2018 (11) TMI 502 - HC - Customs

Time limitation of filing SCN - finalization of provisionally assessed Bills of Entry - report of the laboratory was received on 20.1.2012, whereas the show cause notice for assessment has been issued for 25.1.2017 - Final assessment on the basis of test reports received - Held that - It is evident from the record that import of goods in the present case was made by the petitioner more than five years prior to the issuance of notice and provisional assessment. More than five years prior to issuance of show cause notice, even the representative samples had also been drawn and the test reports from the laboratory were received, but still the department thought it appropriate to sleep over the matter for five years. Issue as to what should be the reasonable time in the absence of statutory period prescribed in the Act for taking any action was considered by Hon'ble the Supreme Court in State of Punjab vs Bhatinda District Co-op. Milk P. Union Limited 2007 (10) TMI 300 - SUPREME COURT OF INDIA , wherein it was opined that five years would be the reasonable period in the absence of any time prescribed in the Act. The proceedings initiated by the respondents for framing of assessment are set aside - petition allowed.

Summary

Issues involved:
1. Challenge to show cause notice for final assessment based on test reports.
2. Delay in issuance of show cause notices after provisional release of goods.
3. Reliability of laboratory testing reports for imported goods.
4. Interpretation of statutory provisions for final assessment period.
5. Consideration of reasonable time for taking action in absence of statutory period.

Analysis:
1. The judgment addresses the challenge posed by the petitioner against the show cause notice for final assessment based on test reports of imported Zinc Skimming. The petitioner argued that the notices were issued more than five years after provisional release and payment of assessed duty, citing a previous judgment for support. The petitioner also questioned the reliability of the laboratory testing reports due to the nature of the product, which can yield varying results in different samples.

2. The issue of delay in issuing show cause notices after the provisional release of goods was extensively discussed. The petitioner contended that the delay of over five years in issuing the notices was unjustified, while the respondents attributed it to departmental workload. The court acknowledged the delay and referenced previous judgments to establish a reasonable time frame for taking action in the absence of statutory provisions.

3. The reliability of laboratory testing reports for imported goods, specifically Zinc Skimming, was a crucial aspect of the case. The petitioner highlighted a previous case where re-testing resulted in significantly different metallic content findings, leading to the dropping of proceedings. This raised doubts about the accuracy and consistency of the testing process for such products.

4. The interpretation of statutory provisions regarding the final assessment period was analyzed, particularly focusing on Section 18 of the Customs Act, 1962, and Chapter 7 of the Board's Manual. The court noted the absence of a specified period for final assessment after goods are released provisionally and highlighted the provisions of Section 28 for recovery of duty within one year, extendable to five years in specific cases.

5. Lastly, the judgment considered the concept of a reasonable time frame for taking action in the absence of statutory guidelines. Citing previous judgments, the court determined that a delay of over five years in issuing show cause notices for assessment was unreasonable. The court emphasized the need for timely adjudication and set aside the proceedings initiated by the respondents based on the petitioner's arguments and legal precedents.