2017 (11) TMI 1192 - AT - Customs

Benefit of N/N. 25/99-Cus dated 28.02.99 - case of Revenue is that the imported plates were not parts of switches and units were not entitled for the said exemption - whether or not the show cause notice and an adjudication proceedings are valid on the question of jurisdiction as contested by the appellant? - Held that - The present proceedings are for the period preceding the period covered by the show cause notice issued by the DRI. This show cause notice dated 13.12.2013 was issued to cover the period from 16.06.2006 to 13.11.2007, which is well beyond 5 years period that could not be covered under a demand invoking Section 28. It would appear that two separate proceedings were initiated against the appellant, one under Section 28 for the permissible period of 5 years and another subsequent one invoking Rule 8 for the period beyond 5 years on the ground that Rule 8 did not provide for any time limit - such dual approach by the Revenue is not legally sustainable. It is apparent and clear that show cause notice issued by the DRI correctly invoked the jurisdiction of the proper Customs Authority in charge of assessment to apply the provisions of Section 28 of the Act. It is not open to the Revenue to resort to Rule 8 to demand and recover customs duty for earlier period, beyond five years. The demand proceedings in the present case is not under Section 28 of the Customs Act. This is under Rule 8 of 1996 Rules. In respect of this appellant, a five year demand on the very same issue has been issued invoking Section 28. The notice was made answerable to the jurisdictional customs officer at the port of import. In such situtation, we note that another proceedings, for earlier period, cannot be initiated invoking Rule 8 by the central excise officer. In the present proceedings, the central excise officer did not exercise his powers, if any, under Section 28 of the Customs Act. Such powers were admittedly available with the Assessing Officer of Customs at the port of import. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Validity of show cause notice and adjudication proceedings regarding jurisdiction.
2. Dual jurisdiction of central excise and customs officers in demanding customs duty.
3. Compliance with conditions of 1996 Rules for exemption.
4. Applicability of Rule 8 for demanding customs duty beyond five years.
5. Interpretation of Supreme Court judgments in similar cases.

Issue 1: Validity of show cause notice and adjudication proceedings regarding jurisdiction:
The appeal challenged the jurisdiction of the Dy. Commissioner of Central Excise to demand customs duty, arguing that the assessment at import was done by customs officers. The Tribunal found the dual jurisdiction of central excise and customs officers unsustainable, noting that the DRI correctly invoked the proper Customs Authority for assessment under Section 28. The Tribunal ruled that the central excise officer's demand for customs duty was beyond legal competence.

Issue 2: Dual jurisdiction of central excise and customs officers in demanding customs duty:
The Tribunal highlighted the inconsistency in the Revenue's approach, with two separate proceedings initiated against the appellant. One under Section 28 for a permissible five-year period and another invoking Rule 8 for a period beyond five years. The Tribunal deemed this dual approach legally unsustainable and emphasized the need for coherence in jurisdictional actions.

Issue 3: Compliance with conditions of 1996 Rules for exemption:
The appellant contended that all procedures under the exemption notification were duly followed, and the demand was time-barred. The Tribunal agreed, emphasizing that the department was aware of the import details and usage, barring the demand by limitation.

Issue 4: Applicability of Rule 8 for demanding customs duty beyond five years:
The Revenue justified invoking Rule 8 for recovery, citing a running bond executed by the appellant under the 1996 Rules. However, the Tribunal found the demand beyond a reasonable time, questioning the need for dual proceedings and emphasizing the importance of adhering to statutory time limits.

Issue 5: Interpretation of Supreme Court judgments in similar cases:
The Tribunal analyzed the Apex Court's decision in Gujarat Ambuja Exports Ltd. to justify Rule 8 action. However, it noted the need to consider the reasonableness of the period for issuing demands. The Tribunal emphasized the importance of jurisdictional clarity, citing relevant High Court and Supreme Court decisions.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal based on the lack of legal sustainability on multiple grounds, including jurisdictional inconsistencies and procedural irregularities.