2007 (5) TMI 428 - AT - Customs

Summary

Issues Involved:
The issues involved in this case are the breach of bond conditions leading to a demand for payment of customs duty, the applicability of the plea of time-bar in response to the demand raised, and the issuance of a detention notice under Section 142 of the Customs Act.

Breach of Bond Conditions and Demand for Payment of Customs Duty:
The appellants imported "Micro Crystalline Cellulose" under Customs Notification No. 158/95, which required the exported product resulting from reprocessing to be exported. The appellants failed to furnish proof of export as required under the bond. Subsequently, a demand for the "bond value" of Rs. 17,50,835/- was made by the Assistant Commissioner, and a notice under Section 28(1) of the Customs Act was issued to the appellants to show cause why the duty should not be paid. The appellants did not respond to the notice or attend the hearing. The adjudicating authority confirmed the duty demand under Section 28(2) for breach of the bond. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

Applicability of Plea of Time-Bar:
The legal issue in question is whether the demand of duty is time-barred. The Commissioner (Appeals) imposed a contractual obligation on the appellants to pay duty due to the bond breach and rejected the plea of time-bar. The appellants argued that the demand, issued without invoking the extended period of limitation, was time-barred as the show-cause notice was issued on 12-10-98, well beyond the ordinary six-month period. The appellants contended that the extended period of limitation could only be invoked with specific allegations such as fraud, collusion, or suppression of facts, which were absent in this case. The Tribunal agreed with the appellants, holding that the demand was time-barred as the extended period of limitation was not invoked, and the notice did not provide grounds for such invocation.

Detention Notice under Section 142 of the Customs Act:
A detention notice was issued to the appellants under Section 142 of the Customs Act after the Order-in-Original was passed. Subsequently, the Department informed the appellants that the detention notice was being kept in abeyance pending finalization by the Commissioner (Appeals). The Tribunal found the orders of the lower authorities unsustainable and set them aside. It was determined that there was no justification for keeping the detention notice in abeyance any longer, allowing the Department to proceed with the Section 142 proceedings in accordance with the law.

Conclusion:
The Tribunal set aside the orders of the lower authorities and allowed the appeal in favor of the appellants, primarily due to the time-barred nature of the duty demand and the unsustainable detention notice proceedings under Section 142 of the Customs Act.