2024 (11) TMI 268 - AT - Customs

SCN is time-barred - Show Cause Notice (SCN) issued after more than ten years - well beyond even the extended period of limitation of five years provided for u/s 28 - Whether the proposals in the SCN fall within the scope of section 124? - HELD THAT - Section 28 provides for issue of SCN for recovery of duties not levied, not paid, short levied, short paid or erroneously refunded and it prescribes a normal period of limitation of one year and an extended period of limitation of five years if the not levy, short levy, etc. was on account of collusion, any wilful mis-statement or suppression of facts by the importer or his agent. There is no provision to recover duties beyond five years in any case. Proposals in the SCN fall within the scope of section 124 or not? - The impugned order upholding the order in original passed by the Joint Commissioner is issued in pursuance of the SCN issued under section 124 under which notice can be issued only for confiscation of goods and imposition of penalty; The only proposal in the SCN falling within the scope of section 124 is the imposition of penalty under section 114; this cannot be sustained because there is no proposal to confiscate export goods or holding the export goods liable to confiscation under section 113 which is a necessary pre-requisite for imposing penalty under section 114. The remaining proposals in the SCN fall beyond the scope of any SCN issued under section 124.

Issues Involved:

1. Whether the Show Cause Notice (SCN) was time-barred under section 28 or valid under section 124.
2. Whether the proposals in the SCN fall within the scope of section 124.
3. Legitimacy of the denial of export incentives and recovery of duties.
4. Legitimacy of the recovery of drawback for non-receipt of remittances.
5. Imposition of penalty under section 114 without a proposal for confiscation under section 113.

Issue-wise Detailed Analysis:

1. Limitation of the Show Cause Notice:

The primary contention was whether the SCN was issued beyond the permissible time frame. The appellants argued that the SCN, issued on 29.03.2017, was time-barred as it was issued more than ten years after the relevant period, exceeding even the extended five-year limitation under section 28. However, the Revenue contended that the SCN was issued under section 124, which does not prescribe a time limit. The tribunal found that the SCN was indeed issued beyond ten years, but since it was issued under section 124, which lacks a time constraint, the question of time-bar under section 28 did not arise.

2. Scope of Section 124:

The tribunal examined whether the proposals in the SCN fell within the ambit of section 124, which pertains to the confiscation of goods or imposition of penalties. It concluded that section 124 could only be invoked for confiscation or penalties, and not for recovery of duties or denial of export incentives. Thus, the proposals to deny export incentives and recover duties fell outside the scope of section 124.

3. Denial of Export Incentives and Recovery of Duties:

The SCN proposed to deny export incentives on allegedly fraudulently obtained DFRCs and recover duties not paid. The tribunal found that such proposals should have been issued under section 28, which has a limitation period of five years. Since the SCN was not issued under section 28, these proposals could not be sustained and were beyond the scope of a notice under section 124.

4. Recovery of Drawback for Non-receipt of Remittances:

The tribunal noted that the recovery of drawback due to non-receipt of remittances is an execution proceeding and not an adjudication proceeding. It emphasized that such recoveries are governed by Rule 16A of the Drawback Rules and are not covered under an SCN issued under section 124. The tribunal cited the Punjab & Haryana High Court's decision in Jairath International vs. Union of India, which clarified that such proceedings are execution in nature and cannot modify the assessment of the Shipping Bill.

5. Imposition of Penalty under Section 114:

The tribunal scrutinized the imposition of penalties under section 114, which requires a proposal for confiscation under section 113. The SCN lacked any proposal to confiscate goods or hold them liable for confiscation under section 113, rendering the penalty under section 114 unsustainable. The tribunal highlighted that the Joint Commissioner's finding of goods liable for confiscation was beyond the SCN and violated section 124, which mandates an SCN for confiscation.

Conclusion:

The tribunal concluded that the impugned order upholding the Order-in-Original was not sustainable as it was based on an SCN issued under section 124, which did not cover the proposals for denial of export incentives and recovery of duties. The imposition of penalties under section 114 was also invalid due to the absence of a proposal for confiscation under section 113. Consequently, both appeals were allowed, and the impugned order was set aside.

← Previous Next →