2025 (9) TMI 1417 - AT - Customs

Service by email to RTI-confirmed address not valid under Sections 28(1), 28(4) and 28(6); order set aside

CESTAT held that service of the show-cause notice by email, though dispatched to the email address confirmed by the appellant under RTI, did not satisfy ... Service of notice - notice served by email constitutes service or not - Effective date of service of notice for determination of the proceedings in the show cause notice to be deemed as conclusive - Competence of the adjudicating authority in proceeding with confirmation of the proposals in the SCN - recovery of interest u/s 28AA of Customs Act, 1962 on differential duty of customs and penalty u/s 114A and 114AA of Customs Act, 1962 on the appellant - HELD THAT:- There is no doubt that, in terms of section 17 of General Clauses Act, 1897 that the appellant is not in the wrong. It is also evident from the record that the said notice was dispatched to abhijeet.pattan@garettmotion as confirmed by the appellant herein through application made under the Right to Information Act, 2005. The proceedings were taken to a conclusion other than that stipulated in section 28(6) of Customs Act, 1962 only on the premise of the appellant not having been controverted assertion of service of the notice in their submission. The appellant had complied with the pre-requisite for deemed conclusion of proceedings on 15th January 2023 which, admittedly, is beyond 30 days from the notice. Nothing has been placed on record by the adjudicating authority, or by the Learned Authorized Representative, that service of notice by email suffices for the purposes of section 28(1) and section 28(4) of Customs Act, 1962. In any case, there is no controverting of the e-mail address to which the show cause notice should have been sent and the one which the notice was apparently sent to; the displacement of two letters of the alphabet and, particularly, with the deployed combination being more common is, probably, a clerical mistake. The impugned order is set aside and the appeal is allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether communication of a show cause notice by email constitutes effective service for the purposes of sections 28(1), 28(4) and 28(5) of the Customs Act, 1962, thereby fixing the operative date for the 30-day period in section 28(5). 2. Whether a clerical mis-spelling of the recipient's email address (displacement of letters) defeats service by email where the record shows dispatch to an email address and the hard copy was received on a later date. 3. Whether payment of the prescribed 15% penalty on a specified date falls within the 30-day period of section 28(5) when there is dispute as to the effective date of receipt of the show cause notice. 4. Whether, on compliance with section 28(5) within the statutory time measured from the effective date of service, proceedings become conclusively determined under section 28(6)(i), preventing adjudication of the proposals in the show cause notice. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Email communication as effective service under the Customs Act and computation of the 30-day period in section 28(5) Legal framework: Section 28(5) and (6) of the Customs Act, 1962 set out a mechanism by which, if duty, interest and a penalty equal to 15% of the duty specified in the notice are paid 'within thirty days of the receipt of the notice' and the proper officer is informed in writing, the proper officer shall determine the amount and, if satisfied that payment is in full, the proceedings shall be deemed conclusive (section 28(6)(i)). Service provisions under the Customs Act (referred to in the adjudicating authority's order) include electronic service by sending to the email address as provided by the person or available in official correspondence (provision cited by the adjudicating authority as basis for treating emailed notice as received). General Clauses Act, 1897, section 17 (and related principles) governs computation and presumptions as to time and service where relevant. Precedent Treatment: No prior judicial authorities are cited in the impugned order beyond the adjudicating authority's reference to statutory service modes; no Supreme Court authority is authoritatively relied upon by the Tribunal in its reasoning. Interpretation and reasoning: The narrow question is the effective date of 'receipt of the notice' for the 30-day window. The adjudicating authority treated the email dispatch date (5th January) as the date of service because the notice was emailed to an address said to be available in official correspondence and thus within the modes indicated under the statute. The Tribunal examined records showing the email was dispatched to an address with a clerical variation and that the hard copy was in fact received by the noticee on 16th January. The Tribunal held that a mere dispatch to an incorrectly spelled email does not constitute acceptable dispatch by email for the purposes of section 28(5) when the dispatch address does not match the correct email and the hard copy receipt date is later and uncontested. The General Clauses Act principles support treating the date of actual receipt (16th January) as the operative date rather than the purported email dispatch (5th January) where the electronic address used was erroneous and service by email is thus not established. Ratio vs. Obiter: Ratio - where an electronic address used for service differs from the correct address (clerical error) and there is uncontested proof of later physical receipt, service by email is not established and the operative date for section 28(5) runs from actual receipt. Obiter - observations on preferred administrative practice for email