2000 (3) TMI 670 - AT - Customs

Summary

Issues:
1. Notice issued for recovery of duty and penalty under Section 112 of the Act.
2. Validity of the notice issued under Section 114A and 112.
3. Compliance with the conditions of Notification 203/92.
4. Invocation of the extended period under Section 28(1) of the Act.
5. Basis for issuing a notice demanding duty and invoking the extended period.
6. Allegations of suppression, collusion, or wilful misstatement against the importer.
7. Compliance with legal requirements in issuing notices for duty recovery.
8. Observations on the issuance of notices without a proper basis and confirmation of demands.

Analysis:

1. The appellant imported goods under an advance license and claimed clearance at Nhava Sheva port duty-free under Notification 203/92. Customs authorities allowed clearance without duty payment. A notice was later issued under Section 114A and 112, alleging the appellant availed modvat credit, leading to duty recovery demand and penalty imposition.

2. The absence of the appellant during the appeal hearing led to a decision based on relevant papers. The notice demanding duty was issued beyond the six-month period specified in Section 28 of the Act, invoking the extended period under the proviso of that section.

3. The Tribunal emphasized that the burden of proving exemption availability lies with the importer. The notice must specify the reason for duty demand post-exemption grant, requiring a basis for issuing such notices.

4. For invoking the extended period under Section 28(1), factors justifying the extension, like collusion or suppression, must be clearly outlined in the notice. The absence of such allegations renders the notice invalid, following the Supreme Court's precedent in HMM Ltd. v. CCE.

5. The Tribunal concluded that the notice lacked a basis for demanding duty or invoking the extended period. The Commissioner's order was set aside, highlighting the necessity for proper legal compliance in issuing duty recovery notices.

6. The Tribunal highlighted the routine issuance and confirmation of notices without a valid basis, urging regulatory changes to prevent inconvenience to importers. Suggestions were made to conduct preliminary investigations before issuing notices wholesale, emphasizing the importance of legal adherence in duty recovery cases.

7. The appeal was allowed, the impugned order was set aside, and a copy of the decision was to be sent to the Central Board of Excise & Customs for necessary action based on the Tribunal's observations.