Circular No. 82/2000-Cus
F. No. 460/71/2000-Cus.V
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject :- CEGAT’s order no. A/444/2000/MB (DB) dated 29-5-2000 in the matter of M/s. Dewan Chand Satyapal Aggarwal v. Commissioner of Customs, New Delhi.
Find enclosed a copy of letter C. No. VIII/12/ACU/7/31/Misc/ 90/97/11611 dated 5th August 2000 from Commissioner of Customs (Air Cargo), New Delhi addressed to Member (Customs) on the subject cited above.
The Board has examined the issue and decided that, ‘though our civil appeal in the case of Paramount Medicos, on similar issue was dismissed the order was a one line order of dismissal. We would have to take a chance and impress upon the Court that in the circumstances of such cases, limitation for violation of conditions, would start, from the last date of violation, preceding the initiation of proceedings, as advised by the Ministry of Law.’
I am directed to bring the Board’s views as expressed above, to your notice so that Show Cause Notices, Adjudication/orders are appropriately drafted in other pending or future cases. You are requested to ensure strict compliance in the matter within your jurisdiction.
OFFICE OF THE COMMISSIONER OF CUSTOMS AIR CARGO UNIT : NCH : NEW DELHI
C. No. VII/12/ACU/7/31 Misc./90/97 Dated : 4-8-2000
Sh. K.L. Verma,
Central Board of Customs & Central Excise,
Sub. : CEGAT’s order No. A/444/2000/MB (DB) dated 29-5-2000 in matter of M/S Dewan Chand Satya Pal Aggarwal Imaging Res. Centre v. Commissioner of Customs, Delhi
Kindly find enclosed a copy of CEGAT’s order No. A/444/2000/NB(D) dated 29-5-2000 setting aside the order no. ACU/VS/35/99 dated 30-9-99 passed by Commissioner of Customs (ACU). This is one of the cases taken up by Rosha Committee appointed to investigate the cases of import of medical equipment.
The brief facts are as follows :
M/s. Dewan Chand Satya Pal Aggarwal Imaging Res. Centre, New Delhi imported 7 consignments of medical equipment under seven Bills of Entry between 21-3-1990 and 15-12-1992. The total assessable value thereof was Rs. 19,31,075/- having a duty liability of Rs. 14,80,943/-. The importer claimed exemption from duty in terms of Notification No. 64/88 dated 1-3-1988, which was allowed and goods cleared without payment of duty in terms of the said notification.
Subsequently the Department issued a show cause notice on 8-9-1998 demanding duty on the said items along with the interest at the rate of 20% on the grounds that the imports have failed to fulfil the conditions of the Notification under which they had cleared the goods duty free. The importer was also asked to show cause against confiscation of the goods under section 111(O) and penal action under Sections 112 and 114A. The matter was adjudicated by the Commissioner of Customs (ACU).
The importers were allowed to redeem the goods on payment of redemption fine of Rs. 2 Lakhs. A Customs duty demand of Rs. 14,80,943/- along with interest at the rate of 20% per annum from the date of clearance of the goods till the date of payment of duty under Section 28AB was also confirmed. Apart from these, a penalty of Rs. 32,47,446/- was also imposed under Section 114A of the Customs Act being the equal amount of duty determined under Sections 28(2) and 28AB of the Customs Act.
The importers filed an appeal before CEGAT against the orders passed by Commissioner of Customs (ACU). CEGAT allowed party’s appeal & set aside the impugned order.
CEGAT observed as follows –
I. In the instant case, since the show cause notice has been invoked beyond the permissible period under section 28, the apex court judgment in Mediwell case cannot be said to apply to the facts of the present case. We have therefore to hold that since the show cause notice has been issued beyond the limitation period under section 28, the time-bar would apply.
