2024 (3) TMI 371 - HC - Customs

Writ Petitions - Delay in finalization of Provisional Assessment - barred by limitation - Challenged the Order of Appellate court - Validity of Show cause notices(SCNs) issued without Pre-SCN consultation - delayed passing of the Order-in-Originals - Penalties - Goods imported as Steam Coal from outside the territory of India - demand duty - Confiscation of Steam Coal - Redemption of Fine - Penalty - HELD THAT - From the facts it is clear that the case of the Petitioner is barred by limitation of 6 months as per Para 3 of Chapter 7 of CBIC Manual and not as per Rule 5 of 2018 Regulation. The Commissioner (Appeal) in the Appellate Order dated 01-08-2022 has held that the finalization of provisional assessment is barred by limitation. Para 3.1 of the CBIC Instruction; the limitation under Rule 5 of 2018 Regulation is applicable prospectively w.e.f. 14-08-2018 is not applicable to present case as the Bills of Entries are assessed provisionally in 2011-12 and 2012-13 i.e. much before 14-08-2018. It is not out of place here to mention that Rule 5 of Customs (Finalization of Provisional Assessment) Regulation 2018 (the 2018 Regulation) applies only to provisional assessment made after 14-08-2018; hence in the case at hand it cannot be applied on the provisional assessments of the 4 Bill of Entries as they are made in the year 2012. The limitation for finalization to the case at hand would be governed by Para 3.1 of the CBIC Instruction as per which the finalization of provisional assessment is to be made expeditiously well within 6 months whereas in the instant case the finalization is done after 6 years to 9 years. We hold that the 1st Appellate Order dated 10-08-2022 which is challenged along with validity of aforesaid two show cause notices both dated 20-04-2018 and two adjudication Orders both dated 19-11-2018 u/s 28 against Bill of Entry No. 260/HC/2011-12 and Bill of Entry No. 261/HC/2011-12 respectively is not sustainable in the eye of law and legal proposition settled by the Hon ble Apex Court and various High Courts on the ground that both the adjudication orders dated 19-11-2018 are passed after expiry of mandatory period limitation of 6 months as provided under Section 28(9)(a) of the Customs Act 1962; further the impugned two SCNs dated 20-04-2018 are issued without Pre-SCN consultation as mandated under proviso to Section 28(10)(a) of the Customs Act 1962. Thus we are having no hesitation in holding that the impugned Order-in-Originals both dated 19-11-2018 should have been passed within limitation period of 6 months in accordance with Section 28(9)(a) which is mandatory in character particularly after omission of the words where it is possible to do so . In the instant case for absence of collusion wilful mis-statement or suppression of fact no penalty u/s 114A have been imposed hence extended period of one year is not attracted in the instant case. Further the mandatory Pre-SCN consultation as mandated under proviso to Section 28(1)(a) of the Customs Act 1962 read with Pre-Notice Consultation Regulation 2018 are not complied with while issuing the impugned SCNs both dated 20-04-2018 hence the subsequent Order-in-Original both dated 19-11-2018 and the impugned 1st Appellate Order dated 10-08-2022 are bad in law being void ab initio and a nullity in the eyes of law.

Summary

Issues Involved:
1. Legality of the impugned Order-in-Appeal dated 10-08-2022.
2. Legality of the impugned Order-in-Original dated 19-11-2018.
3. Legality of the impugned Show Cause Notices dated 20-04-2018.
4. Legality of the finalization of provisional assessments after a significant delay.
5. Compliance with mandatory pre-show cause notice consultation.

Summary:

1. Legality of the impugned Order-in-Appeal dated 10-08-2022:
The petitioner challenged the Order-in-Appeal dated 10-08-2022, which remanded the matter for de novo adjudication, arguing that the impugned orders were barred by limitation under Section 28(9)(a) of the Customs Act, 1962. The court held that the Commissioner (Appeal) failed to appreciate the mandatory nature of the six-month limitation period and the necessity of pre-show cause notice consultation, rendering the entire proceeding void ab initio.

2. Legality of the impugned Order-in-Original dated 19-11-2018:
The petitioner contested the Order-in-Original dated 19-11-2018, asserting that it was passed beyond the six-month limitation period specified in Section 28(9)(a) of the Customs Act, 1962. The court found that the orders were indeed issued after the mandatory period, and no extension of time was granted. Consequently, the court quashed the orders as they were void ab initio and a nullity in the eyes of the law.

3. Legality of the impugned Show Cause Notices dated 20-04-2018:
The petitioner argued that the Show Cause Notices were issued without the mandatory pre-show cause notice consultation as required under Section 28(1)(a) of the Customs Act, 1962. The court confirmed that the consultation was not conducted, making the subsequent orders illegal. The court emphasized that the pre-notice consultation is mandatory and must be scrupulously adhered to.

4. Legality of the finalization of provisional assessments after a significant delay:
The petitioner challenged the delayed finalization of provisional assessments, which took 6 to 9 years, contrary to the CBIC Manual of Instructions that mandates finalization within six months. The court held that such delays were unreasonable and contrary to the instructions, rendering the final assessments invalid.

5. Compliance with mandatory pre-show cause notice consultation:
The court reiterated that the pre-show cause notice consultation is mandatory under the Customs Act, 1962, and non-compliance with this requirement invalidates the subsequent proceedings. The court cited relevant case law to support this position, emphasizing that statutory requirements must be followed strictly.

Conclusion:
The court allowed both writ applications, quashing the impugned orders and show cause notices due to non-compliance with statutory limitations and mandatory procedural requirements. The proceedings were deemed void ab initio and a nullity in the eyes of the law.