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TMI Blog1995 (2) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... (7) C50/39/94 - M/s. Ind-Ital Chemicals, (8) C50/4/95 - M/s. Amco Batteries Ltd., (9) C50/6/95 - M/s. H.M. Brothers P. Ltd., (10) C50/7/95 - M/s. Andrew Yule Co. Ltd., and (11) C50/30/94 - M/s. Ramco Industries Ltd. 3. The common issue that arises for determination in the above mentioned 11 appeals is whether the demand for interest calculated with effect from the date of the return of the Bill of Entry to the importer by the Licence Section for depositing duty and executing bond is tenable in law. 4. Initiating the presentation of the case of the appellants, Shri M.R. Srinivasan, representing M/s. TVS Whrilpool Ltd., M/s. Jay Engg. Works, and M/s. Amco Batteries Ltd., submitted that there are three broad issues on which the appellants shall make their submissions. Those issues are as under :- 1) Whether the Original Authority was competent to confirm the demand; 2) Whether on merits the demand deserves to be confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicable only in court proceedings and not in any proceedings before Customs Authorities. The Customs Officers are the creatures of the Customs Act and can not exercise the powers under the Limitation Act. 8. Having referred to the Bonds executed by the appellants, Shri Srinivasan and other Counsels present submitted that the validity of the Bonds executed had lapsed in all the cases under consideration. This also, according to them, is a pertinent point as it goes to show that the department should not have enforced the bonds at the material time of the demand notices. 9. As regards the merits of the case, being the second issue, Shri Srinivasan has forcefully pleaded that the Custom House made the correct interpretation of the provisions of Section 61(3) of the Customs Act, 1962 in the Public Notice No. 211/91, dated 23-12-1991. The words, Bill of Entry is returned to the importer for warehousing the goods under Section 59A should be interpreted to construe that the Bill of Entry is returned to the importer under Section 59A for warehousing the goods, meaning thereby that after due compliance of the provisions of Section 59(a) the Bill of Entry has been returned to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised, owing to change in department s stand and going against established practice, the said demand shall be enforceable prospectively. In support of his contention, he has sought to rely upon the CEGAT s decision vide 1985 (22) E.L.T. 487 (Tribunal). 12. Shri I. Arokiasamy representing the case of M/s. M.M. Rubber Co., and M/s. Alagiri Spinning Weaving Mills, has submitted that the law of estoppel should apply against the Government Department also. In Public Notice No. 211/91, dated 23-12-1991, the then Collector of Customs specifically instructed that interest shall be charged from the date the Bond department returns the Bill of Entry by way of affixing the date stamp on the Bill of Entry, to the importer, for warehousing the goods. The Department should now be estopped from going back on the said instructions and raise demand retrospectively with reference to an earlier date viz., the date on which the Bill of Entry was returned by the Licence Section/Group to the importer for depositing duty and executing the bond. 13. The Counsels for other appellants present during the hearing have adopted the reasonings advanced by the abovesaid Counsels. 14. The common issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 61 which have been entered for warehousing and assessed to duty under Section 17 or Section 18, shall deposit fifty per cent of the assessed duty and execute a bond binding himself in a sum equal to twice the amount of the balance of such assessed duty and interest leviable on such balance . 18. During the personal hearing, the Counsels for the appellants advanced several reasonings and arguments in support of their contention which can be broadly put under the following for sub-issues :- (i) Whether the Original Authority was competent to confirm the demand; (ii) Whether on merits, the demand deserved to be confirmed. (iii) Whether the demands were hit by limitation, and (iv) Whether the law of estoppel would apply in all these cases. 19. Let us take up those sub-issues, one by one. On the question whether the Original Authority was competent to confirm the demand, it is submitted by Shri M.R. Srinivasan representing the case of M/s. TVS Whirlpool Ltd., M/s. Jay Engg. Works Ltd. and M/s. Amco Batteries Ltd., that the original Authority was not competent to confirm the demands since on his admission, the demand was not covered by Section 28 of the Customs Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing reasons. 22. Section 61(3), as it stood prior to amendment dated 13-5-1994, clearly stipulated that the importer shall pay interest on the amount of duty at such rate as specified under Section 47 for the period from the expiry of seven days from the date on which the Bill of Entry is returned to the importer for warehousing the goods under Section 59A, till the date of clearance of the goods from the Warehouse . In case, the importer does not pay interest as stipulated in Section 61(3), in pursuance of the principles of natural justice, it is quite reasonable on the part of the Customs Authority to give them an opportunity to explain why the said interest shall not be recovered from them. The plea that since Section 28 does not deal with interest, the department cannot issue any notice to the importer raising the demand of interest is not acceptable. As a matter of fact, sub-section (2) of Section 142 provides for recovery of any amount due under the terms of any bond or other instrument executed under the Customs Act, 1962. Section 59A(i), as it prevailed during the material time, provided for execution of bond by the importer binding himself to pay on or before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms, Madras. In the aforesaid Public Notice, it was enjoined that the bond period will be calculated from the date on which the warehousing Bill of Entry is returned to the importer/CHA by the Bond Department with an endorsement returned to the importer . The above Public Notice was in force till 29-9-1993, on which date another Public Notice was issued vide No. 109/93 dated 29-9-1993. This Public Notice, according to the learned Counsel, was in the nature of clarification to Public Notice No. 211/91, as the subject itself revealed. The said Public Notice stated that, interest is chargeable on Bills of Entry from the expiry of 7 days from the date on which the Bill of Entry was returned to the importer/CHA for warehousing the goods under Section 59A of the Customs Act, 1962 till the date of clearance of the goods from the warehouse. The Licence Section/Group will affix the stamp as indicated below : - Bill of Entry is ready for payment of duty and interest shall be chargeable after expiry of seven (7) days from ... till clearance from the warehouse . 