2013 (9) TMI 63 - AT - Customs

Duty Demand u/s 28 Condonation of delay - The show cause notice had been issued for recovery of duty after a lapse of more than 14 years - Held that - The notice was issued after the normal period of 6 months but also after the extended period of 5 years had lapsed - the demand was time-barred - The Revenue s contention that the delay in show cause notice was attributable to the pendency of the matter and this period should be excluded while computing the time limit was not sustainable - VIDEOCON INTERNATIONAL LTD. Versus UNION OF INDIA 2010 (12) TMI 381 - SUPREME COURT OF INDIA - there was no stay in adjudicating the case - the show cause notice demanding duty was hopelessly time-barred and consequently the confirmation of duty demand along with interest thereon under the proviso to Section 28(1) read with 28AA/28AB. Confiscation of goods u/s 111(d) Confiscation being Time barred - Revenue was of the view that the Additional Licences issued to Export Houses/Trading Houses after 1-4-88 were non-transferable - the CPTs imported could not had been cleared for home consumption unless it was sold to Actual Users and sale of the same when the goods were under bond was in contravention of the Import (Control) Order, 1955 - it was very evident that they colluded and connived with each other to illegally import CPTs circumventing the provisions of the Exim policy and also exported the same in contravention of the said policy The imported goods were liable to confiscation u/s 111(d) The show cause notice had been issued u/s 124 issue of a show cause notice prior to passing of an order of confiscation or imposition of personal penalty was mandatory, but the language of Section 124 was clear and precise and no restriction of or limitation or even a fetter was imposed as regards the time when proceedings may be initiated by issue of a show cause notice - Mohanlal Devadhanbhai Choksey and Others v. M.P. Mondker and Others 1976 (3) TMI 54 - HIGH COURT OF JUDICATURE AT BOMBAY - Confiscation of goods, imposition of fine in lieu thereof or imposition of penalty are not subject to any time-bar. Sale in Custom bond - Permissibility to Export - Whether the sale of CPTs while in customs bond and the subsequent export was permissible under the provisions of Exim policy or not - Held that - The transfer of the CPTs when the goods were bonded in the warehouse was clearly a contravention of the import policy and the Import (Control) Order as they stood at the relevant time - Keeping the goods in a customs bonded warehouse was not clearance of the goods through customs The additional licences issued to Export Houses were non-transferable neither were the actual users of the imported CPTs - Clearance takes place only when goods are deboned. Export as such - Whether the CPTs could have been exported as such Held that - The exports undertaken were not in accordance with the Exim policy as they stood at the relevant time - assesse sought to export CPT from customs bonded premises no CTV assembly was exported as envisaged but individual pieces and components for the CTV assembly there was violation of the provisions of the Export (Control) Order also. Redemption fine - Interest and Penalty u/s 112(i) - Held that - Redemption fine imposed was excessive Redemption fine was reduced in line with the value addition which was the profit margin on the transaction - As regards the penalty - the penalty imposed was on the higher side penalty was also reduced u/s 112(a) & 112(b) - the goods had been allowed to be exported subject to execution of bond and bank guarantee - they were liable to redemption fine u/s 125 and liable to penalty u/s 112 Decided against assesse.

Summary

Issues Involved:
1. Demand of duty under Section 28 of the Customs Act.
2. Liability to confiscation of goods under Section 111(d) of the Customs Act and consequential imposition of penalties.

Detailed Analysis:

1. Demand of Duty under Section 28 of the Customs Act:

The demand of duty was made under Section 28(1) of the Customs Act, which requires a notice for determination of duty and its recovery to be issued within six months from the relevant date, extendable to five years in cases of collusion, fraud, suppression, or willful misstatement. In this case, the goods were imported on 26-7-1988 and cleared for export on 9-9-1988. The show cause notice was issued on 31-12-2002, after more than 14 years, making the demand time-barred. The Revenue's contention that the delay was due to court proceedings was rejected as the courts had permitted adjudication. Thus, the demand of Rs. 91,52,206/- under Section 28(1) was set aside as time-barred.

2. Liability to Confiscation of Goods under Section 111(d) of the Customs Act and Consequential Imposition of Penalties:

The imported goods, 6300 CPTs, were sold while in bond by SDTAL to VIL, which was argued to be in violation of the Import (Control) Order, 1955, as the goods should have remained the property of the licensee until clearance through customs. The additional licences issued to Export Houses after 1-4-88 were non-transferable, and the goods were subject to actual user conditions. The transfer of CPTs by SDTAL to VIL while still bonded was a contravention of the import policy.

Additionally, the export of CPTs by VIL was not in accordance with the Export (Control) Order, 1988, which restricted the export of certain goods without a licence. The CPTs were exported without being assembled into CTVs, violating the provisions of the Export (Control) Order.

The Tribunal found that both SDTAL and VIL colluded to circumvent the Exim policy, making the goods liable to confiscation under Section 111(d). However, the redemption fine was reduced from Rs. 25 lakhs to Rs. 5 lakhs, considering the value addition. The penalties on SDTAL and VIL were reduced from Rs. 20 lakhs each to Rs. 5 lakhs each under Section 112(a) & 112(b).

Conclusion:

The duty demand of Rs. 91,52,206/- was set aside as time-barred. The confiscation of goods under Section 111(d) was upheld, but the redemption fine was reduced to Rs. 5 lakhs, and the penalties on the appellants were reduced to Rs. 5 lakhs each. The appeal was disposed of in these terms.