2019 (12) TMI 198 - HC - Customs

Extended period of limitation - Validity of SCN - Section 28 of the Customs Act, 1962 - It is contended that the petitioner was paying Additional Duty of Customs (Countervailing Duty) under Section 3 of the Customs Tariff Act, 1975 on the transaction value of the petitioner's goods imported under the Apple Care brand of services - HELD THAT - In the case of Uniworth Textiles, 2013 (1) TMI 616 - SUPREME COURT , the Hon'ble Apex Court was construing whether mere non payment of duty would come within the ambit of three categories contemplated by the proviso for which the extended period under the proviso to section 28 (1) of the Act could be invoked. In the said case the matter was carried before the Appellate Authorities as well as the Tribunal. The Appellate Authorities and the Tribunal indeed had given a finding in the matter. In that context, the Hon'ble Apex Court has observed that in the absence of specific averments find in the show cause notice which is a mandatory requirement for commencement of action under the said proviso, and that nothing on record disclose a willful default on the part of the assessee, invoking the extended period of limitation under the said provision is held to be unjustifiable. It is the contention of the Revenue that during the period from January 2010 to July 2012, the petitioner has paid the duty on MRP value in respect of warranty replacements but for the period July 2012 to November 2012 customs duty was paid on Transaction Value and were clearing the warranty replacement goods on provisional assessment basis paying customs duty on MRP of the finished goods for the period December 2012 onwards - It is asserted by the petitioner that in respect of the said periods, the petitioner has erroneously valued the products imported for replacements at the maximum retail price at the products sold in retail. These are all vexed questions which requires to be examined by the authorities. The reference made to the circular instructions issued by the Central Board of Excise and Customs inasmuch as clauses 3.2 and 3.6 no doubt deals with the ingredients for extended period, but on the examination of the show cause notice impugned it cannot be held that such ingredients are not present - In such circumstances, the show cause notice issued to submit a written explanation cannot be held to be ill founded - Writ petition is premature and deserves to be rejected.

Issues Involved:
1. Validity of the show cause notice dated 27.06.2017 under Section 28 of the Customs Act, 1962.
2. Allegation of suppression of facts and invocation of the extended period of limitation.
3. Jurisdiction and maintainability of the writ petition.
4. Compliance with principles of natural justice.

Detailed Analysis:

1. Validity of the Show Cause Notice:
The petitioner challenged the show cause notice dated 27.06.2017, which was issued under Section 28 of the Customs Act, 1962. The notice called upon the petitioner to explain why the goods imported as warranty replacement but sold out of warranty should not be confiscated, why differential duty should not be demanded, why interest should not be levied, and why penalties should not be imposed. The petitioner contended that the notice was arbitrary and lacked jurisdiction.

2. Allegation of Suppression of Facts and Invocation of Extended Period of Limitation:
The petitioner argued that the extended period of limitation under Section 28(1) of the Customs Act could only be invoked in cases of collusion, willful misstatement, or suppression of facts. The petitioner asserted that the show cause notice contained mere bald allegations of suppression without specific references to any act or omission. The petitioner relied on the executive order dated 27.02.2013 and the circular dated 10.03.2017 by the Central Board of Excise and Customs, which were allegedly contradicted by the impugned notice.

The revenue countered that the petitioner admitted during inquiries that some goods were sold out of warranty, which was not disclosed earlier, thus justifying the invocation of the extended period due to suppression of facts.

3. Jurisdiction and Maintainability of the Writ Petition:
The petitioner sought to invoke the writ jurisdiction, arguing that the show cause notice was issued without jurisdiction, and the existence of an alternative remedy was not a bar. The revenue contended that the writ petition was not maintainable as the petitioner bypassed the efficacious alternative remedy provided under the Act, and personal hearings were adjourned at the petitioner's request.

4. Compliance with Principles of Natural Justice:
The court noted that the petitioner had invoked the writ jurisdiction without appearing before the statutory authority. It emphasized that there is no bar to entertain a writ petition if the impugned notice is without jurisdiction. However, the court found that the show cause notice contained sufficient ingredients to justify the extended period, and the allegations of suppression were supported by material facts.

Conclusion:
The court examined various judgments, including Calcutta Discount Co. Limited vs. Income Tax Officer, Uniworth Textiles Limited vs. Commissioner of Central Excise, and Siemens India Limited vs. State of Maharashtra, to determine the validity of the show cause notice and the invocation of the extended period.

The court concluded that the show cause notice was not ill-founded and that the writ petition was premature. The petitioner was directed to submit a reply/explanation before the respondent, who would consider the submissions and take a decision in accordance with law, providing a reasonable opportunity of hearing to the petitioner. All rights and contentions of the parties were left open, and the writ petition, along with pending applications, was disposed of.

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