2025 (8) TMI 941 - AT - Customs

Appeal allowed and remanded after finding Commissioner erred on time-bar; reassessment paid under protest, hearing ordered

M/s Chiripal Poly Films Ltd. Versus Commissioner of Customs –Jamnagar

M/s Chiripal Poly Films Ltd. Versus Commissioner of Customs –Jamnagar - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether the appeals against reassessed Bills of Entry were filed within the statutory limitation period under section 128 of the Customs Act, 1962 - i.e., date of communication of the reassessment order for the purpose of computing the 60-day limitation under section 128 and section 153. 2. Whether time between reassessment and actual receipt of a speaking/reasoned order (under section 17(5)) should be excluded in computing limitation (application of Section 14 Limitation Act principles and doctrine of reasonable expectation). 3. Whether the proper officer was statutorily obliged to issue a speaking order under section 17(5) upon reassessment and consequences of non-issuance for limitation and adjudicatory rights. 4. Whether interest, fine and penalty could be levied/ recovered in respect of IGST charged under section 3(7) read with section 3(12) of the Customs Tariff Act, 1975 for alleged breach of pre-import condition in Advance Authorisation imports, in absence of explicit charging provisions in those sections and having regard to CBIC Circular(s) directing recovery. 5. Whether, in the facts of the case, possession/availment of ITC on a date earlier than the date claimed for service constitutes conclusive proof of service of reassessed Bills of Entry on that earlier date (evaluation of circumstantial evidence and burden of proof on preponderance of probability). 6. Relief and disposition appropriate where appeals are held time-barred by lower authority without considering the merits and where speaking orders under section 17(5) were not furnished. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Computation of limitation: date of communication under section 153 for filing appeal under section 128 Legal framework: Section 128 prescribes 60 days from date of communication of the decision/order for filing appeals to Commissioner (Appeals); section 153 prescribes how service/communication is effected; section 17(5) mandates speaking orders upon reassessment where the importer does not confirm acceptance in writing. Precedent treatment: Authorities (Tribunal and Courts) consistently hold that the relevant date for limitation is the effective communication to the aggrieved person (actual receipt), not mere dispatch; cases cited demonstrate remand where service not proved. Interpretation and reasoning: The Court examined record and submissions and found absence of evidence by Revenue proving prior communication of reassessed Bills of Entry. In absence of demonstrable service under section 153 (signed acknowledgement or reliable proof), the date of actual receipt of the reassessed Bills under RSEZ covering letter (received 16-03-2024) is to be treated as date of communication. The fact that ITC was availed on 31-08-2023 does not, by itself, conclusively prove communication unless linked by admissible proof that reassessed B/E were physically delivered then. Ratio vs. Obiter: Ratio - effective communication date for limitation is the date on which the speaking/reasoned reassessment order is actually received by the importer; absent proof of earlier service, presumption of communication on dispatch is insufficient. Obiter - comments on interplay with ITC evidence and circumstantial proof evaluated later are explanatory. Conclusion: Appeals filed on 01-04-2024 were within 60 days computed from actual receipt (16-03-2024) and thus maintainable; lower authority's dismissal on limitation was incorrect. Issue 2 - Exclusion of time while awaiting speaking order; doctrine of reasonable expectation and Section 14 Limitation Act principles Legal framework: Section 17(5) requires a speaking order where reassessment is not accepted in writing; principles of limitation (Limitation Act Section 14) and doctrine of reasonable expectation permit exclusion/construction favourable to a litigant pursuing statutorily-mandated reasoned order. Precedent treatment: Decisions cited (including authorities dealing with exclusion of time while litigant pursues statutory remedy and Tribunal/Court rulings favouring appellants where speaking orders were not issued) support exclusion/benefit of doubt in absence of speaking order. Interpretation and reasoning: Because reassessment attracted mandatory requirement to issue a speaking order and the importer had persistently sought that order and protested the reassessment, the period prior to receipt of the speaking/reasoned order falls within the ambit of time during which the importer could legitimately expect compliance by the proper officer. Doctrine of reasonable expectation and statutory instruction (CBIC/Instruction No.7/2018) reinforce that waiting time for the speaking order is relevant to compute limitation. Ratio vs. Obiter: Ratio - time until receipt of speaking order can be regarded as the operative date of communication for limitation where the officer failed to issue the mandated reasoned order and the importer's protest/requests are on record. Obiter - reference to Limitation Act's Section 14 as an aid to exclusion is explanatory. Conclusion: Period until actual receipt of the speaking order should be treated as part of the communication process for limitation; appeal was timely. Issue 3 - Mandatory nature of speaking orders under section 17(5) and consequences of non-issuance Legal framework: Section 17(5) mandates speaking order within 15 days where reassessment differs from self-assessment and importer has not accepted reassessment in writing; CBIC instruction reiterates and emphasizes the necessity of speaking orders. Precedent treatment: Administrative instructions and judicial pronouncements criticize omission of speaking orders and recognize deprivation of appellant's right to know grounds and to pursue remedy. Interpretation and reasoning: The Court emphasized statutory obligation and CBIC instruction; failure to issue speaking order deprived the importer of necessary information to pursue