Customs, Excise and Gold Tribunal - Delhi
Indo Swiss Times Ltd. vs Collector Of Customs on 26 April, 1993
Equivalent citations: 1993ECR451(TRI.-DELHI), 1993(68)ELT82(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal is directed against the order in appeal dated 2-1-1991.
2. The appellants are engaged in the manufacture of watches covered under Chapter 91 of the Central Excise Tariff. They imported horological raw materials namely brass rods and flats alongwith other machinery parts from Switzerland and submitted a bill of entry on 16-5-1987. They claimed exemption under Custom Notification No. 46/85-Cus., dated 28-2-1985 and paid only basic duty at the rate of 25%. The invoice described the Horological materials as under:
Brass Rods Diamn 1.5 mm Brass Rods Diamn 7.6 mm Brass flats 18.05 x 0.87 mm Brass Flats 230.0 x 1.65 mm (width x thickness)
3. The appellants contend that the goods satisfy the description given in the Custom Notification No. 46/85-Cus. dated 28th Feb. 1985. They further contend that the imported raw-materials are required for the manufacture of components of wrist watches and that they had submitted duly attested bond as well as end use certificate. However, a show cause notice dated 16-11-1987 under Section 28(1) of the Customs Act, 1962 had been issued by the Department demanding a duty amount of Rs. 92,291.00 at the rate of 100% basic + 40% Aux. & 15% CVD.
4. In reply dated 1-12-1987, the appellants contended the demand raised is ambiguous and vague as the show cause notice does not indicate the basis nor any reason to justify the grounds for its issuance. By a criptic order, the Assistant Collector in the order-in-original has held as follows :
"I have gone through case records and submissions made at the time of personal hearing. They duty was paid on 22-5-1987 and demand, issued on 16-11-1987 hence it is very much within time.
ORDER In view of the finding above, it hereby confirm the demand of Rs. 92,291.00 (ninety two thousand two hundred ninety one only) under Section 28(2) of the Customs Act, 1962".
5. Aggrieved by the order, they prepared an appeal before Collector (Appeals). Before the ld. Collector, they stated that the show cause notice had been served on them beyond the stipulated period of six months. The ld. Collector has rejected this plea on the ground that they had not substantiated this plea. He has also observed that they had not raised this plea in the reply to the show cause notice. As regards, the claim of the benefit of Notification No. 46/85, the ld. Collector has held that the classification of the impugned goods adopted in the bill of entry is under sub-heading 7419.99 and 8460.90 of the Customs Tariff, whereas the bill of entry relied by the importer in support of their case of another consignment shows the classification is under subheading 7414.10 read with Notification No. 46/85. He has further held that the description of goods in the bill of entry and invoice were not of the specification covered in the Notification No. 46/85.
6. We have heard Shri S.N. Khanna, ld. Consultant for the appellant and Shri B.K. Singh, ld. SDR for the Revenue. Shri Khanna submitted that the duty had been deposited on 18-5-1987 and the show cause notice had been received by the appellant on 24-11-1987 which will be after 6 months from the date of payment and hence the demands were barred by time. In this context, he has relied on the following ruling :
1. Jayashree Textiles & Industries v. Collector of Customs, Calcutta 1986 (23) E.L.T. 491 (Tri.).
In this case, it has been held that for recovery of short levy, the six months period is to be reckoned with reference to the date of service of notice and not the date of despatch and that the show cause notice would be time barred if the same is received after six months.
2. Collector of Customs, Bombay v. Presto Works, Jullandhar - 1987 (28) E.L.T. 469.
In this case also, it has been held that the date of service is the date for computing six months for less charge demand notice.
7. Shri Khanna, ld. Consultant further contended that the show cause notice does not specify any charges and the same being bold is ambiguous. Such a show cause notice is not sustainable. In this context, he has relied on the following rulings:
(i) Calcutta Silk Mfg. Co. Ltd. v. Assistant Collector of Customs (Appg.) Unit. III (C) & Others - 1984 (17) E.L.T. 244 (Bom.) In this case, the Hon'ble Bombay High Court has held in para 4 of the judgment that:
"It is not possible to appreciate how and on what basis the officer came to the conclusion that there was any collusion or any wilful mis-statement or suppression of facts on the part of the importer. It was open for the respondents to file a return to the petition and set out what was the material available to the officer while initiating the proceedings. Not only the return is not filed, but the ld. Counsel for the respondents is unable to assist the Court for want of instructions. In these circumstances, it is not proper to permit the respondents to proceed with the show-cause notice. The respondents have undoubtedly jurisdiction to issue notice in case duty is short levied, but where the initiation of proceedings are challenged, then the respondents must come out with the material to establish that the officer had sufficient material prima facie to come to the conclusion that the duty was short levied. As the respondents have produced no material whatsoever, in my judgment, the proceedings commenced by the impugned show-cause notice are required to be struck down".
(ii) Audo Visa Corporation v. Collector of Customs -1991 (53) E.L.T. 3 (Tri.). In para (9) of the order, the Bench has held :
"First and foremost the show cause notice is vague. It does not give any reason for the Department's proposal to consider the item as falling under Appendix 3A, entry No. 549 of the Import Policy 1985-88. Hence this notice dated 13-1-1988 does not constitute a proper show cause notice and the proceedings were liable to be struck down on this ground alone".
