2018 (8) TMI 639 - AT - Customs

Extended period of limitation - Section 28(2B) of Customs Act - intent to evade - Held that - If the re-calibrated measurements are considered the appellant had, in fact, lost money by paying excess duty overall and has not gained anything by not re-calibrating their tanks. Therefore, it cannot be alleged that the appellant had any motive to evade payment of duty because he actually paid excess duty on the whole. The extended period of limitation cannot be invoked with respect to those demands and since the show cause notice has been issued after the period, the entire demand is unsustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Calculation of import duty based on quantity received in shore tanks.
2. Allegations of excess cargo received and duty not discharged.
3. Validity of show cause notice under Sec.28(2B).
4. Application of Sec.28 to the case.
5. Bar on demands by limitation.
6. Re-calibration of tanks and impact on duty payments.
7. Imposition of penalty and interest.

Analysis:

Issue 1:
The appeal challenged the Order-in-Appeal regarding the calculation of import duty based on the quantity received in shore tanks, not the ship's quantity. The calibration charts were crucial in quantifying the cargo stored in tanks.

Issue 2:
Allegations of excess cargo received by the importer led to demands of unpaid duty. The discrepancy was identified through re-calibration of tanks, resulting in differential duty demands, interest, and penalties.

Issue 3:
The appellant argued against the validity of the show cause notice under Sec.28(2B), contending that once the differential duty was paid voluntarily, no notice should have been issued.

Issue 4:
The appellant relied on case laws to argue that Sec.28 applies to cases of duty not charged or short-charged, which was not applicable once the differential duty was paid promptly upon identification of the discrepancy.

Issue 5:
The appellant claimed that demands were time-barred due to the absence of fraud or suppression of facts. The argument aimed to contest the imposition of demands beyond the limitation period.

Issue 6:
Re-calibration of tanks was ordered by the department due to discrepancies. The re-calculation revealed both excess and short payments of duty, leading to a conclusion that the appellant had actually paid excess duty overall.

Issue 7:
The department argued for the confirmation of demands, interest, and penalty, citing the re-calibration results. However, the Tribunal found that the demands were unsustainable due to the absence of motive for duty evasion, as the appellant had paid excess duty overall.

The Tribunal allowed the appeal, setting aside the demands of differential duty, interest, and penalty. The appellant was advised to file a refund claim for the excess duty paid. The judgment emphasized the importance of accurate calibration in determining duty payments and highlighted the appellant's compliance by paying excess duty despite discrepancies.