2008 (8) TMI 196 - AT - Customs

Tribunal rules duty demand time-barred and barred by res judicata for imported CT Scanner

The Tribunal held that the second show cause notice for customs duty on an imported CT Scanner was barred by res judicata, as the issue had already been ... Imported CT Scanner (Hospital equipment) duty free u/not. 279/83-Cus – sale of CT Scanner without approval of DGHS - contravention of the condition of Notification No. 279/83-Cus – held that such contravention cannot be said to be of continuing nature – when first SCN was dropped as time barred, second SCN on same facts citing SC order as regarding continuous obligation is not sustainable – principle of res judicata cannot be applied to reopen same issue on same facts – demand not sustainable Issues:1. Customs duty demand on imported CT Scanner.2. Validity of show cause notice and duty demand.3. Application of res judicata principle.4. Continuing obligation under Notification No. 279/83-Cus.5. Time-barred show cause notice and duty demand.Issue 1:The appeal involved a customs duty demand of Rs. 60,91,872 on an imported CT Scanner, which was initially exempted from duty under Notification No. 279/83-Cus. The appellant sold the scanner after more than seven years of use, leading to the duty demand.Issue 2:The Commissioner initially dropped the duty demand in 1996, citing that the show cause notice issued in 1995 was time-barred under Section 28(1) of the Customs Act, 1962. However, a fresh show cause notice was issued in 1997, proposing the same duty amount. The appellant contended that the second notice was barred by the principle of res judicata since the issue had already been adjudicated and dropped.Issue 3:The Tribunal analyzed the res judicata principle and held that the competent authority's previous decision in favor of the appellant prevented the re-opening of the same issue based on the same facts. The Tribunal found that the second show cause notice was not maintainable, considering the earlier adjudication and the principles of res judicata.Issue 4:Regarding the continuing obligation under Notification No. 279/83-Cus, the Revenue argued that the duty demand was justified based on the violation of the notification's conditions. They cited a Supreme Court decision to support the imposition of duty beyond the five-year limitation period in cases of continuing obligations. However, the Tribunal found that the alleged contravention from the sale of the CT Scanner did not constitute a continuing obligation under the notification.Issue 5:The Tribunal concluded that the show cause notice issued in 1997 was time-barred, as the relevant date for levying customs duty was the date of release of the goods in December 1986. The Tribunal emphasized that the duty demand was not enforceable under Section 28(1) of the Customs Act, 1962, due to the notice being issued more than eight years after the clearance of the goods. The Tribunal set aside the impugned order confirming the customs duty demand of Rs. 60,91,872, as it was not in accordance with the law.This detailed analysis of the judgment provides insights into the issues surrounding the customs duty demand on the imported CT Scanner, the validity of the show cause notice and duty demand, the application of the res judicata principle, the continuing obligation under Notification No. 279/83-Cus, and the time-barred nature of the show cause notice and duty demand.