Custom, Excise & Service Tax Tribunal
Gastrade International vs Kandla on 3 June, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
REGIONAL BENCH - COURT NO. 03
CUSTOMS Appeal No. 10497 of 2019
[Arising out of Notification Order-S-15-12-GR-1-GASTRADE-18-19-2969 passed by
Commissioner (Appeals) Commissioner of Central Excise, Customs and Service Tax-
KANDLA]
M/s Gastrade International .....Appellant
401, Through Its Properietor Mr Deepak Aggarwal
443 Basement Mathura Road Bhogal, NEW DELHI
NEW DELHI-110014.
VERSUS
C.C.-Kandla .......Respondent
CUSTOM HOUSE, NEAR BALAJI TEMPLE, KANDALA, GUJARAT APPEARANCE:
Shri. Priyadarshni Manish, Advocate for the Appellant Shri. K.J. Kinariwala, Authorized Representative for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL) , MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU FINAL ORDER NO. A/ 10956 /2019 DATE OF HEARING:22.04.2019 DATE OF DECISION:03.06.2019 PER: RAMESH NAIR The issue involved in the present case is that whether the impugned order passed for extending the time limit for issuing the SCN invoking the proviso to sub section 2 of section 110 of Customs Act, without issuing of SCN for this purpose is legal and correct. The brief facts of the case are that the appellant's imported goods were seized by the custom Authority, however an SCN as provided under Section 110(2) was not issued within the period 6 months. However, a letter dated 26.10.2018 was issued to the appellant by the Additional Commissioner, Custom House-Kandla, wherein the decision of the Commissioner was communicated that the period of issuance of SCN under proviso to Section 110(2) of Customs Act, 1962 has been extended up to 03.05.2019. Being aggrieved by the action of the
2|Page C/10497/2019-DB department, the appellant filed the present appeal raising the question that whether the extension of time without issuance of any notice to the appellant is legal and correct.
2. Sh. Priyadarshi Manish Ld. Counsel appearing on behalf of the appellant submits that appellant was not issued any SCN and no opportunity was given to defend themselves against the proposed action for extension of time limit of issuance of SCN related to seizure of the goods. He submits that even though there is no explicit provision under Section 110 but the natural justice is the foremost requirement for any judicial proceeding, therefore by not issuing the SCN extension of time limit for issuance of SCN is illegal. He placed reliance on the following judgments:
M/s Swees Gems & Jewellery-Final Order No. 50283-50284/2019 SRK Metal & Industries-Final Order No. 75047-75048/2019 IJ Rao Assistant Collector of Customs 1989 (42) ELT 338 (SC) Harbans Lal vs Collector of C.Ex. 1993 (67) ELT 20 (SC) Gaunir Impex Pvt. Ltd. 2017 (346) ELT 106 (Mad.) CCE vs Beauty Gem 2018 (359) ELT 209 (Bom.)
3. On the other hand, Sh. K. Kinariwala Ld. Assistant Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that as per amended section 110, the only requirements were extending the time limit of 6 month for issuance of SCN is that the competent authority only needs to record the reason in writing. He submits that since the investigation is taking time and same inquiry were made from the foreign agency, therefore, it was not possible for issuance of SCN within the 6 months of seizer of goods. Therefore, the Commissioner has extended the time of 6 months after recording reason in writing.
4. Heard both the sides and perused the records. We find that the issue has to be decided by us is that whether the Commissioner is required to issue notice to the importer proposing extension of time limit for issuance of SCN or he may extend the time limit without putting the importer to the notice in this regard. We find that on the identical issue for the prior period to the amendment in Section 110 i.e. before 29.03.2018, Hon'ble Bombay High Court considered the identical issue in the case of Principal Commissioner of Customs vs
3|Page C/10497/2019-DB Beauty Gem 2018 (359) ELT 299 wherein the Hon'ble High Court has passed the following order.
"10.We have perused the show cause notice dated 25th November, 2014. Paragraphs 2.1 to 2.3 of the order-in- original are reproduction of what is stated in the show cause notice. There is no finding recorded by the Commissioner that he was satisfied that investigation is being pursued seriously and there is a need for grant of more time for taking the investigation to its logical conclusion. There is no finding recorded that sufficient cause was made out by the Customs Officer. In view of the law laid down by the Apex Court and in view of the express words used in proviso to sub-section (2) of Section 110, the Commissioner could not have extended the time without recording his satisfaction on basis of the material on record that investigation is being pursued seriously and there is a need for more time for taking it to its logical conclusion. Merely because investigation is delayed, that is no ground for grant of extension of time so as to defeat the right created under sub-section (2) of Section 110.
11.Perusal of the impugned order of the Appellate Tribunal shows that it records findings of fact based on the material which was available on record. It is recorded that the inquiry with respect to live consignment is completed in May-June, 2014 when the reports were received from the laboratory. It is recorded that laboratory reports have been shown to Panch witnesses on 29th May, 2014. The Appellate Tribunal observed that the request for extension of time was very vague. The Appellate Tribunal was conscious of the fact that show cause notice dated 25th May, 2015 has been issued. In short, the Appellate Tribunal has recorded a finding of fact that sufficient cause was not made out by the Respondent. As stated earlier, the Commissioner has not recorded satisfaction in terms of proviso to sub-section (2) of Section 110 and what is held by the Apex Court in paragraph 13 of its decision in the case of I.J. Rao.
