2008 (9) TMI 214 - AT - Customs

President overturns order due to limitation issue, grants relief to appellant.

SHAH ALLOYS LTD. Versus COMMISSIONER OF CUSTOMS, KANDLA

SHAH ALLOYS LTD. Versus COMMISSIONER OF CUSTOMS, KANDLA - 2009 (235) E.L.T. 551 (Tri. - Ahmd.) Issues Involved:1. Legality of the show cause notice dated 13-11-2005.2. Interpretation of the EPCG scheme and Notification No. 55/2003.3. Alleged misdeclaration and suppression of facts by the appellant.4. Applicability of the extended period of limitation under Section 28(1) of the Customs Act.5. Imposition of penalties on the appellant and the Chartered Engineer.Detailed Analysis:1. Legality of the Show Cause Notice Dated 13-11-2005:The appellant argued that the issuance of the show cause notice dated 13-11-2005 was not legal since seven show cause notices on the same issue had already been issued in May 2005. The appellant contended that further proceedings were unjustified. However, the respondent maintained that the new notice was issued based on detailed investigations that brought new facts to light, justifying the issuance of the new show cause notice.2. Interpretation of the EPCG Scheme and Notification No. 55/2003:The EPCG scheme under Para 5.1 of the Foreign Trade Policy 2002-03 and Notification No. 55/2003 dated 1-4-2003 were to be viewed in an integrated fashion. The appellant claimed that the import of furnace oil as consumables was valid under the EPCG scheme, supported by certificates from a Chartered Engineer, and was used for generating electricity. However, the respondent argued that the term 'spares including Refractories and consumables' should be construed as consumable spares for capital goods and not include fuel. The Customs Notification No. 55/2003 did not permit fuel as consumables during the relevant period, and the subsequent amendment specifically permitting such import was not applicable retrospectively.3. Alleged Misdeclaration and Suppression of Facts by the Appellant:The appellant argued that there was no misdeclaration or suppression of facts as the import of furnace oil was clearly indicated in the application and supported by the Chartered Engineer's certificate. The respondent, however, contended that the appellant had furnished incorrect information, misleading the DGFT authorities. The Commissioner confirmed the demand of duty, stating that the fuel could not be considered as spares under Notification No. 55/2003 during the relevant period.4. Applicability of the Extended Period of Limitation Under Section 28(1) of the Customs Act:The imports were made during March-April 2004, and the show cause notice was issued on 30-11-2005. The appellant contended that the notice was time-barred as it was beyond the one-year limitation period and that the extended period of five years could not be invoked without evidence of suppression or misstatement. The Member (Judicial) agreed with the appellant, finding no suppression or misstatement justifying the invocation of the extended period. The Member (Technical) did not explicitly discuss the limitation issue but upheld the demand, implying rejection of the time-bar argument.5. Imposition of Penalties on the Appellant and the Chartered Engineer:The Commissioner imposed a penalty of Rs. 2,11,47,947/- on the appellant and Rs. 10,000/- on the Chartered Engineer. The Member (Technical) set aside the penalties, noting that the certificate and application clearly indicated the intended use of the fuel, and there was no evidence of mala fide intent. The Member (Judicial) also found no grounds for penalties, aligning with the view that there was no suppression or misstatement.Majority Decision:The President (Third Member) agreed with the Member (Judicial), concluding that the impugned order was unsustainable on the ground of limitation. The appeal was allowed, and the order of the Commissioner was set aside, providing consequential relief to the appellant.Final Order:The impugned order was set aside on the ground of limitation, and the appeal was allowed with consequential relief to the appellant.