Custom, Excise & Service Tax Tribunal
Maggie Marketing Pvt Ltd vs Commissioner, Customs-Patparganj on 21 August, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. 1
CUSTOMS APPEAL NO. 50025 OF 2022
(Arising out of the Order-in-Original No. 03/COMMR/MS/Maggie/ICD/PPG/2021-22 dated
29.06.2021 passed by the Commissioner of Customs, Patparganj)
M/s Maggie Marketing Pvt Ltd ......Appellant
No. 315, 13/19, Third Floor
W.E.A., Karol Bagh
New Delhi-110005
Versus
Commissioner, Customs- Patparganj ......Respondent
Inland Container Depot, ICD Patparganj, New Delhi- 110096 AND CUSTOMS APPEAL NO. 50026 OF 2022 (Arising out of the Order-in-Original No. 03/COMMR/MS/Maggie/ICD/PPG/2021-22 dated 29.06.2021 passed by the Commissioner of Customs, Patparganj) Siddharth Sharma ......Appellant Director of M/s Maggie Marketing Pvt Ltd.
No. 315, 13/19, Third Floor W.E.A., Karol Bagh New Delhi-110005 Versus Commissioner, Customs- Patparganj ......Respondent Inland Container Depot, ICD Patparganj, New Delhi- 110096 APPEARANCE:
Shri Sudhir Malhotra, Advocate for the Appellant Shri M.K. Shukla, Authorized Representative of the Department CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P. V. SUBBA RAO, MEMBER (TECHNICAL) Date of Hearing/Decision: August 21, 2024 FINAL ORDER NOS. 58100-58101/2024 2 C/50025-50026/2022 JUSTICE DILIP GUPTA:
Customs Appeal No. 50025 of 2022 has been filed by M/s Maggie Marketing Pvt Ltd.1 to assail the order dated 29.06.2021 passed by the Commissioner rejecting the declared value of the goods under rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 20072 and determining it under rules 5 and 7. The Commissioner has also ordered that since the goods were prohibited they should be absolutely confiscated and the goods which were not absolutely confiscated, could be released on payment of differential duty.
2. Customs Appeal No. 50026 of 2022 has been filed by the Director of the appellant against that part of the order dated 29.06.2021 that imposes personal penalty of Rs. 20 lakhs under section 112 (a)(i) and
(ii) and penalty of Rs. 10 lakhs on him under section 114 AA of the Customs Act, 19623.
3. The sole contention that has been advanced by Shri Sudhir Malhotra, learned counsel appearing for the appellant is that the impugned order deserves to be set aside for the sole reason that even though the show cause notice was issued on 17.10.2017, it was adjudicated upon on 29.06.2021 beyond the time contemplated under section 28 (9) of the Customs Act.
4. To examine this issue, it would be relevant to refer to the relevant provision of the Customs Act.
5. Section 28(9) of the Customs Act was amended on 29.03.2018.
Prior to its amendment, section 28 (9) of the Customs Act read as follows:
1. the appellant
2. the 2007 Valuation Rules
3. the Customs Act 3 C/50025-50026/2022 "Section 28 (9)- The proper officer shall determine the amount of duty or interest under sub-section (8)-
(a) Within six months from the date of notice, where it is possible to do so, in respect of cases falling under clause (a) of sub-section (1)
(b) Within one year from the date of notice, where it is possible to do so, in respect of cases falling under sub-section (4)"
(emphasis supplied)
6. On 29.03.2018, by Finance Act, 2020, section 28 (9) underwent an amendment. The amended section 28(9) is reproduced below:
"Section 28 (9)- The proper officer shall determine the amount of duty or interest under sub-section (8),-
(a) within six months from the date of notice, in respect of cases falling under clause (a) of sub-
section (1);
(b) within one year from the date of notice, in respect of cases falling under sub-section (4). Provided that where the proper officer fails to so determine within the specified period, any officer senior in rank to the proper officer may, having regard to the circumstances under which the proper officer was prevented from determining the amount of duty or interest under sub-section (8), extend the period specified in clause (a) to a further period of six months and the period specified in clause (b) to a further period of one year:
Provided further that where the proper officer fails to determine within such extended period, such proceeding shall be deemed to have concluded as if no notice had been issued."