12.Therefore, on merits, we find no reason to interfere with the findings of fact recorded by the Appellate Tribunal that sufficient cause was not made out for extension of time.
13.Grant of extension of time as provided in the proviso affects the right which is created under sub-section (2) of Section 110 in favour of the person from whom the goods have been seized. If no notice under Section 124 is issued within a period of six months from the date of the seizure, the persons from whom goods are seized is entitled to return of goods as a matter of right. Therefore, we do not agree with the submission made by the learned counsel appearing for the Appellant that as show cause notice was issued after completing investigation within the extended time, the Appeal before the Appellate Tribunal was rendered infructuous. Even if the Appellate Authority has found that no grounds existed for extension of time, the notice issued under Section 124 of the Customs Act remains unaffected. Even that is the finding recorded by the Appellate Tribunal in the impugned judgment and order and in particular in paragraph 7 thereof.
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14.We, therefore, find that there is no reason to
interfere with the impugned order of the Appellate Tribunal. In any event, no substantial question of law arises much less a question of law.
15.Accordingly, we find no merit in the Appeal and the same is dismissed. Pending Notice of Motion does not survive and the same is disposed of."
5. From the above order it is observed that for extending the time a SCN was issued despite this the Hon'ble High Court has held that exceeding of time limit cannot be made without recording any finding, accordingly, Revenue's appeal was dismissed. Similarly in the case of Gaunir Impex Pvt. Ltd. 2017 (3460 ELT 106 (MAD) the Hon'ble High Court observed that even though a SCN for extension of time was issued by it is only before three days of the expiry of the period and seeking extension of time to reply the SCN was turned down. The Hon'ble High Court has held that the department has not followed the natural justice, the writ petition was allowed.
6. In both the above judgments, the department has issued SCN even for extending the time limit for issuance of SCN under Section 110 however in the present case no SCN was issued. The department's submission is that after amendment in the Section 110, there is no need of issuance of SCN. The only requirement is that the Commissioner has to record the reason in writing while extending the time limit for issuance of SCN. We find that even the Commissioner has not recorded the reason properly in the order. However the same issue for the period even after the amendment in Section 110 has come up before the Tribunal-Delhi in the case of M/s Swees Gems & Jewellery. Vide Final Order No. 50283-50284/2019, the Tribunal after interpreting and discussing the difference in the provision of Section 110(2) before and after amendment came to the conclusion that the amendment is not such that the department is not required to issue SCN. The relevant findings of the Tribunal is as under:
"6. We have considered the rival contentions and also perused the case record along with the investigation file submitted before the Bench by ld. AR. In these cases, the issue to be decided is as to whether after the amendment of Section 110(2) of Customs Act by Finance Act, 2018 is there any need for issuance of the Show Cause Notice before the extension is permitted by another six months on the reasonable ground by the
5|Page C/10497/2019-DB Commissioner/adjudicating authority. To resolve the controversy, it will be appropriate to refer the Section 110(2) before the amendment and also after the amendment vide Finance Act, 2018. The same is reproduced as under :
Section 110(2) Section 110(2) before after Where any goods are Where any goods are seized under sub-section seized under sub- (1) and no notice in section (1) and no (2) respect thereof is given notice in respect under clause (a) of thereof is given under Section 124 within six clause (a) of Section months of the seizure of 124 within six months the goods, the goods of the seizure of the shall be returned to the goods, the goods shall person from whose be returned to the possession they were person from whose seized: possession they were seized. [Provided that the Provided that the Principal aforesaid period of six Commissioner of months may, on Customs or sufficient cause being Commissioner of shown, be extended by Customs may, for the [Commissioner of reasons to be
Customs] for a period not recorded in writing, exceeding six months extend such period to a further period not exceeding six months and inform the person from whom such goods were seized before the expiry of the period so specified.
In this context, we also refer to paragraph "163"of FM speech regarding the need for amendment under the Customs Act which is reproduced as under:
" I also propose to make certain change to the Customs Act, 1962 to further improve ease of doing business in cross border trade, and to align certain provisions with the commitments under the Trade Facilitation Agreement. To smoothen dispute resolution processes and to reduce litigation, certain
6|Page C/10497/2019-DB amendments are being made, to provide for pre-notice consultation, definite timelines for adjudication and deemed closure of cases of tose timelines are not adhered to."
