Customs duty demand fails where the supporting public notice is quashed and statutory limitation under section 28 still applies.

A customs duty demand on stores lying on a vessel converted from foreign-run to coastal-run could not be sustained because it rested entirely on a public notice that had already been quashed, eliminating the foundation of the show cause notice and demand. The demand was also time-barred under section 28 of the Customs Act, 1962, and the execution of a bond under section 143 did not displace or override that statutory limitation. The result was that the duty demand remained untenable.

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Issues: (i) Whether the demand for customs duty on all stores lying on a vessel on conversion from foreign-run to coastal-run was sustainable when the public notice forming the basis of the demand had been quashed. (ii) Whether the demand was barred by limitation under section 28 of the Customs Act, 1962 notwithstanding the bond executed under section 143 of the Customs Act, 1962.

Issue (i): Whether the demand for customs duty on all stores lying on a vessel on conversion from foreign-run to coastal-run was sustainable when the public notice forming the basis of the demand had been quashed.

Analysis: The demand rested entirely on the public notice issued by the Customs authorities. Since that notice had already been quashed, the foundation of the show cause notice and the consequential demand ceased to exist.

Conclusion: The demand could not survive and was untenable.

Issue (ii): Whether the demand was barred by limitation under section 28 of the Customs Act, 1962 notwithstanding the bond executed under section 143 of the Customs Act, 1962.

Analysis: The lower appellate authority held that the demand had been raised beyond the period prescribed under section 28, and that the execution of a bond did not displace the statutory limitation. The Tribunal found force in that conclusion as well.

Conclusion: The demand was time-barred and the bond did not override the limitation under section 28.

Final Conclusion: The appeal failed, and the demand of duty was not sustainable.

Ratio Decidendi: A duty demand founded on a quashed administrative notice cannot be sustained, and a bond executed under section 143 does not displace the limitation prescribed by section 28 of the Customs Act, 1962.

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