2020 (10) TMI 971 - HC - Customs

Validity of SCN - Levy of Penalty u/s 112(a) of Customs Act on CHA - abetment of offence committed by the importer as against which the petitioner - scope of Sections 28(2) and 28(4) of the Customs Act, 1962 - suppression of facts or not - extended period of limitation - HELD THAT - The benefit extended to an assessee under section 28(2) is available only in those situations falling under clauses (i) and (ii) of section 28(1)(b), that is, either where the assessee self-computes or seeks a computation from the proper officer of the duty and interest payable, and remits the same voluntarily, even prior to the receipt of a SCN from the officer and not in any other situation contemplated under Section 28 - In the present case, the SCN has been issued invoking the provisions of section 28(5) which contemplates an alternate scheme of assessment. This submission is not acceptable for the reason that it does not take note of the scheme of assessment under Section 28 as noted and explained by me in the preceding paragraphs. To reiterate the conclusion in paragraphs 12 to 17 above, the benefit under Section 28(2) is available only in the case of a regular assessment contemplated made under Section 28(1). This is made clear by the explicit exclusion in Section 28(1) of cases of collusion, wilful mis-statement or suppression of facts for the initiation of which revenue has the benefit of an extended limitation of five years. Furthermore, section 28(2) makes reference to the duty and interest remitted by the assessee computed in terms of Section 28(1), that is, in cases where there is no allegation of collusion, mis-statement or suppression of facts - The placement of Section 28(2), immediately after 28(1) is also, to my mind, supportive of the aforesaid conclusion. It is evident that it is only the remittance of duty and interest as referred to in sub-section (1) that is addressed in sub-section (2) of Section 28. The petitioner is permitted to file an appeal challenging the impugned order before the appellate authority within a period of two weeks from the date of uploading of this order. Such appeal, if filed within the period as stated hereinbefore, shall be received by the registry of the appellate authority without reference to limitation but subject to all other statutory pre-conditions and will be heard and disposed on merits - petition dismissed.

Summary

Issues Involved:
1. Violation of Sections 28(2) and 28(4) of the Customs Act, 1962.
2. Bar of limitation under Section 28(4) of the Customs Act.
3. Issuance of show cause notice despite the remittance of differential duty and interest.

Detailed Analysis:

Violation of Sections 28(2) and 28(4) of the Customs Act, 1962:
The petitioner, a customs house agent, challenged the order dated 24.12.2018 by the Commissioner of Customs, arguing it violated Sections 28(2) and 28(4) of the Customs Act, 1962. The order imposed a penalty under Section 112(a) for abetting import violations by PNN Steel Private Limited. The petitioner contended that the penalty was unjustified as the differential duty and interest had already been paid in 2014, and thus, the show cause notice should not have been issued.

Bar of Limitation Under Section 28(4) of the Customs Act:
The petitioner argued that the show cause notice issued on 09.05.2017 was barred by limitation as there was no fraud, collusion, or willful misstatement/suppression of facts to justify the extended five-year limitation under Section 28(4). The petitioner claimed that the regular two-year limitation period under Section 28(1) should apply, making the notice invalid.

The court examined Section 28, which outlines the assessment scheme under the Customs Act, distinguishing between "regular" and "special" assessments. Regular assessments under Section 28(1) have a two-year limitation unless fraud, misstatement, or collusion is involved. In such cases, special assessments under Section 28(4) allow for a five-year limitation. The court noted that the show cause notice invoked Section 28(5), which pertains to special assessments involving collusion, willful misstatement, or suppression of facts.

Issuance of Show Cause Notice Despite Remittance:
The petitioner contended that the show cause notice was contrary to law as the differential duty and interest had been voluntarily remitted in 2014, citing Section 28(2). The court clarified that Section 28(2) benefits apply only to regular assessments under Section 28(1) and not to cases involving collusion, misstatement, or suppression of facts. The court emphasized that Section 28(2) forecloses further action only in regular assessments where the duty and interest are voluntarily paid before the issuance of a show cause notice.

The court concluded that the benefit under Section 28(2) is restricted to regular assessments and does not extend to special assessments involving allegations of collusion, misstatement, or suppression of facts. The court found that the petitioner’s case involved such allegations, making the invocation of Section 28(4) appropriate.

Conclusion:
The court dismissed the writ petition, allowing the petitioner to file an appeal before the appellate authority within two weeks. The appeal would be accepted without reference to limitation but subject to other statutory pre-conditions, to be heard and disposed of on merits. The court did not interfere with the impugned order, emphasizing that the determination of facts and the proper period of limitation should be addressed by the appellate authority.