2019 (6) TMI 170 - AT - Customs

Extension of time limit for issuance of SCN - whether the Commissioner is required to issue notice to the importer proposing extension of time limit for issuance of SCN or he may extend the time limit without putting the importer to the notice? - HELD THAT - The same issue for the period even after the amendment in Section 110 has come up before the Tribunal-Delhi in the case of M/s Swees Gems Jewellery. 2019 (2) TMI 1375 - CESTAT NEW DELHI , the Tribunal after interpreting and discussing the difference in the provision of Section 110(2) before and after amendment came to the conclusion that the amendment is not such that the department is not required to issue SCN. There is no legal authority with the department for dispensing with the issuance of SCN to the appellant, therefore, the impugned order passed without issuance of any SCN will not sustain - Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Legality of extending the time limit for issuing a Show Cause Notice (SCN) under Section 110(2) of the Customs Act without issuing an SCN for this purpose.
2. Requirement of natural justice in judicial proceedings related to the extension of time limits for issuing SCNs.
3. Interpretation of the amended Section 110(2) of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Legality of Extending the Time Limit for Issuing an SCN Without Issuing an SCN for This Purpose:
The primary issue in this case is whether the extension of the time limit for issuing an SCN, as per the proviso to Section 110(2) of the Customs Act, can be done without issuing an SCN to the appellant. The appellant argued that no SCN was issued and no opportunity was provided to defend against the proposed extension, which violates the principles of natural justice. The appellant relied on several judgments to support this claim, including M/s Swees Gems & Jewellery, SRK Metal & Industries, IJ Rao Assistant Collector of Customs, Harbans Lal vs Collector of C.Ex., Gaunir Impex Pvt. Ltd., and CCE vs Beauty Gem.

2. Requirement of Natural Justice in Judicial Proceedings:
The appellant emphasized that even though Section 110 does not explicitly require an SCN for extending the time limit, the principles of natural justice necessitate such a notice. The appellant argued that the lack of an SCN deprived them of the opportunity to defend their case, rendering the extension illegal. The respondent, however, contended that the amended Section 110 only requires the competent authority to record reasons in writing for the extension, and due to ongoing investigations, issuing an SCN within six months was not feasible.

3. Interpretation of the Amended Section 110(2) of the Customs Act, 1962:
The Tribunal examined whether the Commissioner is required to issue an SCN to the importer before extending the time limit for issuing an SCN. The Tribunal referred to the Bombay High Court's decision in Principal Commissioner of Customs vs Beauty Gem, which held that the Commissioner must record satisfaction based on material evidence that the investigation is being seriously pursued and more time is needed. The Tribunal noted that merely delaying the investigation does not justify extending the time limit without proper findings.

The Tribunal also considered the decision in Gaunir Impex Pvt. Ltd., where the High Court allowed a writ petition because the department did not follow natural justice principles, despite issuing an SCN for the extension. The Tribunal found that in the present case, no SCN was issued, and the Commissioner did not properly record reasons for the extension.

The Tribunal further analyzed the amended Section 110(2) and concluded that the amendment does not eliminate the need for issuing an SCN. The Tribunal referred to the case of M/s Swees Gems & Jewellery, where it was held that even after the amendment, the department must issue an SCN and provide a reasoned order after hearing the affected party. The Tribunal emphasized that the amendment aimed to improve ease of doing business and align with the Trade Facilitation Agreement, not to dispense with natural justice requirements.

Conclusion:
The Tribunal concluded that the impugned order extending the time limit for issuing an SCN without issuing an SCN to the appellant is not sustainable. The Tribunal set aside the impugned order and allowed the appeal, providing consequential reliefs in accordance with the law. The Tribunal reiterated that the principles of natural justice must be upheld, and the affected party must be given an opportunity to defend their case before extending the time limit for issuing an SCN.

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