2014 (1) TMI 1019 - AT - Customs

Non clearance of goods - Penalty u/s 117 - Demand barred by limitation - Whether a demand for interest in the present case was required to be issued within a period of 06 months under Section 28 of the Customs Act, 1962 or there is no time limit for making such demand of interest - Held that - demands raised under Rule 57-I of the Central Excises and Salt Act, 1944 when no period of limitation was prescribed under the said rule has held that taking into consideration the scheme of the Central Excise Law and the limitation periods prescribed for various purposes under different sections and rules reasonable period limitation would be six months or five years depending upon whether there has been any suppression of facts etc. with the fraudulent intention or not - under Section 28 of Customs Act, 1962 period of limitation prescribed for recovery of duty is six months or five years as above and also the period for claim of refund is also six months. The position being similar we hold that the same logic should apply in respect of the recovery to be made under the Customs Act where no period of limitation has been prescribed. It is only reasonable that the period of limitation that applies to a claim for the principal amount should also apply to the claim in the appeals - demand for interest was required to be issued within a period of 06 months under Section 28 of the Customs Act, 1962 in the present proceedings and is thus clearly time barred - Decided in favour of assessee.

Summary

Issues:
- Demand for interest issued beyond the prescribed time limit under Section 28 of the Customs Act, 1962.
- Applicability of time limit for demand of interest in cases where no specific period is mentioned.

Analysis:
1. The appeal was filed against the order upholding the demand for interest and penalty imposed on the appellant, a 100% EOU, for not clearing goods from the private bonded warehouse within the specified time limit under Section 61(2)(ii) of the Customs Act, 1962. The adjudicating authority demanded interest and imposed a penalty, leading to the appellant's appeal.

2. The appellant contended that the demand for interest should have been issued within 6 months, citing a Madras CESTAT judgment. The argument was based on the interpretation that even if Section 61 of the Customs Act did not specify a time limit for interest demand, it should be within 6 months, as per the precedent.

3. The Revenue, represented by Shri J. Nair, argued that there was no time limit for the demand of interest, supporting the orders of the adjudicating authority and the first appellate authority.

4. The Tribunal examined the issue of whether a demand for interest needed to be issued within 6 months under Section 28 of the Customs Act, 1962. Referring to the Madras CESTAT judgment in the case of C.C., Madras vs. TVS Whirlpool Ltd., the Tribunal highlighted that a reasonable period of limitation should be read into the section, as established by previous decisions and the scheme of the Customs Act.

5. The Tribunal further emphasized that in cases where no specific time limit is provided, the recovery of duty and interest should adhere to a reasonable period, similar to the Central Excises and Salt Act. The Tribunal held that the demand for interest beyond 6 months from the clearance of goods was time-barred, aligning with the principles set by previous judgments and the Supreme Court's decision in Commissioner vs. TVS Whirlpool Ltd.

6. The Tribunal concluded that the demand for interest in the present case was required to be issued within 6 months under Section 28 of the Customs Act, 1962, and was time-barred. Consequently, the appeal filed by the appellant was allowed, overturning the decision of the first appellate authority.

This detailed analysis of the judgment provides a comprehensive overview of the issues raised, arguments presented, legal interpretations applied, and the final decision rendered by the Tribunal in favor of the appellant.