Case Law Details
Inspira Bio-Pharm Pvt Ltd Vs Commissioner of Customs (Import) (CESTAT Mumbai)
In a recent judgment, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Mumbai ruled in favor of Inspira Bio-Pharm Pvt. Ltd. against the Commissioner of Customs (Import). The tribunal quashed an order for the recovery of differential customs duty, deeming it barred by the limitation period under Section 28 of the Customs Act, 1962. This decision underscores the importance of adhering to statutory timelines for issuing show cause notices and the necessity of establishing elements such as suppression or fraud for invoking extended periods of limitation.
The case revolves around the import of 500 kg of Balsam Tolu (Oleoresin) by Inspira Bio-Pharm Pvt. Ltd. The company had classified the goods under CTH 13019049 in their Bill of Entry No. 4430905 dated August 23, 2011, and claimed the benefit under Sr. No. 27 of Notification No. 21/2002-Cus, dated March 1, 2002. However, the customs department contended that this notification applied solely to ‘Oleo Pine Resin,’ not ‘Oleo Resin (Balsam Tolu).’
Consequently, a Less Charge notice was issued on December 20, 2012, followed by a show cause notice on January 16, 2013. These notices demanded the recovery of a differential duty amounting to Rs. 1,59,860, along with interest, and imposed a penalty of Rs. 25,000 under Section 112 of the Customs Act. The initial adjudication upheld these demands, and the subsequent appeal to the Commissioner (Appeals) also resulted in the confirmation of the order. Aggrieved, Inspira Bio-Pharm Pvt. Ltd. approached the CESTAT.
The primary contention of the appellant was the timing of the notices. They argued that both the Less Charge notice and the show cause notice were issued beyond the one-year limitation period prescribed under Section 28 of the Customs Act, 1962. The appellant emphasized that there were no allegations of suppression, fraud, or willful misstatement, which are prerequisites for invoking the extended limitation period.
The tribunal meticulously examined the timeline of events and the relevant provisions of the law. The Bill of Entry was filed on August 23, 2011, and according to the unamended Explanation 1(a) to Section 28, the show cause notice should have been issued within one year from this date. However, the notices were issued on December 20, 2012, and January 16, 2013, clearly beyond the permissible period.
The tribunal highlighted that for the extended limitation period to apply, the department must establish elements such as suppression or fraud. Since no such allegations were made in the notices, the extended period could not be invoked. This reasoning was further supported by the Supreme Court judgment in the case of Collector of Central Excise, Jaipur Vs. Rajasthan Textiles Mills, which established that without fulfilling the necessary conditions, demands based on extended periods cannot be sustained.
The judgment underscores that in the absence of allegations such as suppression or fraud, recovery proceedings initiated beyond the stipulated period are untenable
FULL TEXT OF THE CESTAT MUMBAI ORDER
Briefly stated, the facts of the case are that the appellant herein had imported 500 kg. of Balsam Tolu (Oleoresin) and claimed classification of the said goods under CTH 13019049 in the Bill of Entry No. 4430905 dated 23.08.2011 filed with the Customs department. The appellant had also claimed the benefit provided under Sr. No. 27 of the Notification No. 21/2002-Cus., dated 01.03.2002. On examination of the imported goods, the department observed that the said notification is applicable only for ‘Oleo Pine Resin’ and not for ‘Oleo resin (Balsam Tolu)’. Since the appellant had claimed the concessional rate of duty in terms of notification dated 01.03.2002, the Department had issued a Less Charge notice dated 20.12.2012 under Section 28 of the Customs Act, 1962, calling upon the appellant as to why the differential amount should not be recovered from them. Subsequently, the Department had issued a show cause notice under Section 28 ibid on 16.01.2013, which was adjudicated vide the original order dated 04.04.2013, wherein the lower adjudicating authority had denied the benefit of notification dated 01.03.2002 and confirmed the differential duty amounting to Rs. 1,59,860/- along with interest and also imposed penalty of Rs.25,000/- under Section 112 ibid on the appellant. On appeal against the said original order dated 04.04.2013, the learned Commissioner (Appeals) vide the impugned order dated 11.06.2014 has upheld confirmation of the adjudged demands and rejected the appeal filed by the appellant. Feeling aggrieved with the impugned order dated 11.06.2014, the appellant has preferred this appeal before the Tribunal.
