2023 (6) TMI 912 - SC - Customs

Supreme Court allows delayed appeal, sends extended period issue back to Tribunal for review.

M/s SHASHI DHAWAL HYDRAULICS PVT. LTD. Versus COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI

The Supreme Court condoned the delay and proceeded to hear the matter on its merits. The Court remitted the issue of the extended period's applicability ... Rejection of application for rectification of mistake - Applicability of extended period of limitation - Tribunal did not consider the issue sought to rectified - Recovery of differential duty - hydraulic pumps - same goods were imported by the sister concern of the appellant, namely, M/s Shashi Charu Hydraulics Pvt. Ltd. at a higher price, albeit directly from the manufacturer - HELD THAT:- When any duty had not been levied or had been short-levied or erroneously refunded, or when any interest payable had not been paid, part paid or erroneously refunded, the proper officer might have served show cause notice within one year in case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital; and in any other case, within six months from the relevant date. The Proviso allowed an extended period of five years when there was collusion or any wilful mis-statement or suppression of facts. The appellant brought it to the notice of the Tribunal by way of an application under Section 129-B of the Act, that the question in regard to availability of extended period for SCN in terms of Proviso to Section 28(1) of the Act had not been specifically dealt with in the order dated 06.11.2018. However, it was observed in the impugned order dated 17.07.2019 that during the course of hearing, the Tribunal was not persuaded to accept the contentions of the appellant. The Tribunal also stated that the relevant aspect had been sufficiently ‘amplified’ in the principal order dated 06.11.2018. After taking note of the observations therein and the reasons that prevailed with the Tribunal, it is difficult to find if the Tribunal adverted to the question as to whether the necessary elements of the said Proviso to Section 28(1) of the Act were existing or not. Maybe, such a question was not raised by the appellant in the memo of appeal presented before the Tribunal in specific terms but, indisputably, this question remains a jurisdictional question because without existence of the elements specified in the said Proviso to Section 28(1), the show cause notice in question, as issued on 26.09.2006 in relation to the imports made from November, 2001 to April, 2003, could not have been maintained. It is deemed appropriate that the question of availability of extended period be examined by the Tribunal with reference to the facts of the case and the law applicable - It is not deemed necessary to delve into the findings of the Tribunal with reference to the fact that there was no mis-declaration so as to justify confiscation or redemption fine, because the preliminary issue herein would be as to whether the elements of the Proviso to Section 28 had been existing in the first place, which would be decided independent of the findings/observations of the Tribunal in the second impugned order dated 17.07.2019. The impugned orders are modified to the extent that Appeal No. C/1132/2007 stands restored; and the question as to whether the extended period in terms of the Proviso to Section 28(1) of the Act of 1962 is available in this matter or not is remitted for consideration of the Tribunal in accordance with law - Appeal allowed. Issues Involved:1. Delay condonation.2. Validity of the extended period of limitation under Section 28 of the Customs Act, 1962.3. Allegation of under-invoicing and recovery of differential duty.4. Confiscation of goods, redemption fine, and imposition of penalties.5. Application for rectification of mistake under Section 129-B(2) of the Customs Act, 1962.Detailed Analysis:1. Delay Condonation:The Supreme Court condoned the delay and proceeded to hear the matter on its merits, given the short point involved.2. Validity of the Extended Period of Limitation:The appellant challenged the invocation of the extended period of limitation under Section 28 of the Customs Act, 1962. The Tribunal had upheld the recovery of differential duty but set aside the redemption fine and penalties, indicating no evidence of mis-declaration. The appellant contended that without mis-declaration, the extended period was inapplicable. The Supreme Court noted that the Tribunal did not specifically address whether the elements of the Proviso to Section 28(1) were met, deeming it a jurisdictional question. The Court remitted this issue back to the Tribunal for reconsideration.3. Allegation of Under-Invoicing and Recovery of Differential Duty:The Commissioner of Customs initially found that the appellant under-invoiced hydraulic pumps imported from the supplier and ordered the recovery of differential duty of Rs. 20,31,302/- under Section 28 of the Customs Act, 1962. The Tribunal upheld the recovery of differential duty but set aside the redemption fine and penalties, citing the lack of evidence for mis-declaration.4. Confiscation of Goods, Redemption Fine, and Imposition of Penalties:The Commissioner ordered the confiscation of goods, imposed a redemption fine of Rs. 20,00,000/-, and penalties on the appellant and its directors. The Tribunal, however, set aside the redemption fine and penalties, stating that mere enhancement of assessable value did not justify confiscation without evidence of mis-declaration. The Supreme Court agreed with the Tribunal's findings on the lack of evidence for mis-declaration but remitted the issue of the extended period's applicability back to the Tribunal.5. Application for Rectification of Mistake:The appellant filed an application for rectification of mistake under Section 129-B(2) of the Customs Act, 1962, arguing that the extended period of limitation should not apply as there was no mis-declaration. The Tribunal rejected this application, maintaining that the elements for invoking the extended period were different from those for confiscation. The Supreme Court found that the Tribunal did not sufficiently address the jurisdictional question of the extended period's applicability and remitted this issue for reconsideration.Conclusion:The Supreme Court modified the impugned orders to the extent that the appeal was restored, and the question of the extended period's applicability under the Proviso to Section 28(1) of the Customs Act, 1962, was remitted back to the Tribunal for reconsideration. The parties were directed to appear before the Tribunal on 17.03.2023. The appeals were allowed to the extent indicated.