2018 (11) TMI 766 - AT - Customs

Extended period of limitation - Section 28 of CA - classification of goods - provisional release of the seized goods - N/N. 21/2002-Cus (Sl No 190C) - Held that - It is quite evident that the issue on merits admittedly stands decided against the appellants and the matter needs to be reconsidered, on the issue of demand by invoking extended period of limitation as provided by the Section 28 of the Customs Act, 1962 - in terms of own admission by the appellant s major portion of demand is not barred by limitation. It is quite evident that the earliest date of examination in respect of the Bill of Entries, for which appellants have claimed that the demand is beyond normal period of limitation as prescribed by Section 28, is 12.05.2008. Thus in terms of Section 28, the period of limitation which has to be within six months from the date on which the proper officer makes the order for clearance of goods would be some date after 12.05.2008 - In case appellants intended to disagree with the duty demanded, instead of paying the same they should have asked the department to issue a show cause notice on 7th November 2008, and then it was for the department to issue the show cause notice within the prescribed period of limitation which ended after the said date. Thus even if the appellants argument that extended period of limitation cannot be invoked in the present case is admitted, even then the demand cannot be held to be time barred as the all the amounts had been paid by the appellants, prior to expiry of normal period of limitation. It was responsibility of the Appellant to ensure that he was eligible for exemption benefits claimed by him. He was thus required to make a fair declaration claiming the benefit of exemption Notification - Further it is an admitted fact by the employees of appellant who are professionally qualified metallurgical engineers that just by looking at the mill test certificate they can tell whether the consignment to which said mill test certificate pertains is of alloy steel or else. The professional experience of the said persons cannot be disregarded. If the appellants were aware that the goods imported by them were other alloy steels, definitely by declaring them an classifying them as non alloy steels to avail the benefit of exemption is nothing but a misdeclaration. The appellants have misdeclared and have thereby availed the benefit of exemption which was not due to them - the ingredients required for invoking extended period of limitation as provided by the Section 28 are satisfied in the present case. - Since the ingredients for invoking extended period of limitation under section 28 and for imposition of mandatory penalty under section 114A of the Customs Act, 1962 are identical, penalty imposed on the appellants under the said section is justified. Appeal allowed in part.

Issues Involved:
1. Invoking the extended period of limitation under Section 28 of the Customs Act, 1962.
2. Alleged misdeclaration and suppression of facts by the appellant.
3. Applicability of penalties under Section 114A of the Customs Act, 1962.
4. Confiscation of goods and imposition of redemption fine.

Detailed Analysis:

1. Invoking the Extended Period of Limitation under Section 28 of the Customs Act, 1962:

The Hon’ble Bombay High Court remanded the matter to the Tribunal to reconsider the issue of invoking the extended period of limitation. The appellant argued that the classification issue was complex and that genuine doubt existed, as evidenced by the difference of opinion among Tribunal members. The appellant contended that the extended period of limitation should not apply as the Revenue failed to determine the correct classification at the time of importation.

The Tribunal noted that the appellant had admitted the duty liability and paid the same within the normal period of limitation. The Tribunal concluded that the proceedings initiated by the Show Cause Notice dated 01.01.2009 were not for fresh demand but to confirm and appropriate the amount already paid by the appellant. Thus, the demand was not time-barred.

2. Alleged Misdeclaration and Suppression of Facts by the Appellant:

The Tribunal examined whether the appellant had misdeclared the goods to claim an exemption under Notification No. 21/2002-Cus. The appellant's employees, who were qualified metallurgical engineers, admitted that they could determine the classification by looking at the Mill Test Certificate (MTC). The Tribunal found that the appellant knowingly declared the goods as non-alloy steel to avail of the exemption, which constituted misdeclaration and suppression of facts.

The Tribunal referred to the Constitutional Bench decision in Commissioner of Customs (Import), Mumbai Vs. M/s. Dilip Kumar and Company & Ors., which held that the burden of proving applicability of an exemption lies on the assessee. The Tribunal concluded that the appellant failed to meet this burden and had misdeclared the goods.

3. Applicability of Penalties under Section 114A of the Customs Act, 1962:

Given the findings of misdeclaration and suppression of facts, the Tribunal upheld the imposition of penalties under Section 114A. The Tribunal noted that the ingredients for invoking the extended period of limitation and imposing penalties were identical. The appellant's arguments against the penalties were rejected, and the penalties were deemed justified.

4. Confiscation of Goods and Imposition of Redemption Fine:

The Tribunal upheld the confiscation of goods that were seized and provisionally released against a bond and bank guarantee. The Tribunal found no reason to differ from its earlier order upholding the confiscation. However, the Tribunal modified the adjudicating authority's order by setting aside the redemption fine of ?2,46,00,000 imposed on goods that were not available and not seized.

Conclusion:

The Tribunal partly allowed the appeal by setting aside the redemption fine on non-seized goods while upholding the rest of the adjudicating authority's order, including the invocation of the extended period of limitation, penalties under Section 114A, and confiscation of goods. The Tribunal's decision was pronounced in court on 26.10.2018.

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