2. Learned Advocated appearing for appellant submitted that the classification of the goods adopted by the Department is not in dispute, and the appellant through this appeal is contesting issuance of show cause notice on the ground that there is no element of suppression, fraud etc., and thus, both less charge notice as well as show cause notice are clearly barred by limitation of time as per the provisions of Section 28 ibid.
3. On the other hand, learned Authorized Representative appearing for the Revenue reiterated the findings recorded in the impugned order.
4. Heard both sides and perused the records.
5. We find that the appellant in this appeal has made a very specific prayer that the recovery proceedings initiated by the department are barred by limitation of time. In this context, the appellant has submitted that there is no allegation either in the less charge notice or in show cause notice that the appellant had indulged itself in the activities, concerning suppression of facts, fraud etc., with the intent to de-fraud the government revenue. We find that the submission made by the appellant is correct that both the notices issued by the Department have not invoked the extended period of limitation for confirmation of the adjudged demands. Insofar as recovery of duty under Section 28 ibid is concerned, the time line has been prescribed therein for service of notice on the person from whom the proposed duty amount is to be recovered. The phrase ‘relevant date’ for such purpose has been clarified in the explanation appended thereto. Clause (a) in explanation 1 has clarified the ‘relevant date’ to mean non-levy of duty in a case, where the proper officer makes an order for clearance of the goods. The phrase ‘not levied’ was substituted with the words ‘not levied or not paid or short levied or short paid’ by the Finance Act, 2016 (28 of 2016) w.e.f. 14.05.2016. In the present case, the Bill of Entry was filed by the appellant on 23.08.2011. Thus, the case of the appellant falls under the un-amended explanation provided in clause (a), which is confined only for ‘non-levy of duty’. In the case of the appellant, there is no question of non-levy of duty inasmuch as duty was levied at the concessional rate in terms of notification dated 01.03.2002 and the assessed duty was paid by them. Since, the Bill of Entry was filed on 23.08.2011, as per the requirement of Section 28 ibid read with clause (a) in the explanation 1 appended thereto, the show cause notice was required to be issued within a period of one year from the date of such filing. In this case, it is an admitted fact on record that the less charge notice and the show cause notice were issued to the appellant on 20.12.2012 and 16.01.2013 respectively. Since, such notices were issued beyond the period of one year from the relevant date of filing the Bill of Entry and passing of the assessment order, in our considered view, issuance of such notices are clearly barred by limitation of time and as such, proceedings cannot be initiated against the appellant for confirmation of the adjudged demands. In addition to our above findings, we also appreciate that the clause (d) in the explanation 1 shall also not be of any help to the department, inasmuch as the said clause clarified the relevant date to mean the date of payment of duty, which admittedly in this case was paid at the time of filing the bill of entry, and therefore the notices issued beyond the period of one year from such date would be clearly barred by limitation of time. Further, we also find that both the notices (referred supra) were not invoked the extended period of limitation for recovery of the adjudged demands.
6. We find that the issue arising out of the present dispute with regard to suppression of facts, mis-statement etc., justifying invocation of the extended period of limitation, is no more open for any debate, in view of the judgment of Hon’ble Supreme Court delivered in the case of Collector of Central Excise, Jaipur Versus Rajasthan Textiles Mills – 1997 (94) E.L.T. 481 (S.C.), holding that when show cause notice is not fulfilling the ingredients provided under Section 11A(1) of Central Excise Act, 1944 (pari materia with sub-section (4) of Section 28 ibid), then demand cannot be sustained on the ground of limitation.
7. In view of the foregoing discussions, we do not find any merits in the impugned order, insofar as it has upheld confirmation of the adjudged demands made beyond the normal period of limitation. Therefore, the appeal is allowed in favour of appellant only on the ground on limitation.
(Dictated and pronounced in open court)
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