service and on the possibility of clerical errors generally. Conclusion: The Tribunal concluded that email dispatch to the mis-spelled address did not amount to service for the purposes of section 28(5); the effective date of receipt was 16th January 2023 (date of hard copy receipt), not 5th January 2023. Issue 2 - Effect of a clerical mis-spelling in the recipient email on validity of electronic service Legal framework: Service by electronic means must be sent to the email address provided by the person or available in official correspondence to constitute valid service under the statutory modes; where an email is sent to an incorrect address, principles of communication and receipt govern whether service has occurred. Precedent Treatment: The adjudicating authority accepted that emailing to the address available in official correspondence constituted service. The Tribunal distinguished that factual posture because the address actually used differed from the correct address and there was no contrary evidence proving receipt at the earlier date. Interpretation and reasoning: The Tribunal emphasised that a displacement of letters resulting in a different electronic address is a clerical mistake and cannot be equated with delivery to the intended recipient. The record - including RTI confirmation of the email used and the undisputed hard copy receipt date - supported the conclusion that the erroneous email did not effect service. Thus, mere electronic dispatch to an imperfect address does not satisfy statutory service requirements where the dispatched address is not the email actually provided or used by the recipient. Ratio vs. Obiter: Ratio - an email sent to an incorrect address due to clerical error does not constitute valid service; factual proof of actual earlier receipt is required to rely on electronic dispatch. Obiter - none significant beyond practical admonitions regarding accuracy of electronic addresses. Conclusion: Clerical misspelling of the recipient's email defeated the contention that the notice was served by email on 5th January; service for statutory purposes was the later date when the hard copy was received. Issue 3 - Applicability of section 28(6) where penalty payment was made within 30 days counted from the actual date of receipt Legal framework: Section 28(5) permits payment of duty, interest and a penalty equal to 15% within thirty days of receipt of the notice, and section 28(6) provides that if payment is made in full, proceedings shall be deemed conclusive. Precedent Treatment: The adjudicating authority held that the penalty payment on 15th February 2023 was beyond thirty days measured from the email date (5th January) and therefore section 28(6) could not be invoked. The Tribunal re-examined the operative date of receipt. Interpretation and reasoning: Accepting the date of actual receipt as 16th January 2023, the Tribunal found that the appellant complied with section 28(5) by making the 15% payment on 15th February 2023, which fell within thirty days of 16th January. Once payment was thus shown to have been made within the statutory period and the proper officer was informed in writing, the conditions of section 28(6)(i) were met, mandating that the proceedings be deemed conclusive (subject to the specified statutory exceptions which were not engaged). Ratio vs. Obiter: Ratio - where payment required by section 28(5) is made within thirty days measured from the actual date of receipt of the show cause notice, the consequence under section 28(6)(i) - deeming the proceedings conclusive - follows and bars further adjudication on the proposals in the notice to the extent covered by the payment. Obiter - discussion of what constitutes full compliance (formal intimation, determination by proper officer) is contextual. Conclusion: The appellant's payment on 15th February 2023 satisfied section 28(5) when the operative receipt date is 16th January 2023, and accordingly the conditions for deeming the proceedings conclusive under section 28(6)(i) were met; denial of that consequence by the adjudicating authority was incorrect. Issue 4 - Competence of the adjudicating authority to proceed to confirm proposals where section 28(6) conditions are satisfied Legal framework: Section 28(6)(i) removes the adjudicatory competence to continue proceedings where duty, interest and penalty have been paid in full under section 28(5) within the prescribed period and the proper officer so determines. Precedent Treatment: The adjudicating authority proceeded to decide the proposals in entirety on the premise that payment was outside the 30-day window; the Tribunal reversed that factual premise and applied the statutory consequence. Interpretation and reasoning: Having found that payment complied with section 28(5) measured from the actual receipt date, the Tribunal held that the adjudicating authority erred in not treating the proceedings as conclusive under section 28(6)(i). The absence of any record displacing the finding of actual receipt on 16th January and the lack of proof that the emailed mis-spelt address resulted in effective service meant the adjudicating authority's continued adjudication was not competent. Ratio vs. Obiter: Ratio - where conditions of section 28(6)(i) are satisfied, the adjudicating authority lacks competence to confirm proposals in the show cause notice that are covered by the payment and must treat the proceedings as conclusive on those matters. Obiter - none material beyond application to facts. Conclusion: The adjudicating authority's order confirming the proposals was set aside; the Tribunal allowed the appeal on the ground that the statutory preconditions for deeming the proceedings conclusive under section 28(6)(i) were met.