Customs, Excise and Gold Tribunal - Delhi
Asian Exports vs Commissioner Of Customs, Icd on 28 May, 2002
Equivalent citations: 2002(145)ELT702(TRI-DEL)
ORDER P.S. Bajaj, Member (J)
1. In this appeal, the appellants have challenged the impugned order-in-original dated 9-10-2001 passed by the Commissioner of Customs vide which he had confirmed the duty demand of Rs. 28,17,072/- with penalty of Rs. 28 lakhs on appellant No. 1, M/s. Asian Exports, and imposed penalty of Rs. 5 lakhs on appellant No. 2, the Director of the firm, Shri Rajeev Khandelwal.
2. The appellants are engaged in the export of the goods. They imported brass scrap duty free against two advance licences through ICD, TKD., New Delhi, by availing benefit of exemption from payment of customs duty under Notification No. 203/92-Cus., dated 19-5-1992. The customs duty leviable on the goods, but for this, exemption, was of Rs. 28,17,072/-. The appellants disposed of the imported goods without discharging the export obligation. They instead of utilising the imported goods for the manufacture of the resultant export product, cleared the material in the domestic market. They were accordingly served with a show cause notice calling upon them to pay the customs duty of Rs. 28,17,072/- leviable on the goods imported by them against the said advance licences and personal penalty was also proposed to be imposed on the appellant No. 2. The appellants, however, contested the correctness of the show cause notice and maintained that the duty demand was time-barred. The Commissioner through the impugned order confirmed the duty and imposed penalty on the appellants, as detailed above.
3. The learned Counsel has solely contested the validity of the impugned order on the ground of limitation. According to the learned Counsel, the show cause-cum-demand notice issued was barred by limitation under Section 28 of the Customs Act as the same was issued after the expiry of statutory period of six months.
4. The learned SDR, on the other hand, has not been able to refute this contention of the Counsel.
5. We have gone through the record. The import of the goods was made by the appellants against two advance licences in July and August, 1994. They executed a bond with bank guarantee/letter of undertaking in favour of the licensing authority to ensure the fulfilment of export obligation within one year from the date of the issuance of licences. That period of one year, admittedly, expired in July/August, 1995, if reckoned from the date of the import of the goods (brass scrap). After the expiry of one year, within which the export obligation was to be discharged by the appellants, the licensing authorities could enforce the bond within a period of three years, but that period of three years also expired in July/August, 1998, when calculated from July/August, 1995, within which the export obligation was to be discharged by the appellants, but they failed to do so. Even, as per the conditions appended to the advance licences issued to the appellants as well as in terms of Para 118 of the Handbook of the Procedures 1992-97, the bond executed by them was valid for a period of three years from the date of expiry of export obligation period.
6. There is nothing on the record to suggest if there was any continuous obligation on the part of the appellants for discharging the export obligation, rather the period for discharging the export obligation was specified and limited to one year from the date of import the goods made by them. The view taken by the learned Commissioner that the bond executed did not contemplate any limitation and could be enforced during its validity period, in the light of the Apex Court judgment in the case of Mediwell Hospital & Health Care Pvt. Ltd. v. U.O.I - 1997 (89) E.L.T. 425 (S.C.), cannot be accepted to be correct. The Apex Court in the above said case has no doubt observed that the show cause notice could be issued beyond a period of limitation of five years prescribed under Section 28 of the Customs Act, but this view was taken as the bond executed by the parties imposed continuous obligation without fixing any period for complying with the conditions of the import. But in the instant case, as per the terms of the advance licences and the bond executed by the appellants, the export obligation was to be discharged by them within a period of one year from the date of import of the goods and the conditions of the bond could be enforced by the licensing au-
thorities in the event of failure on the part of the appellants to discharge the export obligations, within the specified period of three years. Therefore, the ratio of the law laid down by the Apex Court in the above referred case could not be made applicable to the case of the appellants by the learned Commissioner for holding the demand within time under Section 28(1) of the Customs Act.
7. The show cause notice was admittedly issued in the instant case on 12-9-2000, much after the expiry of the period prescribed under Section 28(1) of the Customs Act. Therefore, the show cause-cum-demand notice must be held to be barred by limitation. That being so, the duty demand could not be confirmed against the appellants nor even the penalty could be imposed. The impugned order of the Commissioner, therefore, cannot be sustained and is set aside-on the ground of limitation.
8. In view of the discussion made above, the appeals of the appellants are allowed with consequential relief permissible under the law.