2013 (12) TMI 819 - AT - Customs

Validity of show case notice - Bar of limitation - Whether the Show Cause Notice issued within 6 months from the date of seizure is in accordance with the provisions of Section 110(2) of the Act - Held that - if the Show Cause Notice is not issued within 6 months from the date of seizure, only consequence would be that the person from whom the goods were seized, would become entitled to their return - The period laid down under Section 110(2) is of seizure of goods and not the validity of the notice. As such, by applying the ratio of law as declared by Hon ble Supreme Court, even if it is considered that the notice does not stand issued within 6 months from the date of seizure as envisaged by Section 110(2) of Customs Act, 1962, the effect of the same would be that the appellant would become entitled to return of the goods. However, it is seen that the goods were already carted by the appellant in CFS and continued to lie there even during the period of detention and after the seizure was formally made. They never applied for return of the rice. As such, it has to be held that the seizure continued till the Show Cause Notice was issued. The same cannot be held to be barred by limitation - Following decision of Chaganlal Gainmull v. CCE 1989 (11) TMI 59 - SUPREME COURT OF INDIA - Decided against assessee.

Summary

Issues:
Limitation period for issuance of Show Cause Notice in a customs case.

Analysis:
The judgment pertains to a Rectification of Mistake (ROM) application filed by the applicant challenging the confiscation of rice, redemption fine, and penalty imposed by the lower authority. The main issue raised was the ground of limitation regarding the issuance of the Show Cause Notice. The applicant argued that the notice was issued beyond the 6-month period from the date of detention of the goods, relying on a Kolkata High Court judgment. The Revenue, on the other hand, contended that due to misclassification and mala fide intent of the exporters, the 6-month period should not apply. The Tribunal examined the facts, including the detention and seizure dates, along with the relevant legal provisions.

The Tribunal observed that the rice was detained on 15-3-2010, and a Show Cause Notice was issued on 23-9-2010, within 6 months from the seizure date of 25-3-2010. The applicant argued that the Notice should have been issued within 6 months from the detention date. The Tribunal referred to a Kolkata High Court judgment where the date of sealing was considered as the date of seizure due to lack of access to the goods. However, in the present case, there was no such sealing by Customs officers. Additionally, the Tribunal cited a Supreme Court judgment stating that failure to issue the Notice within 6 months only entitles the person to return the goods, without specifying a time limit for the Notice under Section 124 of the Customs Act, 1962. Since the goods were not requested to be returned, the Tribunal held that the seizure continued until the Notice was issued, rejecting the plea of limitation.

Ultimately, the Tribunal rejected the ROM application, concluding that the applicant's plea of limitation was unfounded based on the facts and legal precedents cited. The judgment was pronounced on 17-8-2011 by the Tribunal.