2009 (8) TMI 663 - HC - Customs

Demand - Limitation -the petitioners were served with a show-cause notice dated July 23, 2004 purportedly under Section 28(1) of the Customs Act, 1962 calling upon the petitioners to show-cause why cess amounting to Rs. 30,944/- in respect of the consignments mentioned in Annexure A to the said show-cause notice under the Mica Mines Labour Welfare Fund Act, 1946 should not be levied on the petitioners. Held that- Show cause notice to be issued within six months from date of export and impugned SCN issued after expiry of time limit. Adjudication order passed after three years and beyond six months from date of issue of SCN. Impugned order set aside.

Summary

Issues:
Challenge to Order Confirming Cess Demand under Mica Mines Labour Welfare Fund Act, 1946

Analysis:
The judgment revolves around a writ application challenging an order confirming a demand of cess under the Mica Mines Labour Welfare Fund Act, 1946. The petitioners exported silicone mica washers and were served with a show-cause notice regarding the cess amount. The Assistant Commissioner of Customs confirmed the demand, leading to the challenge in court.

The key legal provision at the center of the analysis is Section 28 of the Customs Act, 1962. This section outlines the procedure for serving notice for payment of duties, interest, etc. It specifies the time limits for issuing such notices, with different timelines based on the nature of the import. The provision also addresses situations involving collusion or willful misstatement, extending the time limit for issuing notices.

In this case, Section 28(1)(b) of the Customs Act, 1962 is crucial as it mandates issuing a show-cause notice within six months from the date of export. The court noted that the show-cause notice in question was issued after the expiry of this six-month period, rendering it time-barred. The judgment references precedents like the Madras High Court case and a previous Calcutta High Court decision to support this interpretation.

The court emphasized the importance of adhering to statutory timelines and procedural requirements. It highlighted that recovery of duty not levied must comply with the provisions of Section 28, and failure to issue notices within the prescribed time limits can render the recovery efforts invalid. As a result, the impugned order confirming the demand of cess was set aside and quashed, as it was passed after a significant delay of almost three years, violating the statutory timeline.

In conclusion, the writ application was allowed, and the impugned order was declared unsustainable. The judgment underscores the significance of procedural compliance and adherence to statutory timelines in matters involving the recovery of duties or levies, providing a clear legal interpretation of the relevant provisions of the Customs Act, 1962 in the context of the case at hand.