Clause 90 of the Bill seeks, to amend Section 110 of the Customs Act so as to give power to extend the period for issuing Show Cause Notice in case of seized goods by a further period of six months to case in cases where no order for provisional release of goods has been passed. We find that similar issue has been decided by the coordinate bench of this Tribunal vide Final Order No. 75047-75048/2018 dated 17.1.2019 in the case of S.R.K. Metal & Industries & Pink Commercial, wherein it is held as under:
"Our attention was also drawn towards the decision of Sardar Kulwant Singh vs. Collector of Central Excise and Customs, wherein it is held that an order extending period of issue of Show Cause Notice under Section 110(2) and 124 of the Customs Act, 1962, without giving an opportunity of being heard to the affected party is illegal. Further, the requirement of issue of Show Cause Notice issued under Section 124 of the Customs Act in such a case was held to be a must relying upon the various judgments referred as above. Relying on these judgments, we find that the seized goods are required to be returned to the person from whom the seizure has been made of fact of expiry of six month under Section 110 of the Act without extension of time. Regarding the Revenue 8 C/53512-53513/18 contention that with effect of the amendment carried out in Section 110(2) of the Customs Act, the requirement of issuance of Show Cause Notice is dispensed with is without any basis. In fact, we find that after the amendment the Adjudicating Authority has to give the proper reasoning by way of reasoned order after examining the requirement for extension of time period as per sub proviso 2 of Section
110. Question as to whether the person claiming restoration of the goods under Section 110 of Act is entitled to notice before time is extending, this flows from the circumstances that this is a quasi judicial proceeding, and also it goes beyond the doubt that rights of a person are likely to prejudicially affected, he is entitled to
7|Page C/10497/2019-DB opportunity to put forwarded his case before the Adjudicating Authority. Therefore, the person from whom the goods have been seized, is entitled to notice of the proposal before Adjudicating Authority for the extension of original period of the six months under Section 110(2) of the Customs Act subject to the restriction that he is not entitled to the information about the investigation which is in possession of the Investigating Agency as there can be no right in any person to be informed whose goods during the investigation material collected against him and there is no need for maintaining the investigation proceedings. This view has been affirmed in the I G Rao case referred(supra). The provisions of Section 110(2) before and after the amendment is as identical but for "on sufficient cause being shown has been replaced with reasons to be recorded in writing extends such period", for a period not exceeding six months and inform the person from whom such goods were seized before expiry of the said period. Careful analysis of the provision makes it clear that the right of issuance of the Show Cause Notice for the extension of the period of six months as prescribed under said sub-Section of Section 110(1) remains same from which the emanate right of Show Cause Notice to the affected party in furtherance of Principle of Natural Justice as his rights are being prejudicially affected. The amendment will not obliterate the aforesaid position of issuance of Show Cause Notice has discussed above, even after insertion of with new sentence in the provisions of Section 110(2) of the Act. In fact, we are of the view that after amendment not only the Show Cause Notice is required to be issued by the Adjudicating Authority, but he has also to give a reasoned order after hearing the Investigation Officer and also taking view of the affected party from whom seizure has been made as his personal right is being deprived of which emanate from the Section 110(1) of the Act that entitled him to got the goods returned which has been seized from his possession. This is also cleared from statements of objects in the Finance Act as discussed above.
13. In view of above, we are of the opinion that the impugned order is in violation in this provisions of Section 110 of the Customs Act
8|Page C/10497/2019-DB has held in the various decisions discussed above. We have also seen the note sheet order of the Ld. Commissioner in this case. It is seen from the order that the Commissioner while extending the time period has only gone by the letter of DRI and not put up to him by his office without examining the merits of the such extension and recording his own finding. His finding is only two worded finding which is „GC issued dated 26/06/2018‟ Sd- M Chandra This proves that there is no independent application of mind by the Commissioner (Port) for the extension of Show Cause Notice even by accepting his assertion that the only requirement is that the Principal Commissioner/ Commissioner of Customs made for the reasons to be recorded in writing, extends such period to further period not extending six months and inform the person from whom the goods are seized. We have also considered the submission made by Ld. Advocate that the aforesaid amendment has been brought with effect from 18/3/2018. Obviously, the amendment will not have its application from the retrospective date. The amendment has not been made with retrospective effect as is evident from the Finance Act, 2018. We also find that in case of Commissioner of Income Tax (Central-1), New Delhi vs. Vatika Township)[(2014) 0 SCC 670], Hon‟ble Supreme Court has held that law enacted in absence of a provision in the statue about the same being with of retrospective effect in the Clause of Finance Act, the amendment will have prospective effect only. In view of that also we find that the impugned order is not sustainable as the new amended provision has been applied for the seizure made during period when the amendment was not there in the statue.
14. In view of above our analysis as above, we are of the considered opinion that there is no legality for dispensing with the Show Cause Notices to the affected party even under the amended provisions of Section 110(2) of the Act. The Adjudicating Authority has erroneously held that this is no need of issue of Show Cause Notice in the cases of extension at hand.
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15. Accordingly, we set aside the impugned orders and allow appeals with consequential relief as per law."
7. In view of above, we are of the view that the impugned order is not sustainable and the same are being set aside with consequential benefit, as per law, which includes the return of imported goods to the person from whom the seizure have been made."
7. In view of the above decision which is in respect of the amended provision of Section 110 (2), we are of the view that there is no legal authority with the department for dispensing with the issuance of SCN to the appellant, therefore, the impugned order passed without issuance of any SCN will not sustain. Accordingly, we set aside the impugned order and allow the appeal with consequential reliefs if any, in accordance with law.
(Order pronounced in the open court on 03.06.2019) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Neha