2002 (5) TMI 117 - AT - Customs

Summary

Issues:
Challenge to impugned order confirming duty demand and penalty, validity of show cause notice on the ground of limitation.

Analysis:
The case involved an appeal against an order confirming a duty demand and penalty imposed by the Commissioner of Customs. The appellants, engaged in exporting goods, imported brass scrap duty-free against advance licenses but failed to discharge the export obligation. The Commissioner confirmed the duty demand of Rs. 28,17,072/- and imposed penalties on the appellants. The main contention raised was the validity of the show cause notice on the ground of limitation under Section 28 of the Customs Act.

The appellants argued that the show cause notice was time-barred as it was issued after the statutory period of six months. The learned Counsel contested the validity of the impugned order solely on the ground of limitation. It was noted that the import of goods was made in 1994 against advance licenses, and the export obligation was to be fulfilled within one year from the import date. The licensing authorities could enforce the bond within three years from the expiry of the export obligation period.

The Tribunal examined the terms of the advance licenses and the bond executed by the appellants. It was observed that the export obligation was limited to one year from the date of import, and the bond could be enforced within three years if the obligation was not fulfilled. The Tribunal distinguished a previous Apex Court judgment where continuous obligation was imposed without a fixed period. In this case, the specific time frame for discharging the export obligation was crucial.

The show cause notice in this case was issued much after the expiry of the period prescribed under Section 28(1) of the Customs Act, rendering it time-barred. Consequently, the duty demand and penalties could not be upheld. The impugned order of the Commissioner was set aside on the ground of limitation, and the appeals of the appellants were allowed with consequential relief as permissible under the law.