1987 (1) TMI 213 - AT - Central Excise

Summary

Issues Involved:
1. Classification of imported goods under the correct heading of the Customs Tariff.
2. Validity of the demand notice issued by the Customs Department concerning the time-bar under Section 28 of the Customs Act, 1962.
3. Authority and responsibility of the clearing agent to receive notices on behalf of the importer.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:

The initial issue revolved around the classification of imported bearings and bushes. The goods were initially assessed under Heading 84.63(1) of the Customs Tariff Act (CTA). However, with effect from 1-3-1981, Heading 84.63 was split into sub-headings (1) and (2), with different duty rates. The department reclassified the goods under Heading 84.63(2), leading to a higher duty rate. The respondents (importers) contested this reclassification and filed an appeal with the Collector of Customs (Appeals), who allowed their appeal, citing a lack of reasoning for the reclassification and precedent practice. The Tribunal noted that during the hearing, the respondents conceded that the goods were correctly classifiable under Heading 84.63(2), thus resolving this issue in favor of the department without further examination.

2. Validity of the Demand Notice:

The core issue was whether the demand notice issued by the Customs Department was valid concerning the time-bar under Section 28 of the Customs Act, 1962. The relevant dates were:
- Date of payment of duty: 19-6-1981
- Date of demand: 14-12-1981
- Date of dispatch of demand notice: 14-12-1981
- Date of receipt by the respondent: 23-12-1981
- Date of receipt by the clearing agent: 18-12-1981

The respondents argued that the notice was served beyond the six-month limitation period. The Tribunal examined Section 28, which mandates that notice should be served within six months from the relevant date, which in this case was the date of payment of duty (19-6-1981). The Tribunal agreed with the respondents, citing previous judgments that the date of receipt of the notice is crucial, not the date of dispatch. The Tribunal also noted that the notice reached the importer beyond the limitation period, thus invalidating the demand.

3. Authority and Responsibility of the Clearing Agent:

The respondents argued that the clearing agent was not authorized to receive notices on behalf of the importer after the goods were cleared. The Tribunal examined Sections 147 and 153 of the Customs Act. Section 147(3) states that duty shall not be recovered from the agent unless it cannot be recovered from the owner/importer. The Tribunal found no evidence that the clearing agent was authorized to receive notices post-clearance or that the Assistant Collector had determined that the duty could not be recovered from the importer. The Tribunal cited several judgments supporting the view that service on the agent does not equate to service on the principal unless explicitly authorized.

Conclusion:

The Tribunal concluded that the demand notice served on the clearing agent within the limitation period did not constitute valid service on the importer. The notice to the importer was served after the limitation period, rendering the demand invalid. Consequently, the appeal by the department was dismissed, and the classification issue was resolved in favor of the department based on the respondents' concession.