(emphasis supplied)
7. On 29.03.2018, Explanation 4 was also added to section 28 of the Customs Act and the same is reproduced below:4
C/50025-50026/2022 "Explanation 4: For the removal of doubts, it is hereby declared that in cases where notice has been issued for non-levy, non paid, short levy or short paid or erroneous refund after the 14th day of May, 2015 but before the date on which the Finance Bill, 2018 receives the assent of the President, they shall continue to be governed by the provisions of Section 28 as it stood immediately before the date on which such assent is received."
8. It transpires that Explanation 4 was substituted on 27.03.2020 with retrospective effect from 29.03.2018. The substituted Explanation 4 is reproduced below:
"For the removal of doubts, it is hereby declared that notwithstanding anything to the contrary contained in any judgment, decree or order of the Appellate Tribunal or any Court or in any other provision of this Act or the rules or regulations made thereunder, or in any other law for the time being in force, in cases where notice has been issued for non-levy, short levy, non-payment, short payment or erroneous refund, prior to the 29th day of March 2018, being date of commencement of the Finance Act 2018 (13 of 2018) such notice shall continue to be governed by the provision of section 28 as it stood immediately before such date."
9. The records indicate that in response to the show cause notice dated 17.10.2017, the appellant submitted an interim reply dated 07.04.2021 and contended that though section 28 (9) was amended on 29.03.2018, but it will also be applicable to show cause notices issued prior to this date and so in view of the amended provisions of section 28(9) of the Customs Act, such proceedings shall be deemed to have been concluded as if no notice has been issued since the show cause notice was not adjudicated within the stipulated time. To support this contention, the appellant placed reliance upon the judgment of the Punjab & Haryana High Court in M/s. 5
C/50025-50026/2022 Prabhat Fertilizers and Chemicals Works vs. Commissioner of Customs (Import), Maharashtra and others4.
10. Thus, in effect, what was sought to be contended by the appellant in response to the show cause notice was that even though the show cause notice was issued on 17.10.2017, it would still be governed by the amended provisions of section 28(9) of the Customs Act and, therefore, the proceeding should be concluded as the show cause notice had not been issued within the stipulated time.
11. This contention advanced by the appellant has not been accepted by the Commissioner in the impugned order. In the first instance, the Commissioner pointed out that after the decision of the Punjab & Haryana High Court in Harkaran Dass Vedpal vs Union of India5, Explanation 4 was substituted on 27.03.2020 and in view of the said Explanation, the show cause notice dated 17.10.2017 would continue to be governed by the unamended provision of section 28(9) of the Customs Act. The Commissioner, then examined the unamended provisions of the section 28 (9) of the Customs Act and considered the effect of "where it is possible to do so", which occurs in both clauses (a) and (b) of the unamended section 28(9) of the Customs Act. In this context, the Commissioner recorded the following findings:
"4.11 So the present notice needs to be decided as per the present position of law. In the present notice, the other parties representing IPR violation submitted their written replies in November 2017. However, no reply of M/s Maggie Marketing Pvt Ltd. was received till December 2019. The case was transferred from Commissioner of Customs (ICD Tughlakabad, Exports) to Commissioner of Customs (ICD Patparganj) for adjudication due to work load in
4. Civil Writ Petition No. 23433 of 2019 decided on 18.12.2019
5. 2019 (368)E.L.R. 546 (P&H) 6 C/50025-50026/2022 November, 2018, vide Order No.01/2018 dt. 15.11.2018 issued by Chief Commissioner, Customs Delhi Zone.
M/s Maggie Marketing Pvt Ltd. sought copies of annexure and relied upon documents vide letter dt.26.12.2019 & 23.7.2020, addressed to Commissioner of Customs (ICD Tughlakabad Exports). The letters were not sent to new adjudicating authority, Le., Commissioner of Customs (ICD Patpargani). Due to Covid related restrictions, the adjudication proceedings were taken up in February, 2021 and M/s Maggie Marketing Pvt Ltd. sought copy of Show Cause Notice through their advocate M/s R.K. Jain vide email dt.26.2.2021. These documents were provided in March 2021 post which advocates were changed to M/s Swamy Associates.
