2012 (11) TMI 918 - HC - Customs

Period of limitation reasoned order - purported speaking order has been passed more than 5 months from the date of assessment. allegation of undervaluation - misdeclaration - on the basis of new facts discovered in the course of enquiry by DRI a show cause notice under Section 28 of the Customs Act has been issued upon the appellant/importer and the same is pending consideration. Subsequently, the file was sent back to the Adjudicating Authority and the Adjudicating Authority appears to have passed a speaking order of assessment on 16-2-2009 which is claimed to have been communicated to the Commissioner on 24-2-2009. Thereafter, the Commissioner sought to exercise his powers under Section 129D of the Customs Act and by order dated 20-5-2009 passed an order authorizing appropriate officer to apply for review the aforesaid order of assessment dated 8-9-2008. Held that - Since the earlier order dated 8-9-2008 had already been placed before the Commissioner and the Commissioner had acted upon it, it cannot be said that the subsequent communication of reasons in support of such order should be taken to be the starting point for the period of limitation. There is no provision in Section 129D of the Customs Act, which provides for enlargement of the period of limitation in respect of fraud. In this respect one may make a comparative analysis of Section 28 of the Customs Act and that of Section 129D of the said Act. the plea of existence of a departmental practice of subsequently passing a reasoned order and the claim that the subsequent communication of such reasoned order ought to be starting point of limitation in respect of Section 129D of the Customs Act is wholly untenable. Allegations of fraud cannot alter the period of limitation specified in subsection (3) of Section 129D of the Customs Act and that question is also answered in the affirmative

Summary

Issues Involved:
1. Limitation under Section 129D of the Customs Act.
2. Allegation of fraud and its impact on the limitation period.

Detailed Analysis:

Issue 1: Limitation under Section 129D of the Customs Act

The appellant/importer challenged the review proceedings initiated by the Commissioner under Section 129D of the Customs Act, arguing that they were barred by limitation. The assessment order was passed on 8-9-2008 and communicated promptly, with the importer acting upon it the next day. The Commissioner received information from DRI about potential fraud on 11-9-2008 and called for the file, which was then passed to DRI for further investigation. The Tribunal's finding that the Commissioner acted upon the order on 11-9-2008 was crucial. The appellant argued that the limitation period should start from the date of the original order's communication, not from a subsequent reasoned order issued on 16-2-2009. The court agreed, stating that the limitation period starts from the original communication date, emphasizing that the practice of issuing a subsequent reasoned order cannot extend this period. The court referenced Section 17(5) of the Customs Act, which mandates a reasoned order within 15 days if the assessment is disputed, and found the later reasoned order irrelevant for the limitation period.

Issue 2: Allegation of Fraud and its Impact on the Limitation Period

The Tribunal held that the review proceedings were not barred by limitation due to fraud by the appellant. However, the court found no substantial evidence of fraud at the time of the initial assessment. The appellant had complied with the assessment, and the valuation was independently verified by the authorities. The court noted that Section 129D does not provide for an extended limitation period in cases of fraud, unlike Section 28 of the Customs Act, which explicitly allows for an extended period in cases of collusion, willful misstatement, or suppression of facts. The court emphasized strict interpretation of fiscal statutes, rejecting the notion that fraud could extend the limitation period under Section 129D.

Conclusion:

The court concluded that the review proceedings initiated by the Commissioner were barred by limitation, as the period started from the date of the original order's communication (11-9-2008), not from the subsequent reasoned order. The allegations of fraud did not alter the limitation period under Section 129D, as there is no provision for such an extension in the statute. The court set aside the Tribunal's order, quashed the review order dated 20-5-2009, and the Commissioner's order dated 2-7-2009.

Additional Observations:

The court expressed concern over procedural fairness, noting that the Tribunal's order was pronounced on 28-6-2011 but signed by a member on 17-6-2011, which is procedurally irregular. The appeal was allowed, and no costs were ordered.