2015 (10) TMI 1981 - AT - Customs

Confiscation of seized goods - delay in issuance of SCN - Imposition of penalty - Held that - As per the provision of section 110 of the Customs Act 1962 a show cause notice can be issued within six months from the date of the seizure of the goods. In this case admittedly on 29.03.2006 goods were detained and released to the appellant under superdinama with the direction not to dispose of the goods till further order of the concerned officer. As per the department goods were seized only on 27.05.2006. In fact, the goods were in the custody of the department since 29.03.2006. Therefore, as per section 110 of the Customs Act 1962 the show cause notice can be issued within six months from the date of detention of the goods i.e. on 29.03.2006 as held by the Hon ble High Court of Madhya Pradesh in the case of Vilayat Hussain Vs. UOI 1987 (12) TMI 54 - HIGH COURT OF MADHYA PRADESH AT JABALPUR - As the show cause notice has been issued beyond a period of six months from the date of detention of the goods, therefore, the show cause notice is barred by limitation. Consequently, the proceedings initiated as per the show cause notice are quashed. With these terms, I hold that the goods cannot be confiscated beyond six months from the date of detention and redemption fine and penalty is not imposable on the appellant. With these terms, impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
- Appeal against imposition of redemption fine
- Barred by limitation: Show cause notice issued beyond prescribed time
- Interpretation of section 110 of the Customs Act 1962
- Legal validity of redemption fine and penalty

Analysis:
The appellant filed an appeal against an order imposing a redemption fine. The case involved the detention and subsequent seizure of goods by Central Excise Officers, leading to the issuance of a show cause notice for confiscation and penalty. The appellant argued that the show cause notice, issued on 27.11.2006, was beyond the time limit prescribed by section 110 of the Customs Act 1962, which allows for issuance within six months from the date of seizure. The appellant contended that since the goods were initially detained on 29.03.2006 and seized on 29.05.2006, the show cause notice was time-barred. The appellant relied on legal precedent, citing a High Court case and a Supreme Court decision to support their argument that the limitation period should be calculated from the date of detention.

The opposing party argued that the procedure allows for goods to be initially detained and later seized if necessary, emphasizing that the show cause notice timeline begins from the date of seizure. The Tribunal considered both arguments and reviewed the provisions of section 110 of the Customs Act 1962. The Tribunal noted that the goods were in the department's custody since 29.03.2006, even though they were officially seized on 27.05.2006. Referring to the legal precedents presented by the appellant, the Tribunal agreed that the show cause notice should have been issued within six months from the date of detention, as established by the High Court and Supreme Court judgments. Consequently, the Tribunal held that the show cause notice was time-barred and quashed the proceedings initiated based on it.

In conclusion, the Tribunal determined that the goods could not be confiscated beyond six months from the date of detention, and therefore, redemption fine and penalty were not applicable to the appellant. The impugned order imposing the redemption fine was set aside, and the appeal was allowed in favor of the appellant.