2018 (10) TMI 1767 - HC - Customs

Time Limitation - imposition of penalty - Whether CESTAT was right in dismissing the appeal preferred by Commissioner of Customs (Export) holding that the SCN for imposition of penalty was barred by limitation? - HELD THAT - The decision in Bhatinda District Co-op. Milk P. Union Ltd. 2007 (10) TMI 300 - SUPREME COURT is clear that wherever power is conferred upon any statutory authority which can potentially result in infliction of penalty or such adverse orders, the jurisdiction is to be invoked within reasonable time atleast from obtaining the information preferably within five years. In this case the jurisdiction to invoke penalty clause was invoked atleast eight years after receipt of information. The principle in Bhatinda District Co-op. Milk P. Union Ltd. squarely applies - the question of law framed in this case is answered against the Revenue/appellant and in favour of the assessee - Appeal dismissed.

Summary

Issues:
1. Dismissal of appeal by Customs, Excise and Service Tax Appellate Tribunal due to limitation on show cause notice for penalty.

Analysis:
The judgment in question dealt with the issue of whether the Customs, Excise and Service Tax Appellate Tribunal was correct in dismissing the appeal by the Commissioner of Customs (Export) on the grounds that the show cause notice for imposition of penalty was barred by limitation. The Customs Authorities suspected the respondent/assessee of wrongly availing benefits under Notification No. 48/2000-Cus. The show cause notice for penalty was issued much later than the receipt of information, leading to a delay of several years. The Order-in-Original dated 18-12-2008 canceled 13 DFRC licenses, and a subsequent show cause notice dated 20-1-2010 was issued, which was later dropped in the Order-in-Original dated 4-10-2010. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) based its decision on the judgment of the Supreme Court in 'State of Punjab v. Bhatinda District Co-op. Milk P. Union Ltd.', 2007 (217) E.L.T. 325 (S.C.), ruling that the belated show cause notice was illegal, and thus, imposing a penalty was unjustified.

The High Court analyzed the submissions of both parties and considered the precedent set by the Supreme Court in the 'Bhatinda District Co-op. Milk P. Union Ltd.' case. The Court emphasized that any statutory authority empowered to impose penalties must do so within a reasonable timeframe, preferably within five years of obtaining relevant information. In this case, the penalty clause was invoked eight years after receiving the information, which was deemed excessive. Consequently, the Court applied the principle established in the 'Bhatinda District Co-op. Milk P. Union Ltd.' case to the present situation. The Court ruled against the Revenue/appellant and in favor of the assessee, ultimately dismissing the appeal.

In conclusion, the judgment highlighted the importance of adhering to statutory timelines when invoking penalties or issuing adverse orders. The decision underscored the necessity for authorities to act promptly upon receiving information to ensure fairness and avoid undue delays in legal proceedings. The ruling served as a reminder of the significance of timely enforcement actions within the legal framework to uphold the principles of justice and procedural regularity.