II. As regards the contention of the assessee that the show cause notice in the instant case was without jurisdiction for having been issued by the Deputy Commissioner and not by the Commissioner in terms of proviso to section 28(1), we find that the Tribunal’s decision in Jagdish Cancer and Research case (supra) supports this contention. In the said case a notice issued by the Assistant Commissioner invoking the extended period under proviso to Section 28(1) was held to be without jurisdiction since the Board had not authorised the Assistant Commissioner to issue a show cause notice for the extended period.
III. As regards penalty under Section 114A and the interest demanded under section 28AB, we find that the said provisions were enacted subsequent to the imports and therefore the said provisions will not be applicable in the facts and circumstances of the case. The penalty under section 114A and interest demanded under Section 28AB cannot therefore sustain.
IV. Since Section 111(o) makes contravention of the provisions of the Act liable to confiscation which will include also the conditions under an exemption Notification issued under Section 25 of the act, we do not find that there is scope for contending that liability under Section 111(o) and for penalty under section 112 are not attracted in the instant case.
In this case the following Question of law are involved :
I. whether the time limits under section 28 would be applicable in case of contravention of conditions of Customs Notification.
II. whether the show cause notice in such cases can be issued by DC/AC or it is required to be issued by the Commissioner.
III. whether penalty under Section 114A & interest under Section 28AB can be imposed for the goods imported prior to the date of enactment of these provisions.
The views of Air Cargo Unit, New Delhi on above mentioned issues are as follows –
I. CEGAT in para 10 of the impugned order has admitted that there is scope for liability under section 111(o) and for penalty under section 112. Once the violations have been admitted by the Tribunal, the duty liability arises under the same provisions. The limit under Section 28 is applicable only in case where duty has not been levied or short levied or erroneously refunded. In instant case duty free clearance was allowed in terms of condition laid down under notification 64/88. Once the conditions of notification are violated the liability to pay duty arise automatically. The obligations under notification are continuous obligation. The present case is covered by Supreme Court’s order in case of Mediwell Hospital & Health Care Pvt. Ltd. v. U.O.I. (1997/89 RLT 425-SC). In the case of Notification No. 64/88 issued in terms of Section 25(1) of the Customs Act, the exemption was conditional and the obligations to be fulfilled by the person availing of the exemption benefit under the notification is a continuing mandatory obligation. The Notification having stipulated certain conditions for availing of the duty exemption, the importer was under obligation to observe and fulfil all the obligations contained therein and the failure on his part would result in his becoming disentitled to the duty exemption and thereby becoming liable to pay the duty on the imported goods. The provisions of Section 28 and the period of limitation provided therein would not apply to cases where the obligation was a continuous one.
II. The show cause notice in this case was issued by Assistant Commissioner of Customs basically for non-fulfilment of condition of exemption Notification No. 64/88. The Assistant Commissioner is proper officer to issue show cause notice in such cases. The show cause notice under section 28 can be issued by the proper officer of Customs. The cause of action arises due to non-fulfilment of condition of exemption Notification No. 64/88. The Assistant Commissioner of Customs is the proper officer to enforce the condition of Notification hence he is also the proper officer to issue show cause notice under Section 28 of the Customs Act.
III. In terms of Section 28AB, the interest clause applies to case where duty becomes payable after the said provisions came in force. Hence CEGAT’s order on this limited issue merits acceptance.
IV. Section 114A does not appear to cover the goods imported prior to enactment of said provision as interpreted by CEGAT and Hon’ble Supreme Court. Hence this part of the order also merits acceptable.
A reference has already been made to Board for filing appeal in Supreme Court against CEGAT’s order. The CEGAT’s order will have repercussions on the other cases under the purview of Rosha Committee.
In case the CEGAT’s order is not stayed, it would not be possible to confirm the existing demands on the grounds of time-bar. Similarly it will also be meaningless to investigate various references being received from the Rosha committee and issue Show Cause Notice as the same would be time-barred in terms of CEGAT’s above judgments.
The matter may kindly be examined by Board’s office & appropriate guidelines issued.