1998 (1) TMI 74 - SC - Customs

Period of limitation - Held that - While the period of limitation is prescribed for issue of a show cause notice under sub-section (5) of Section 131 when the Central Government seeks to annul the order passed by the original assessing authority, no period of limitation with regard to show cause notice issued under sub-section (3) of Section 131 where the order sought to be annulled is that of the appellate or revisional authority. In the present case, the Show Cause Notice dated August 13, 1981 has been issued in exercise of the power conferred under sub-section (3) of Section 131. Since no period of limitation is prescribed for exercising the power under sub-section (3) of Section 131, the proceeding initiated on the basis of the said Show Cause Notice could not be held to be not maintainable as being barred by limitation. Thus unable to uphold the impugned judgment of the Tribunal. Appeal allowed.the impugned judgment of the Tribunal is set aside and the matter is remitted to the Tribunal for consideration on merits in accordance with law.

Summary

Issues:
1. Classification of imported goods for custom duty assessment.
2. Validity of the Show Cause Notice issued by the Central Government under Section 131(3) of the Customs Act, 1962.
3. Interpretation of the provisions of Section 131(3) and Section 131(5) of the Customs Act, 1962 regarding the period of limitation for issuing show cause notices.

Analysis:
1. The case involved the classification of imported goods for custom duty assessment, specifically focusing on a Step and Repeat Machine, an Automatic Photo Camera 'Danagraf', and Glass Film and Screens. The Assistant Collector of Customs initially classified these goods under specific headings in the Customs Tariffs. However, on appeal, the Collector of Customs (Appeal) disagreed with the classification and made changes, which were further challenged by the Central Government through a Show Cause Notice.
2. The Central Government issued a Show Cause Notice under Section 131(3) of the Customs Act, 1962, proposing to annul or modify the order-in-appeal regarding the classification of the imported goods. The respondent raised an objection that the Show Cause Notice was barred by limitation under Section 28 of the Act, as it was issued more than one year after the order of the appellate authority. The Tribunal accepted this objection and held the proceedings initiated based on the Show Cause Notice as not maintainable due to being time-barred.
3. The interpretation of the provisions of Section 131(3) and Section 131(5) of the Customs Act, 1962 was crucial in determining the validity of the Show Cause Notice issued by the Central Government. The Tribunal's decision was based on the distinction between orders passed under Section 128 or Section 130 (sub-section 3) and orders passed by the original assessing authority (sub-section 5) for the applicability of the period of limitation. The Tribunal's decision was overturned by the Supreme Court, emphasizing that no period of limitation is prescribed for exercising the power under sub-section 3 of Section 131, which deals with annulment or modification of appellate or revisional orders. Therefore, the proceedings initiated based on the Show Cause Notice were deemed maintainable, and the matter was remitted to the Tribunal for consideration on merits.