M/s Swamy Associates' Advocate only insisted on submitting an interim reply dt.8.4.2021 and has again sought order first on their interim reply in personal hearing on 3.6.21. In addition, the party had taken provisional release of the seized goods under section 110A of the Customs Act submitting bond, bank guarantee and cash deposit as security as per table-K of the Show Cause Notice. The importer, at time of provisional release, as per the conditions of B-11 bond, agreed to pay all dues (duty, penalty) demandable on the goods. The party never pursued to get the demands decided to discharge its bond obligation, which they had bound themselves in.
4.12 The above explains why the case could not be decided within one year of date of notice. So, the case is being adjudicated now once principles of natural justice have been followed and all respondents have gotten a chance to submit replies and have been given a personal hearing. So, the present adjudication, in terms of explanation 4 of section 28 of Customs Act 1962 read with section 28(9) of Customs Act prior to 29.3.18 is not time barred."
(emphasis supplied) 7 C/50025-50026/2022
12. Shri Sudhir Malhotra, learned counsel appearing for the appellant submitted that the aforesaid findings recorded by the Commissioner are perverse, for even if the unamended section 28(9) of the Customs Act was applicable and even if appellant had not submitted a reply to the show cause notice dated 17.102017, nothing prevented the Commissioner from adjudicating the show cause notice within the time prescribed in the unamended section 28(9) of the Customs Act.
13. Shri Mukesh Kumar Shukla, learned authorised representative appearing for the department, however, supported the findings recorded by the Commissioner and contended that in the facts and circumstances of the case, it was not possible for the Commissioner to decide the matter within the time prescribed under the unamended section 28(9) of the Customs Act.
14. It is not possible to accept the contention of the learned counsel for the appellant. What transpires from the record is that after the notice dated 17.10.2017 was issued to the appellant, reply was not filed. In fact, copies of annexures and relied upon documents were sought by the appellant by letters dated 26.12.2019 and 23.07.2020. The time period prescribed under unamended section 28 (9) of the Customs Act had already lapsed much before the submission of these two letters dated 26.12.2019 and 23.07.2020 filed by the appellant seeking relied upon documents and annexures. The appellant, therefore, clearly wanted to file a detail reply to the show cause notice and for this purpose had sought the relevant documents. The appellant could have clearly pointed out to the Commissioner at that point of time only that even if the appellant had not filed any reply, the Commissioner should have passed the order to ensure compliance of the time limit prescribed in the unamended section 8 C/50025-50026/2022 28(9), but that was not done. Once the documents were provided, the appellant submitted the interim reply dated 07.04.2021. In this reply, the appellant merely stated that amended section 28(9) of the Customs Act would apply retrospectively and, therefore, the show cause notice dated 17.10.2017 issued to the appellant would be governed by the amended provisions of section 28 (9) of the Customs Act. In support of his contention, the appellant placed reliance on the judgment of Punjab & Haryana High Court in Prabhat Fertilizers and Chemicals Works. This contention of the appellant has not found favour of the Commissioner for the reason that Explanation 4 to section 28(9) was subsequently substituted on 27.03.2020 after the decision of the Punjab and Haryana High Court with retrospective effect from 29.03.2018.
15. What needs to be noted is that though the Explanation 4 had been substituted on 27.03.2020 and the reply was filed by the appellant on 07.04.2021, but still the appellant did not point out this substituted Explanation 4 to the Commissioner and instead made an attempt to place reliance on the judgment of the Punjab & Haryana High Court in Prabhat Fertilizers and Chemicals Works to contend that the amendment to section 28 (9) made on 29.03.2019 would apply retrospectively.
16. It needs to be noted that unamended and amended sections 28(9) of the Customs Act were examined at length by the Delhi High Court in Swatch Group India Pvt Ltd. vs. Union of India6. The Delhi High Court considered the decision of the Punjab & Haryana High Court in Harkaran Dass Vedpal and also the substituted Explanation 4 added on 27.02.2020 and rejected the contention about retrospectively application of the
6. 2023 (386) ELT 356 (Del.) 9 C/50025-50026/2022 amended section 28(9) of the Customs Act. The relevant paragraphs of the judgment of the Delhi High Court are reproduced below:
"28. Learned Counsel for the petitioner has vehemently contended that the amendment carried out in Section 28 of the Customs Act is only procedural and applying the principles of retroactive amendment, the respondent was bound to pass an order within 12 months of coming into force the amendment to Section 28(9) of the Customs Act. He relied upon the judgment passed by the Hon'ble High Court of Punjab and Haryana in the case of M/s. Harkaran Dass Vedpal v. Union of India & Ors., CWP No. 10889 of 2017, decided on 22-7-2019 [2019 (368) E.L.T. 546 (P & H)].
