2017 (9) TMI 1337 - AT - Customs

Validity of SCN - Time limitation - Advance License Scheme - case of Revenue is that amount of ₹ 10,69,643/- confirmed in the impugned order had already been paid by them under protest on 17.10.2003. In the circumstances, the SCN ought to have been issued within the period of limitation from that date. However, the same having been issued more than one year i.e. on 29.12.2004, is therefore hit by limitation. Held that - appellant had exported substantially fulfilling the export obligation and in fact had been seeking extension of time to complete the quantitative obligation also - It is not the case of the department that they were involved in any diversion of imported raw material clandestinely for purposes other than that intended - The SCN therefore should have been issued within a period of six months provided for normal period of limitation under section 28 of the Customs Act, 1962 as was in force at the relevant time. However, this was not done and the show cause notice was issued only after six months period i.e. on 29.12.2004. Reliance placed in the case of Commissioner of Customs, Chennai Vs. Lalchand Bhimraj 2013 (7) TMI 797 - MADRAS HIGH COURT wherein duty was paid on 1.6.2000 and the SCN was served on imported on 2.12.2000. It was held that the notice was time-barred. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Extension of time for fulfilling export obligation under Advance License.
2. Alleged violation of Customs Act regarding duty on raw materials and export obligation.
3. Limitation period for issuing show cause notice under Customs Act.

Extension of Time for Export Obligation:
The appellants had obtained an Advance License for importing cotton yarn with a specific deadline for completing import and export obligations. Despite fulfilling the export obligation value-wise, they fell short quantitatively. The appellants sought an extension for fulfilling the export obligation, which was denied. The Commissioner of Customs held that the appellants availed double benefit by claiming clearance for export obligation under the DEEC Advance License. The appellants argued that they had exported cotton yarn through a third party but failed to mention it in shipping bills. The tribunal noted that the appellants had been seeking an extension to complete the quantitative obligation, indicating their efforts to fulfill obligations. The tribunal found no evidence of diversion of raw materials for unauthorized purposes.

Alleged Violation of Customs Act:
The show cause notice alleged that the appellants used duty-free imported raw materials for manufacturing final products, leading to a demand for duty payment and interest. The Commissioner of Customs demanded duty payment on the raw materials used for export, along with interest. The appellants contended that the notice was time-barred due to a delay in issuance beyond the statutory limitation period. The tribunal agreed that the proceedings were hit by limitation, citing a previous High Court judgment where a notice served after the expiry of the time limit was deemed time-barred. The tribunal emphasized the importance of adhering to the statutory limitation period for issuing show cause notices under the Customs Act.

Limitation Period for Show Cause Notice:
The tribunal ruled in favor of the appellants, setting aside the impugned order and allowing the appeal based on the violation of the limitation period for issuing the show cause notice. The tribunal highlighted the relevance of the statutory limitation period under the Customs Act and drew parallels with a previous High Court judgment to support its decision. The tribunal emphasized the necessity of issuing show cause notices within the prescribed time frame to maintain procedural integrity and uphold legal standards.

This detailed analysis of the judgment highlights the key issues of extension of time for export obligation, alleged violations of the Customs Act, and the importance of adhering to the limitation period for issuing show cause notices under the Customs Act.