2008 (9) TMI 391 - HC - Customs

Court Upholds Time-Bar, Penalty Remand, Interest Levy in Customs Act Case

The court dismissed the appeal, upholding the extended period of limitation for notice under Section 28(1) of the Customs Act due to willful suppression ... DEPB fraud -Demand - Limitation - Suppression of facts - Whether extended period of five years is available for the notice dated 3-10-2006 issued under Section 28(1) of the Customs Act, 1962 (hereinafter referred to as the Act) when the ingredients of 'Fraud' and 'with intent to evade payment of duty' are absent in the said Section? Held that:- It is settled principle of common law that a purchaser steps into the shoes of the seller and does not acquire better title than the seller. This principle has also been recognized under Section 27 of the Sales of Goods Act, 1932.The charge of duty is on the goods under Section 12 of the Act unless a case of exemption is made out, irrespective of intention of any person.Even though the word 'fraud' and 'with intent to evade payment of duty' are absent in Section 28(1) of the Act, willful suppression or misstatement do find mention in proviso to Section 28 of the Act, which is clearly attracted to the present case. No substantial questions of law arises For the purpose of duty, the Tribunal has clearly held that the documents being forged, the appellant could not be allowed to take advantage of exemption. The Tribunal noticed that the firm with whom the appellant entered into the transaction was not traceable. The appellant itself had come to the conclusion that the documents were forged. In these circumstances, if further opportunity has been given to the appellant on its own asking and for its own benefit, we do not find any error in the course adopted by the Tribunal so as to give rise to substantial question of law sought to be raised. Whether interest under Section 28AB of the act is leviable in absence of determination of short levy under Section 28 of the Act does not, thus, arise on facts as the short levy has clearly been determined. Appeal dismissed. Issues Involved:1. Availability of extended period of five years for notice under Section 28(1) of the Customs Act, 1962.2. Time-barred nature of the demand raised under Section 28(1) of the Act.3. Necessity of remand on the aspects of payment of duty, imposition of penalty, and time bar.4. Reliance on Mr. Vijay Singh Bishnoi's statement dated 24-11-2004.5. Levy of interest under Section 28AB of the Customs Act in the absence of determination of short levy under Section 28.Detailed Analysis:1. Availability of Extended Period of Five Years for Notice under Section 28(1) of the Customs Act, 1962:The appellant argued that the extended period of five years under the proviso to Section 28 of the Customs Act, 1962, is available only in cases of collusion or willful misstatement or suppression of facts, which were not present in this case. However, the court found that the DEPB scrips used by the appellant were forged, and the benefit of a forged document cannot be retained. The court emphasized that the appellant's failure to verify the genuineness of the documents amounted to willful suppression of facts, thus justifying the extended period of limitation.2. Time-Barred Nature of the Demand Raised under Section 28(1) of the Act:The appellant contended that the demand for duty was time-barred as it was raised beyond the standard six-month period. However, the court noted that the appellant was informed about the forgery within three months of the clearance of goods and had paid the duty under protest. The court held that the extended period of five years was applicable due to the willful suppression of facts by the appellant, thus rejecting the time-bar argument.3. Necessity of Remand on the Aspects of Payment of Duty, Imposition of Penalty, and Time Bar:The tribunal had remanded the matter to the original authority on the issue of penalty while confirming the demand for duty. The court upheld this decision, stating that the appellant had not acted bona fide, and the documents being forged, the appellant could not be allowed to take advantage of the exemption. The court found no error in the tribunal's decision to remand the matter for further consideration on the penalty aspect.4. Reliance on Mr. Vijay Singh Bishnoi's Statement Dated 24-11-2004:No arguments were addressed on this issue by the appellant. Consequently, the court did not find any substantial question of law arising from this issue.5. Levy of Interest under Section 28AB of the Customs Act in the Absence of Determination of Short Levy under Section 28:The court noted that the short levy had been clearly determined, and thus, the question of the levy of interest under Section 28AB did not arise on the facts of this case.Conclusion:The court dismissed the appeal, holding that no substantial questions of law were involved. The appellant's arguments regarding the extended period of limitation, time-barred demand, and the necessity of remand were rejected. The tribunal's decision to remand the matter on the penalty aspect was upheld, and the levy of interest under Section 28AB was deemed valid due to the determination of short levy.