2017 (10) TMI 469 - AT - Customs

Valuation of imported goods - foreign liquor - rejection of declared value - Since, the prices of the importer-appellants were much below than the declared prices of DDFSPL, the Department has entertained the view that there was deliberate attempt to undervalue the goods and evade substantial customs duty - Extended period of limitation - Held that - The Bills of Entries, in the present case, were filed by the importer-appellants between the period August 2009 to February 2013. The provisions for recovery of short-levied or non-levied duties are contained in Section 28 of the Customs Act, 1962. The said statutory provision mandates the time limits for issuance of the show cause notice in different circumstances - On a conjoint reading of both sub-sections (2) and (4) of Section 28 ibid, it would reveal that in case of short levy or non-levy of duty, other than the situation involving collusion, wilful mis-statement and suppression of facts, the proper officer shall issue the show cause within a period of one year from the relevant date, calling upon the concerned person to show cause, as to why the duty cannot be recovered from him. However, in exceptional circumstances, where non-levy or short levy of duty is by reason of fulfilment of the above ingredients, then instead of the period of one year, the proceedings can be initiated within five years, for recovery of such duty - In the present case, it is an admitted fact on record that the show cause proceedings were not initiated within the normal period of one year from the relevant date i.e. filing of Bills of Entries and payment of duty on the declared value. In view of the settled position of law and in view of the fact that the Department has not brought on any iota of evidence of the involvement of the importer-appellants in the fraudulent activities, concerning collusion, wilful mis-statement and suppression of facts with reference to value of imported goods, in our considered view, the demand could not have been issued for extended period - In the case in hand, it is an admitted fact that the show cause notice has been issued beyond the period of one year from the date of filing the Bills of Entries and payment of duty on the declared value. Thus, the proceedings are wholly barred by limitation of time as per the dictates of Section 28 ibid. The appeals by the importer-appellants are to be allowed on the ground of limitation - decided in favor of appellant.

Summary

Issues:
1. Time limitation for recovery of duty demand
2. Rejection of declared value and imposition of penalties

Issue 1: Time limitation for recovery of duty demand

The case involved an appeal against an order passed by the Commissioner of Customs regarding the rejection of declared value of imported alcoholic beverages. The importer-appellants argued that the proceedings initiated by the Department were time-barred as the show cause notice was issued beyond the normal period of limitation. The importer's advocate contended that without any evidence of mis-declaration, collusion, or wilful misstatement, the duty demand cannot be extended beyond the normal period as per the Customs Act, 1962. Reference was made to the judgment in Uniworth Textiles Ltd. vs. Commissioner of Central Excise, emphasizing the burden of proof on the Department to establish fraudulent activities. The Tribunal analyzed the provisions of Section 28 of the Customs Act, 1962, and concluded that since the show cause notice was issued beyond the one-year period from the relevant date, the proceedings were time-barred. The Tribunal held that without evidence of fraudulent activities by the importer-appellants, the demand could not be issued for an extended period, and thus, the appeals were allowed on the ground of limitation.

Issue 2: Rejection of declared value and imposition of penalties

The Department had rejected the declared value of imported liquor by the importer-appellants based on a comparison with another importer, resulting in a duty demand and penalties. The importer's advocate argued that the rejection of declared value and redetermination under Customs Valuation Rules was not justified as the comparison with the other importer was not valid due to differences in commercial levels and sourcing of goods. The Department, on the other hand, defended the rejection of declared value and imposition of penalties based on the comparison and findings in the impugned order. The Tribunal examined the case records and found that the Department had not provided evidence of collusion or fraudulent activities by the importer-appellants. The Tribunal ruled in favor of the importer-appellants, stating that the demand could not be sustained beyond the normal period of limitation. Consequently, the impugned orders were set aside, and the appeals by the importer-appellants were allowed, while the appeal by the Revenue was dismissed.

In summary, the Tribunal's judgment in this case primarily focused on the time limitation for recovery of duty demand and the rejection of declared value. The Tribunal emphasized the burden of proof on the Department to establish fraudulent activities and concluded that without such evidence, the duty demand could not be extended beyond the normal period. As a result, the appeals by the importer-appellants were allowed on the ground of limitation, and the impugned orders were set aside.