1996 (4) TMI 232 - AT - Customs

Tax appeals dismissed: interest demands beyond six months from goods clearance barred by limitation under Rule 61(3)

CEGAT, Madras - AT dismissed the Revenue's appeals, holding demands for interest beyond six months from goods clearance barred by limitation. The tribunal ... Demand/Recovery of interest - bar of limitation - The only plea of the Revenue is that in the absence of any period of limitation provided under Section 61(3), the general period, of limitation prescribed under the Limitation Act should be made applicable. - Held that: - We observe as pointed out before us that the scheme of the Central Excises and Salt Act so far as the recovery of duty etc. is concerned is similar to that under the Customs Act, 1962. Here also we observe under Section 28 of Customs Act, 1962 period of limitation prescribed for recovery of duty is six months or five years as above and also the period for claim of refund is also six months. The position being similar we hold that the same logic should apply in respect of the recovery to be made under the Customs Act where no period of limitation has been prescribed. We therefore hold that the Ld. Lower Authority is right in holding that the demand for interest beyond the period of six months from clearance of goods is barred by limitation and we therefore uphold the order of the lower authority and dismiss the appeals. We observe that the relevant date for demand of duty would be date on which goods were allowed clearance from the Warehouse as the interest is required to be paid till the date of clearance in terms of Rule 61(3) of the Customs Act, 1962. The department recovered at the time of clearance the duty as well as interest as held payable at that time and cancelled the bonds. Taking into consideration the relevant date the demand have been clearly raised much after the period of six months. The Appeals of the Revenue are therefore dismissed. Issues:1. Whether the demand for interest under Sections 47 and 61(3) of the Customs Act, 1962 is barred by limitation.Detailed Analysis:The case involved a common issue concerning the limitation period for the demand of interest under Sections 47 and 61(3) of the Customs Act, 1962. The Revenue contended that the demand for interest was justified as the appellants had not paid interest in accordance with the Act. The Revenue argued that although no specific limitation period was provided under Section 61(3), the general period of limitation prescribed under the Limitation Act should apply. On the other hand, the Respondents, represented by consultants, asserted that the interest had been paid as per earlier demands and bonds executed for warehousing of goods. They argued that the interest was recoverable from importers under Sections 47 and 61, and that the demand for interest beyond the permissible period was time-barred.The Tribunal considered the submissions from both sides and referred to previous decisions to analyze the issue. It noted that no specific limitation period was prescribed under Section 61(3) of the Customs Act. Citing the case of Government of India v. Citedal Fine Pharmaceuticals, the Tribunal held that a reasonable period of limitation must be read into the section. Drawing parallels with similar provisions in the Central Excises and Salt Act, the Tribunal concluded that a reasonable limitation period of six months or five years, depending on the circumstances, should apply where no specific period is prescribed. The Tribunal rejected the Revenue's argument that the general period of limitation under the Limitation Act should be applicable, emphasizing the need for a reasonable time frame for the exercise of powers under the Act.Ultimately, the Tribunal upheld the lower authority's decision that the demand for interest beyond six months from the clearance of goods was barred by limitation. It found that the demand for interest had been raised significantly after the permissible period, leading to the dismissal of the appeals from the Revenue. The Tribunal clarified that the relevant date for the demand of duty would be the date of clearance from the warehouse, as interest is payable until that point under Rule 61(3) of the Customs Act, 1962. The decision highlighted the importance of applying a reasonable limitation period in the absence of specific provisions under the Act.