2006 (3) TMI 57 - HC - Customs

Demand Limitation Appellant filed an appeal that the SCN issued under section 130 of the C.A, 1962, on 9th Aug 2001 was time barred After considering all the fact authority decided SCN was time barred

Issues Involved:
1. Whether the show cause notice issued under Section 28 of the Customs Act, 1962 on 9th August, 2001 was time-barred.
2. Interpretation of the terms "relevant date" and "date of adjustment of duty after the final assessment" under Section 28(3)(b) of the Customs Act.
3. Whether the Tribunal was justified in its interpretation of the relevant date for the purposes of Section 28 of the Customs Act.
4. The validity of actions taken pursuant to the show cause notice dated 9th August, 2001.

Detailed Analysis:

1. Whether the show cause notice issued under Section 28 of the Customs Act, 1962 on 9th August, 2001 was time-barred:
The Tribunal held that the relevant date of adjustment of duty for the purposes of Section 28 of the Customs Act was the date on which the amount paid provisionally was credited into the government treasury. Therefore, the show cause notice issued on 9th August, 2001 was within six months from 13th February, 2001 and hence valid. However, the High Court disagreed, stating that the relevant date should be either the date of the refund order (31st January, 2001) or the date the refund cheque was issued (6th February, 2001). Consequently, the show cause notice issued on 9th August, 2001 was held to be time-barred as it was beyond six months from these dates.

2. Interpretation of the terms "relevant date" and "date of adjustment of duty after the final assessment" under Section 28(3)(b) of the Customs Act:
The High Court analyzed Section 18 and Section 28 of the Customs Act to determine the "relevant date" for the adjustment of duty. Section 18(2)(a) specifies that the adjustment occurs when the duty finally assessed is compared with the duty paid provisionally, and any excess or deficiency is determined. The Court concluded that the relevant date for adjustment of duty should be the date on which the refund order is issued or the date the refund cheque is issued, whichever is earlier.

3. Whether the Tribunal was justified in its interpretation of the relevant date for the purposes of Section 28 of the Customs Act:
The Tribunal's interpretation that the relevant date was the date on which the amount was credited into the government treasury was found to be incorrect by the High Court. The Court emphasized that the adjustment of duty occurs when the refund order is issued or the refund cheque is issued, not when the amount is credited into the government treasury. The Court noted that the legislature used distinct terms like "adjustment of duty," "date of refund," and "date of payment," indicating different relevant dates for different scenarios under Section 28.

4. The validity of actions taken pursuant to the show cause notice dated 9th August, 2001:
Since the High Court held that the show cause notice dated 9th August, 2001 was time-barred, all actions taken pursuant to this notice were rendered invalid and unenforceable. The Court concluded that the notice and subsequent actions were beyond the permissible six-month period from the relevant date of adjustment of duty.

Conclusion:
The High Court ruled that the show cause notice issued on 9th August, 2001 was time-barred as it was issued beyond six months from the relevant date of adjustment of duty, which should be either the date of the refund order (31st January, 2001) or the date the refund cheque was issued (6th February, 2001). Consequently, all actions taken pursuant to the said show cause notice were declared invalid and unenforceable. The appeal was disposed of accordingly with no order as to costs.

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