1997 (5) TMI 276 - AT - Customs

Tribunal upholds order, dismissing appeal due to time-barred demand notices.

The tribunal upheld the Commissioner (Appeals)'s order, dismissing the department's appeal and cross objections. The decision was based on finding that ... Demand - Provisional assessment Issues Involved:1. Limitation period for issuing demand notices.2. Finalization of provisional assessment.3. Classification of imported goods.4. Validity of test bond and its extension.5. Application of Sections 18 and 28 of the Customs Act.Issue-wise Detailed Analysis:1. Limitation Period for Issuing Demand Notices:The primary issue revolves around whether the demand notices issued by the department were barred by limitation. The Commissioner (Appeals) held that the relevant date for issuing the demand notice should be within six months from 27-1-1993. Since the department issued the demand on 3-12-1993, it was deemed time-barred. The department argued that the final assessment date should be considered as 8-3-1995, when the formal demand was confirmed. However, the appellate tribunal upheld the Commissioner (Appeals)'s decision, stating that the demand notices issued on 3-12-1993 and 17-10-1994 were indeed barred by limitation as per Section 28(3)(b) of the Customs Act.2. Finalization of Provisional Assessment:The respondents contended that the provisional assessment was finalized on 27-1-1993 when the first demand of Rs. 55,939/- was issued under Heading 35.07. The department's argument that the assessment remained provisional until the test bond was canceled was rejected. The tribunal agreed with the Commissioner (Appeals) that the provisional assessment was finalized on 27-1-1993, and any subsequent demand should have been issued within six months from this date.3. Classification of Imported Goods:The respondents initially cleared the imported goods under sub-heading 0404.90. The department later sought to reclassify the goods under Heading 35.07 and subsequently under Heading 21.06. The tribunal did not delve into the merits of the classification dispute, as the case was decided on the grounds of limitation. The respondents maintained that the original classification under sub-heading 0404.90 was correct.4. Validity of Test Bond and Its Extension:The respondents argued that the test bond, valid for three months, expired in March 1991 and was never extended. The department's failure to extend or revalidate the bond contributed to the delay. The tribunal noted that the department did not provide any evidence to counter the fact that the bond was not extended. The Commissioner (Appeals) held that the bond's expiration did not affect the finalization date of the provisional assessment, which was 27-1-1993.5. Application of Sections 18 and 28 of the Customs Act:Section 28 of the Customs Act stipulates that the relevant date for issuing a demand notice is within six months from the date of adjustment of duty after final assessment. Section 18 deals with provisional assessment and its finalization. The tribunal reproduced and analyzed these sections, concluding that the final assessment date was 27-1-1993, as per the letter issued by the department. The Commissioner (Appeals) correctly applied these provisions, determining that the subsequent demand notices were time-barred.Conclusion:The tribunal upheld the Commissioner (Appeals)'s order, dismissing the department's appeal and the cross objections. The decision was based on the finding that the demand notices were barred by limitation, as the provisional assessment was finalized on 27-1-1993, and any subsequent demand should have been issued within six months from this date. The tribunal did not find any grounds to interfere with the Commissioner (Appeals)'s decision, which was in consonance with Sections 18 and 28 of the Customs Act.