2015 (9) TMI 813 - HC - Customs

Demand for interest and penalty Delay in service of notice Show cause notice came to be issued to Respondent calling upon it to show cause as to why interest and penalty should not be demanded Adjudicating authority confirmed issue and imposed penalty Respondents thereafter preferred appeal before tribunal which is allowed by impugned order Held that - Demand for interest pertains to dues which were paid on various dates Clearly seen that there is delay of more than three years from date on which first cause of action arose and more than two years from date on which last cause of action arose Said delay has not at all been explained In that view of matter, it cannot be said that Tribunal was unjustified in holding that delay in issuing show cause notice was not sustainable in law Tribunal has rightly allowed appeal of Respondent Decided against Revenue.

Summary

Issues:
1. Appeal against the order of CESTAT allowing the appeal filed by the Respondent.
2. Interpretation of limitation period under Section 61 of the Customs Act.
3. Justification of delay in issuing show cause notice.

Analysis:
1. The appeal before the High Court stemmed from the order of the CESTAT, Ahmedabad, which had allowed the appeal filed by the Respondent challenging the order passed by the Commissioner (Appeals), Central Excise and Customs, Daman. The Appellant Revenue contested this decision (para 2).

2. The core issue revolved around the interpretation of the limitation period under sub-section (2) of Section 61 of the Customs Act, 1962. The Respondent had warehoused goods beyond the stipulated period, leading to a show cause notice for demanding interest and imposing penalties. The Revenue argued that there was no specific limitation under Section 61, unlike Section 28, and the Tribunal erred in holding the notices as beyond limitation. The Tribunal, however, emphasized the need for action within a reasonable period, citing precedents and the Apex Court's stance on inordinate delays in notices (para 3-6).

3. The High Court analyzed the delay in issuing show cause notices in the present case. The demand for interest related to payments made between specific dates, indicating a significant delay in taking action. The Court found the delay unexplained and upheld the Tribunal's decision that the delay in issuing notices was not legally sustainable. Ultimately, the High Court dismissed the appeal, affirming the Tribunal's reliance on the Apex Court's judgment (para 7-8).