29. We do not agree with the aforesaid contention advanced on behalf of Learned Counsel for the petitioner. Pursuant to the judgment passed by the Punjab and Haryana High Court in M/s. Harkaran Dass Vedpal (supra), a further amendment was carried out by a Finance Act, 2020 dated 27-3-2020. The same, came into effect retrospectively from 29-
3-2018. By Finance, Act, 2020, the Explanation 4 to Section 28 of the Customs Act was substituted and the same reads as under:
"Explanation 4. - For the removal of doubts, it is hereby declared that notwithstanding anything to the contrary contained in any judgment, decree or order of the Appellate Tribunal or any Court or in any other provision of this Act or the rules or regulations made thereunder, or in any other law for the time being in force, in cases where notice has been issued for non-levy, short-levy, non-payment, short-payment or erroneous refund, prior to the 29th day of March, 2018, being the date of commencement of the Finance Act, 2018 (13 of 2018), such notice shall continue to be governed by the provisions of section 28 as it stood immediately before such date."
30. The intention of the legislation, thus, is apparent that the show cause notices which were issued prior to the Finance Act coming 10 C/50025-50026/2022 into force the Finance Act, 2018 were required to be governed by unamended Act of Section 28(9) of the Customs Act.
31. Therefore, the question, which requires consideration now is whether in terms of erstwhile Section 28(9) of the Customs Act, the impugned SCN dated 14-2-2018 has lapsed having not been adjudicated within the period of 12 months. In other words, whether in the facts and circumstances of the present case, it was not possible for the Revenue to adjudicate the impugned SCN within the period of 12 months from the date of issuance."
(emphasis supplied)
17. It has therefore, to be held, in view of the aforesaid discussion, that the show cause notice dated 17.10.2017 issued to the appellant would be governed by the unamended provisions of section 28(9) of the Customs Act.
18. It has now to be examined whether the reasons stated by the Commissioner in the impugned order are justified in the facts and circumstances of the case.
19. The unamended section 28(9) of the Customs Act provides that the proper officer shall determine the amount of duty or interest under sub- section (a) within six months from the date of notice, where it is possible to do so, or under sub-section (b) within one year from the date of notice, where it is possible to do so. The Commissioner, in the impugned order, has recorded a finding that despite the issuance of the show cause notice dated 17.10.2017, the appellant for a long period of time did not file any reply and, in fact, sought copies of the relied upon documents and annexures. Thereafter, he filed an interim reply dated 07.04.2021. The Commissioner, further noticed that due to covid related restrictions, the adjudication proceedings were taken up only in February 2021. 11
C/50025-50026/2022 Thereafter, the appellant again sought a copy of the show cause notice through an advocate which was made available to the appellant in March 2021. The personal hearing took place on 03.06.2021 and the matter was adjudicated on 29.06.2021.
20. The Commissioner has given good and cogent reasons for holding that it was not possible to adjudicate the show cause notice within time as stipulated under the unamended section 28(9) of the Customs Act.
21. All that has been pointed out by the learned counsel for the appellant is that even if the appellant had not filed any reply to the show cause notice, the Commissioner should have adjudicated the show cause notice within the stipulated time. This aspect has already been examined in the earlier part of this order.
22. Learned counsel for the appellant has not made any submissions on the merits of the order and, therefore, only the limitation aspect has been considered.
23. Thus, for all the reasons stated above, there is no infirmity in the order passed by the Commissioner. The appeals, therefore, deserve to be dismissed and are dismissed.
(Order dictated and pronounced in Open Court) (JUSTICE DILIP GUPTA) PRESIDENT (P. V. SUBBA RAO) MEMBER (TECHNICAL) Diksha