2020 (7) TMI 270 - HC - Customs

100% EOU - Debonding of EOU - Commissioner of Customs (Appeals) dismissed the appeal on the ground that, the petitioner had sought to invoke the provisions of Section 35 of the Central Excise Act, 1944 as well as Section 128 of the Customs Act, 1962 and had thereby failed to take recourse to a specific provision - SCN was issued invoking power u/s 28 of the Customs Act, 1962 - time limitation - suppression of facts or not - HELD THAT - A perusal of Ext.P6 reveals that the order was issued by the third respondent, the Joint Commissioner of Customs. The printed format in which Ext.P6 order is issued indicates that an appeal against the order lies to the Commissioner of Customs. It was in such circumstances that the appeal got to be filed before the fourth respondent. It is true that while filing an appeal, the specific provision under which the appeal is filed should be mentioned. But having accepted the appeal on file and proceeded to hear the appeal on merits, the fourth respondent should not have rejected the appeal on the premise that the provisions quoted therein are vague. Even though the learned Standing Counsel vehemently contended that the fourth respondent had decided the appeal on merits, the findings in Ext.P7 do not support that contention. As far as the legal contention of the notice being time barred is concerned, all that is stated in Ext.P7 is that in the impugned order, the claim of the demand being time barred was found to be not maintainable and certain notifications to hold the appellant liable to duty were cited. This observation in Ext.P7 cannot, under any circumstance, be termed as a finding on merit. That being the case, Ext.P7 is liable to be interfered with. The writ petition is allowed by directing the fourth respondent to consider Appeal No. 92 of 2012 filed by the petitioner afresh and to render a decision on merits.

Summary

Issues:
1. Validity of show cause notice under Customs Act, 1962.
2. Applicability of limitation period for issuance of show cause notice.
3. Dismissal of appeal by the Commissioner of Customs (Appeals) on grounds of maintainability.
4. Jurisdiction of the appellate authority in deciding the appeal.

Analysis:

Issue 1: Validity of show cause notice under Customs Act, 1962
The petitioner, a former 100% Export Oriented Unit, faced a show cause notice alleging clearance of goods to the Domestic Tariff Area without payment of duty. The notice was issued under Section 28 of the Customs Act, 1962. The petitioner disputed the allegation and raised a legal objection regarding the notice being time-barred. Subsequently, a fresh notice was issued under Section 11A(1) of the Central Excise Act, 1944, invoking a larger period of limitation. The petitioner contended that issuing a second notice for the same demand was impermissible when the earlier notice was not pursued.

Issue 2: Applicability of limitation period for issuance of show cause notice
The petitioner argued that the second show cause notice, invoking a larger period of limitation, was unjustified. The petitioner maintained that the Department could not issue a fresh notice for the same demand when the initial notice was not pursued. The petitioner emphasized that the demand pertained to a period beyond the statutory limitation, thus challenging the validity of the notice under Section 11A(1) of the Central Excise Act, 1944.

Issue 3: Dismissal of appeal by the Commissioner of Customs (Appeals) on grounds of maintainability
The appeal filed by the petitioner before the Commissioner of Customs (Appeals) was dismissed on the basis of the provisions under which the appeal was filed being considered vague. The appellate authority held that the petitioner failed to invoke a specific provision despite the impugned order being passed under the Central Excise Act, 1944. The dismissal of the appeal was challenged on the grounds of abdication of appellate power and failure to address the petitioner's contentions, both legal and factual.

Issue 4: Jurisdiction of the appellate authority in deciding the appeal
The High Court found merit in the petitioner's contention that the dismissal of the appeal by the Commissioner of Customs (Appeals) based on the vagueness of the provisions quoted was unjustified. The Court noted that the appeal was accepted for hearing on merits, and rejecting it on technical grounds was improper. The Court directed the appellate authority to reconsider the appeal and render a decision on merits. It was emphasized that if the appellate authority lacked jurisdiction, the appeal should be transferred to the appropriate authority in the Central Excise Commissionerate for a decision on merits.