2025 (8) TMI 267 - AT - Customs

Demand under Customs Act Section 28 barred by limitation; corrigendum integral to adjudication process, appeal allowed

The CESTAT Mumbai held that the corrigendum issued to the original show cause notice was integral to the adjudication process, which commenced only after ... Time limitation - Corrigendum issued belatedly for a demand raised for the normal period - HELD THAT:- Needless to mention here that corrigendum has referred to the provision of law that empowers the proper officer to issue Show Cause and it has substantially changed the content of original notice in making various amendments to the description of goods, its quantity etc., apart from the fact that adjudication process had been initiated only after issue of corrigendum and receipt of reply from the appellant to such corrigendum. This would lead to conclude that corrigendum is part and parcel of the notice and as no adjudication had taken place prior to that, nor there was any basis in the original notice for initiation of adjudication process since the provision of law has not been referred under which demand has been raised, the facts of this case are therefore completely different from mentioning a wrong provision while putting forth the right claim. On the other hand mentioning of provision of Customs Act namely Section 28 of the said Act, without its extended provision, has not authorized the proper officer to issue a Show Cause almost at the close of five years since the limitation prescribed under Section 28 is restricted to one year from the relevant date and as it is already opined that service of notice is completed on the day of issue of corrigendum i.e. on 11.04.2013 that was received by the appellant on 05.08.2013, duty demand for an export made on 10.05.2008 is clearly hit by the period of limitation as prescribed under Section 28 of Customs Act. The Order-in-Original passed by the Commissioner of Customs Panaji, Goa in confirming duty demand with interest on five shipping bills cleared on dated 10.05.2008 for shipment is hereby set aside - appeal allowed. ISSUES: Whether a corrigendum issued to a Show Cause Notice (SCN) that substantially enlarges the scope and content of the original notice is sustainable in law when issued beyond the prescribed limitation period.Whether omission or incorrect reference to the specific statutory provision in the original demand notice invalidates the proceedings under the Customs Act.Determination of the applicable limitation period for issuing a demand notice under Section 28 of the Customs Act in the context of export duty demands.Whether adjudication can be initiated based on the original notice or only after issuance and receipt of the corrigendum that specifies the relevant statutory provision and details. RULINGS / HOLDINGS: The corrigendum issued on 11.04.2013, which 'substantially changed the content of original notice' and was received by the appellant on 05.08.2013, is considered part and parcel of the notice; however, issuance of such a corrigendum beyond the one-year limitation period prescribed under Section 28 of the Customs Act renders the demand time-barred and unsustainable in law.Omission or incorrect reference to the specific provision in the original demand notice does not automatically invalidate proceedings if sufficient details regarding the amount of duty demanded, goods involved, and reasons for demand are provided; however, in this case, the original notice lacked reference to any provision, making it vague and not taxable.The limitation period under Section 28 of the Customs Act is strictly one year from the relevant date for issuing demand notices; since the corrigendum was issued and received nearly five years after the relevant export date, the demand is barred by limitation.Adjudication was initiated only after issuance and receipt of the corrigendum; no adjudication had taken place prior, and the original notice did not form a valid basis for initiation, thus the adjudication process commenced outside the limitation period and is invalid. RATIONALE: The Court applied the limitation provision under Section 28 of the Customs Act, which restricts the period for raising a demand to one year from the relevant date, emphasizing strict adherence to limitation timelines.Reliance was placed on judicial precedents holding that a corrigendum or revised notice that materially alters the original SCN and is issued beyond the limitation period cannot sustain proceedings or orders.The Court distinguished between cases where a wrong provision is mentioned but the claim is valid and cases where the original notice is vague and lacks any statutory foundation, holding the latter as invalid.The judgment reaffirmed that the date of service of the corrigendum is the effective date for limitation calculation when the corrigendum significantly changes the original notice, thereby preventing belated initiation of proceedings.