remedies and affected computation of limitation. The importer's protest letters and repeated requests triggered statutory entitlement to reasoned order; absence thereof required treating the date of receipt of speaking order as date of communication. Ratio vs. Obiter: Ratio - non-issuance of mandated speaking order has material consequence for limitation and entitlement to be heard; the proper officer's obligation is mandatory. Obiter - broader administrative practice criticisms. Conclusion: Proper officer's failure to issue speaking orders warranted treating communication as taking place on actual receipt of speaking order/ reassessed B/E; appeals must be adjudicated on merits. Issue 4 - Chargeability of interest, fine and penalty on IGST levied under section 3(7)/3(12) Customs Tariff Act and validity of CBIC Circular directing interest recovery Legal framework: Charging sections of Customs Tariff Act prescribe levy of IGST under s.3(7); question whether statutory scheme contained specific charging/penal provisions for interest/fine/penalty on IGST likened to provisions in other sections (e.g., s.9A(8)); CBIC Circular(s) and apex/court decisions provide interpretive guidance. Precedent treatment: Divergent judicial and Tribunal decisions exist. Some decisions conclude absence of express statutory authority bars imposition of interest on IGST under Customs Tariff Act; other decisions hold interest can be claimed under alternative statutory provisions or IGST/CBIC rules. A recent High Court decision held CBIC Circular ultra vires to extent it purported to levy interest on IGST; other courts/tribunals reached contrary conclusions. Interpretation and reasoning: The Court acknowledged conflicting authority and that the question had been referred to a Larger Bench by the Tribunal. The Court noted that a later High Court decision (on similar facts) supports the appellant's contention that Circular/interest recovery is beyond statutory authority and observed that many issues on merits remain undecided by the Commissioner (Appeals). Given absence of reasoned findings below and presence of conflicting precedents, the Court did not decide the substantive charging issue but remanded for adjudication on merits after speaking order. Ratio vs. Obiter: Obiter - commentary on divergence of authorities and strength of appellant's reliance on certain later decisions; no definitive ratio because matter remanded without deciding the statutory validity of interest demand. Conclusion: Merits on chargeability of interest remain open; matter remanded to Commissioner (Appeals) to decide on merits in light of precedents and to issue reasoned findings. Issue 5 - Proof of service by circumstantial evidence: availment of ITC as proof of possession of reassessed Bill of Entry Legal framework: Section 153, rules of evidence and settled principles on preponderance of probability in civil/revenue matters govern evaluation; burden shifts once department adduces prima facie evidence of delivery. Precedent treatment: Decisions cited illustrate that actual receipt is relevant, but circumstantial evidence (e.g., postal tracking, ITC availment) may discharge burden where direct acknowledgement absent; courts/tribunals have applied preponderance-of-probability standard. Interpretation and reasoning: The Court examined competing contentions. Revenue relied on appellant's availment of ITC on 31-08-2023 as circumstantial evidence that reassessed B/E were in appellant's possession on that date. Appellant produced evidence of actual receipt by RSEZ forwarding letter dated 13-03-2024 and affidavit; Revenue produced no dated acknowledgment from 31-08-2023. Given statutory obligation to issue speaking order and appellant's protests, and absence of cogent evidence of earlier service, the Court declined to treat ITC availment alone as conclusive proof of earlier delivery for limitation purposes. The Court applied preponderance standard but found balance favoured appellant on communication date issue. Ratio vs. Obiter: Ratio - circumstantial evidence may suffice to prove service, but in each case the totality of evidence must be weighed; possession of ITC alone is not conclusive proof of service absent linkage to reassessed B/E delivery. Obiter - general comments on shifting burden and precedent. Conclusion: On facts, possession/ITC availment did not displace appellant's evidence of receipt on 16-03-2024; therefore earlier service was not proved. Issue 6 - Appropriate relief where appeals dismissed on time-bar without merits and speaking order not furnished Legal framework: Principles of natural justice, statutory appeal rights, and mandate to issue speaking orders inform relief. Tribunal's power to remand for fresh decision on merits where jurisdictional/ procedural errors exist. Precedent treatment: Numerous authorities direct remand where limitation/ service issues unresolved or where appellant deprived of opportunity due to procedural defects; Tribunal may direct fresh adjudication and consequential reliefs. Interpretation and reasoning: Because the Commissioner (Appeals) rejected appeals solely on limitation without addressing merits and because reassessment speaking orders were not furnished as required, the Court held remand appropriate. The Court ordered that Commissioner (Appeals) treat the date of receipt of speaking order as date of communication and decide appeals on merits, and directed issuance/consideration of speaking order under section 17(5) and re-assessment/amendment remedies (section 149) as necessary. Ratio vs. Obiter: Ratio - where speaking order was not issued and communication date disputed, appellate authority must accept actual date of receipt as communication date and decide appeal on merits; remand is appropriate. Obiter - observations on res judicata and binding effect of appellant's earlier favourable Tribunal order noted but not decisive. Conclusion: Appeals allowed by setting aside limitation dismissal; matter remitted to Commissioner (Appeals) to take date of receipt of speaking order as communication date, to issue/obtain or consider speaking order under section 17(5), and to decide appeals on merits (including question of refund of interest) in accordance with law and precedents.