Again the Ld. Consultant argued that the adjudication order is not a speaking order and it does give the basis on which the demand was confirmed. In this context, he has relied on the ruling rendered in the case of Anandeshwar Pande v. Collector of Central Excise as reported in 1989 (39) E.L.T. 249 (Allahabad). The Hon'ble Allahabad High Court has held in para 3 as follows :
"In the present writ petition, the petitioner's grievance is against the decision of Collector, Central Excise, who has, by his order dated 4-8-1988 held that the petitioner had been rightly impleaded as a party to the show-cause notice and was liable for further action as indicated in the said show-cause notice. On scrutiny of the order we find that this conclusion of the Collector is not at all supported by any reasons. This infirmity alone is sufficient to vitiate the order. No reasons having been indicated in the impugned order. It cannot be ascertained whether the objection raised by the petitioner had been duly considered before reaching the final conclusion".
8. Shri Khanna, ld. Consultant pointed out that the ld. Collector (Appeals) has held that the imported items does not meet the specifications given in the Notification. He submitted that this finding is not based on any charge in show cause notice nor the adjudicating authority had examined given any findings on this aspect of the matter and hence this finding is a mere presumption. In otherwise, the ld. Collector had failed to notice the end use certificate, the DGTD's certificate, original invoice and hence his findings were perverse. The Collector had indirectly questioned the certificatie issued by DGTD which was beyond his jurisdiction. In this context, he relied on the following rulings:
(i) Oudh Sugar Mills Ltd. v. Union of India -1978 (2) E.L.T. (J 172) (S.C.)
(ii) Bombay Chemicals (P) Ltd. v. Appellate Collector of Customs -1990 (49) E.L.T. 190.
9. The Hon'ble Bombay High Court has held in para (6) of the judgment that the customs authorities have no jurisdiction whatsoever to sit in Appeal over the certificates which have been granted by DGTD or the Director of Industries, as the case may be and came to their own conclusion. It has further been held that these certificates are binding and conclusive upon the customs authorities save and except, when it can be contended that these certificates have been obtained by fraud or under some mistake.
10. Shri B.K. Singh, ld. SDR has reiterated the findings of the lower authorities.
11. We have carefully considered the submissions made by both the sides and have perused the records. The show cause notice dated 16-11-1987 reads:
"The raw-material attract duty @ 100% + 40% CVD 15%. As such demand for Rs. 92,291/- is issued.
You are, therefore, requested under Section 28(1) of the Customs Act to show-cause within 15 days of the receipt of this letter as to why you should not pay the amount of customs duty specified above".
12. The importer in his reply dated 1st December 1987 has not raised the question of time bar nor has stated that the show cause notice was received by them on 24-11-1987. They have neither filed the registered postal cover, in which the show cause notice was received by them. There is also no affidavit filed on their behalf in support of their contention that the show cause notice was received by them on 24-11-1987. It is contended by them that the duty was paid on 18-5-1987. But the Assistant Collector in his order has found that the duty had been paid on 22-5-1987. The show cause notice had been despatched on 16-11-1987. Both offices of Assistant Collector and that of the addressee is situated in New Delhi itself. Therefore, a reasonable presumption can be drawn that the show-cause notice had reached the Importer before 22-5-1987 and is within time. The importer had not specifically raised this issue in their reply to the show cause notice nor they had produced any proof of services as being 24-11-1987 and therefore, the plea of the importer has to be rejected and we hold that the show-cause notice is in time.
13. As regards the plea that the show cause notice is vague, ambiguous and no grounds have been stated in the show cause notice and the same is unsustainable requires to be accepted. As can be seen the importer had claimed the benefit of the Notification No. 46/85-Cus., dated 28-2-1985. The bill of entry had been scrutinised and they were allowed clearance by availing the benefit of! the same. Therefore, it follows that the authorities were satisfied with the claim of the importer. Moreover, they had filed duly attested bonds certificate from' DGSD and also the end use certificate. Therefore, it follows that the authorities were quite satisfied with the applicability of the notification and benefit claimed by the importer. The show cause notice issued under Section 28(1) of the Customs Act does not state the ground for raising the short levy. As is well known that the short levy is recoverable provided the Department is satisfied that the assessment had not been properly levied on account of reasons to be stipulated in the show-cause notice, so as to enable the noticee to answer the grounds taken up by the Department. In this case, the Department having accepted the bill of entry and allowed the importer to avail the benefit of the notification in question, after duly satisfying with the details furnished by the importer, could not have raised the short levy on this ground unless so stipulated in the show cause notice, giving reasons for reopening the assessment. Thus, having not raised any grounds and the ld. Assistant Collector also not having given any reasons in his order despite specifically pointed out by the importer, it follows that the authorities had not made up their mind clearly and had no reasons or grounds for making a short levy. The ld. Collector had tried to fill the lacunae by holding that the importer had .not fulfilled the terms of the notification in question. As pointed out, this has not been the ground for reopening the assessment, in fact, no grounds had been given and hence we cannot presume that the Department could have been having in their mind this ground for reopening the assessment. When the reasons are not spelt out in clear terms in the show-cause notice for rejecting the claim for the benefit of the notification claimed by the importer then it would be reasonable to hold that the show-cause notice is vague and unsustainable. As rightly contended by the Id. Consultant, we find the appellate authority has also gone beyond his jurisdiction in giving a finding that the appellant had not satisfied the terms of the notification. We also note that the appellate authority has not given any reasons for rejecting the DGTD certificate and end use certificate placed by the importer in the first instance. Hence the reasons given by the ld. Collector is also not sustainable in law. In the result the importers contentions requires to be accepted by allowing the appeal we order accordingly.