26. In the second para, the Public Notice states that the date stamp affixed by the Bond Department as per Public Notice No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Section 59 or Section 59A had been complied with in respect of any goods, the proper officer may make an order permitting deposit of goods in a warehouse. 31. Thus, when we read the words in Section (61)(3) returned to the importer for warehousing the goods under Section 59A - we can not take those words in their natural meaning, as if warehousing of the goods was to be under Section 59A. 32. The above words can be interpreted in the following two manners :- 33. First, it may be interpreted in the sense the department has interpreted it, (i.e.) that the Bill of Entry has been returned to the importer for complying with the conditions under Section 59A for the purpose of warehousing the goods. Obviously here, the Department has given stress on the words under Section 59A . Secondly, it may also be interpreted in the manner the appellants have suggested, i.e. Bill of Entry has been returned to the importer for warehousing the goods after Section 59A has been complied with. The stress here is obviously on the words for warehousing the goods , inasmuch as goods can be warehoused only after the conditions under Section 59A have been complied with. 34. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the said judgment, the Hon ble Gujarat High Court held that in the absence of any provision with regard to the specific period of limitation, reasonable period of limitation has got to be read into it. The learned Counsel has also submitted that in a number of cases, it was held by quasi-judicial authorities that in the absence of any time limit for issue of demand notice under the erstwhile provisions of Rule 57(1) of the Central Excise Rules, the department should raise the demand within a reasonable time limit and the said reasonable time limit was to be governed by Section 11A of the Central Excises Salt Act, as the demand under Rule 57(1) had a nexus with the duty. On the same analogy, it is submitted by Shri Vijayaraghavan that reasonable time limit for demand notice under Section 61(3) of the Customs Act, 1962 should be taken as 6 months, as provided under Section 28 of the Customs Act, 1962. Since the subject demand notices were issued after expiry of approximately two years, all these demand notices should be held as time-barred. All the more so, when those demands are not recoverable in terms of bonds as those bonds with the normal validity period of one year had al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not enforceable in terms of the Bonds and the normal time limit of 6 months as stipulated in Section 28 should apply, having regard to the nexus between the interest on duty as prescribed in Section 47(2) and Section 61(3) and the duty that can be demanded under Section 28. 40. Let us now turn to the last issue, i.e. whether the law of estoppel applies in the present cases. Shri Rajagopal, representing the case of M/s. Ramco Industries Ltd. has submitted that if a demand has been raised, owing to change in appellant s stand and going against established practice, the said demand shall be enforceable prospectively. He has relied upon the CEGAT s decision 1985 (22) E.L.T. 487 (Tri.) in this regard. 41. Shri I. Arokiasamy representing the case of M/s. M.M. Rubber Co. and Alagiri Spinning Weaving Mills has submitted that the law of estoppel should apply against the Government Department also.. 42. The question whether the law of estoppel applies against the Government Government Offices is now well settled by the Judgments of Supreme Court in the case of Godfrey Philips India Ltd. Others [1985 (22) E.L.T. 306 (S.C.)] and also in the case of Amrit Banaspati Co. Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they are acting bona fide in pursuance of Government Policy, the Government cannot be permitted to disown it as a citizen can have no means to know if what was being done was with tacit approval of the Government. And if it is found that the representation made by the official concerned was such that any reasonable person would believe it to have been made on behalf of the Government then unless such representation is established to be beyond scope of authority, it should be held binding on the Government. 43. In one of the latest judgments of Supreme Court vide 1994 (74) E.L.T. 5 in the matter of M/s. Rainbow Industries (P) Ltd., it is held that `once the Department accepted the price list, acted upon it and the goods were cleared with the knowledge of the Department, then in absence of any amendment in law or judicial pronouncement, the reclassification should be effective from the date the Department issued the show-cause notice. The reason for it is clearance with the knowledge of the Department and no intention to evade payment of duty. It was held that `the appellant is liable to pay duty on the dyestuffs manufactured by it in the manner calculated by the department from 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. C50/27/94 M/s. M.M. Rubber Co.Ltd., Madras. S4/550/93(B) (628), dated 3-10-1994 4. C50/29/94 M/s. Alagiri Spinning Weaving Mills, Madras. S4/550/93(B) (3273), dated 4-10-1994 5. C50/30/94 M/s. Ramco Industries Ltd., Madras. S4/550/93(B) (2197), dated 29-9-1994 6. C50/31/94 M/s. India Cine Agencies, Madras. S4/550/93(B) (3412), dated 27-9-1994 7. C50/32/94 M/s. Orwo Films Eastern Unit, Madras. S4/550/93(B) (2102), dated 28-9-1994 8. C50/39/94 M/s. Ind-Ital Chemicals Ltd., Madras. S4/550/93(B), dated 30-9-1994 9. C50/4/95 M/s. Amco Batteries Ltd., Bangalore. S4/550/93(B) (589), dated 11-10-1994 10. C50/6/95 M/s. H.M. Brothers P. Ltd., Madras. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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