2024 (6) TMI 312 - AT - Customs

Mis-declaration of nature and description of imported goods or not - invocation of extended period of limitation - SCN issued is time barred or not in terms of provisions of Section 28 of the Customs Act, 1962. Whether the appellant has mis-declared the nature and description of imported goods or not and whether invocation of extended period is justified in the facts of this appeal? - HELD THAT - The Appellant had at the time of import and subsequent assessment had declared the subject imports as 91513.9 metres of 100% Cotton processed fabrics and upon assessment availed exemption from duty by debiting the value and quantity thereof against four DFRC licences under Notification No. 46/2002-Cus. dated 22.04.2002. the fact that the Appellant indulged in fabrication of documents was evidenced by documentary evidence obtained during investigation and moreover the Appellant admitted that they had resorted to the mis-declaration to utilise the exemption for Basic Customs Duty and Special Additional Duty available under Notification No. 46/2012- Customs applicable under DFRC licenses in their possession which is only applicable to 100% Processed Cotton fabrics and not applicable for 65% poly and 35% Cotton fabric. The Appellant had declared the entire consignment as 100% Processed Cotton fabrics and failed to declare and assess 65% poly and 35% Cotton fabric. Therefore, there is no denying the fact that the Appellant fabricated the invoice and Bill of Lading, only with an intent to evade payment of applicable duties of Customs. There are no hesitation to hold that the appellant had manipulated the invoice and Bill of Lading in order to evade applicable customs duty by utilizing ineligible DFRC licenses which would not cover the import of 65% Polyester and 35% Cotton Fabrics. As such invocation of extended period is legal and justified in this appeal for aforesaid reasons. Whether the Show Cause Notice dated 21.02.2013 issued is barred by limitation of time or not in terms of relevant provisions of Section 28 of the Customs Act, 1962? - HELD THAT - The relevant date that is applicable to the facts of this appeal is the date of payment of duty and not the date of order of Out of Charge of Customs. So, it has to be noted that Explanation 1(d) is applicable and not 1(a) to Section 28 of the Customs Act, 1962. Even the appellant s argument that they declared the entire quantity of fabrics imported in terms of quantity though there was an admitted misdeclaration as to the description. The DFRC Licences produced covered only the Cotton Fabrics imported and not that portion of Poly Cotton Fabrics. As such, it is concluded that at the best there can be short levy but not non levy - the explanation covers both non levy and short levy subsequent to the amendment w.e.f. 2016. The period involved in this case is before 2016 and so short levy cases would not be covered by explanation 1(a) to Section 28 of the Customs Act, 1962. At the relevant time, the date of order of Out of Charge of Customs would cover only non-levy cases. CESTAT New Delhi in the case of M/S. DESEIN PRIVATE LIMITED VERSUS COMMISSIONER OF SERVICE TAX, SERVICE TAX COMMISSIONERATE, DELHI-II 2024 (1) TMI 400 - CESTAT NEW DELHI has held that the Show cause Notice issued beyond 5 years is time barred and neither the demand maintainable nor interest and penalty leviable. The provisions of Section 28(4) mandates issuance of Show Cause Notice within maximum period of 5 years from the relevant date. The relevant date being the date of payment of duty, the Show Cause Notice should have been issued on or before 11.02.2008. As the Show Cause Notice was issued later to this date on 21.02.2013, the Show Cause Notice is time barred by limitation. Tthe impugned order dated 23.12.2013 of Commissioner (Appeals) cannot sustain and justified to be set aside as being time barred - Appeal allowed.

Summary

Issues Involved:
1. Mis-declaration of imported goods.
2. Invocation of extended period for issuing Show Cause Notice.
3. Time-barred nature of the Show Cause Notice.

Summary:

1. Mis-declaration of Imported Goods:
The Appellant imported goods declared as "100% Cotton Woven fabrics" under Bill of Entry No. 659465 dated 31.01.2008. However, investigation revealed that part of the goods were "65% poly and 35% Cotton fabric" which were not declared. The Appellant admitted to fabricating import documents and suppressing facts to evade customs duty by wrongly debiting the value and quantity against DFRC licences, which were only eligible for 100% Cotton Processed fabrics. The Adjudicating Authority confirmed the re-classification and re-determination of value, holding the goods liable for confiscation u/s 111(m)/119 of the Customs Act, 1962, and imposed penalties u/s 114AA and 112(a).

2. Invocation of Extended Period:
The Department invoked the extended period for issuing the Show Cause Notice (SCN) on the grounds of wilful mis-declaration and fabrication of documents by the Appellant. The Tribunal found that the Appellant manipulated the invoice and Bill of Lading to evade applicable customs duty by utilizing ineligible DFRC licenses. The Tribunal held that the invocation of the extended period was legal and justified due to the wilful mis-declaration by the Appellant.

3. Time-barred Nature of the Show Cause Notice:
The Appellant argued that the SCN issued on 21.02.2013 was time-barred as the duty payment was made on 11.02.2008. The Tribunal examined the provisions of Section 28 of the Customs Act, 1962, particularly the "relevant date" for issuing the SCN. It concluded that the relevant date is the date of payment of duty, not the date of the "Out of Charge" order. Since the duty was paid on 11.02.2008, the SCN should have been issued within five years, i.e., by 11.02.2013. As the SCN was issued on 21.02.2013, it was held to be time-barred.

Conclusion:
The Tribunal set aside the impugned order dated 23.12.2013, holding that the SCN was time-barred. The appeal was allowed with consequential relief as per the law.