the decision of the Kerala High Court cited supra, which persuaded the

adjudicating authority to hold that the demand was well within the time limit. A reading of Section 153 clearly points out various clauses which are

recognised under the Act for the purpose of serving notice or for decision or to issue summons. It contains nothing about limitation. On the other

hand, Section 28 of the Customs Act clearly states that when any duty has not been levied or has been short-levied or erroneously refunded, or

when any interest payable has not been paid or erroneously refunded, the officer may initiate proceedings within a period of six months from the

relevant date; that he may serve a notice on the person chargeable with the duty or interest which has not been levied or charged or which has

been so short levied or part paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the

amount specified in the notice. The six months period of limitation has to be calculated from the relevant date. The ''relevant date'' is defined in

Section 28(3) of the Customs Act as the date on which the proper officer makes an order for the clearance of the goods or in any other case the

date of payment of duty or interest. Given the fact that the payment of duty on the above bill of entry was on 1.6.2000 and going by Section 28 of

the Customs Act, the six months time for the purpose of invoking jurisdiction u/s 28 has to be counted from the date of payment of duty i.e. on

1.6.2000. On the facts admitted, with the notice served on 2.12.2000 after the expiry of time limit on 1.12.2000, we have no hesitation in holding

that the Tribunal has rightly come to the conclusion that the proceedings initiated by the adjudicating authority was time barred. Hence, cannot be

sustained.

As far as the reliance placed on the decision of the Kerala High Court is concerned, we do not find that Revenue could draw any assistance

from the said decision by making reliance on Section 28 of the Customs Act. It may be relevant to point out that similar contention taken in respect

of other two bills of entry are not under challenge before this Court. When the Revenue had accepted the two other bills of entry, on the same line

of arguments, we fail to understand the logic in challenging the order of the Tribunal in respect of one bill of entry, which was the subject matter in

one of the appeals before the Tribunal. In any event, for the reasons stated above, we have no hesitation in rejecting the plea of the Revenue.

Accordingly, the above Civil Miscellaneous Appeal is dismissed. No costs.

Note: This judgments has been sourced from the court website. The tables in the judgment may not be aligned.