AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 2034
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.... Section 72(1)(d) through violation of the condition specified in the exemption Notification No.53/97 - Cus dated 03.06.1997 by M/s.Super Spinning Mills Ltd., who were holders of private bonded warehouse licence issued under Section 58 of the Customs Act, 1962 and were carrying out manufacturing and other operations in the private bonded warehouse, as per Section 65 of Customs Act 1962? 2. Whether wrong mention of provision of law in the show cause notice is sufficient to invalidate the exercise of that power, when the power exercised is available under a different provision?" 2. The brief facts of the case are as follows: The first respondent/assessee is a 100% Export Oriented Undertaking and holders of Central Excise Registration No.AADCS 0672 XM 01 and Customs Licence No.1/92 dated 21.2.1992 for undertaking manufacturing activity under bond. The assessee is engaged in the manufacture of cotton yarn falling under Chapter Heading 52.05 of the Schedule to both Central Excise Tariff Act, 1985 and Customs Tariff Act, 1975 and procure raw materials viz., cotton indigenously and also through imports. They were exporting cotton yarn as well as clearing under DTA sales in the do....
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....(Rupees Six Lakhs twenty one thousand and sixty two only) being the Customs duty amounting to Rs. 5,91,560/- and the surcharge amounting to Rs. 29,502/- as detailed in the Annexure should not be demanded under proviso to Section 28(1) of the Customs Act, 1962 read with Section 72 of the Customs Act, 1962. ii. a penalty should not be imposed under Section 117 of the Customs Act, 1962 for contravening the provisions as detailed above and iii. interest at appropriate rate should not be recovered from them under Section 28 of the Customs Act, 1962. (emphasis supplied) 4. In response to the said notice, the assessee filed a reply denying the allegations made in the Show Cause Notice. After due process of law, the Adjudicating Authority adjudicated the matter and passed an order holding that there was no suppression by the assessee. After considering the entire issue, the Adjudicating Authority came to the conclusion that the waste generated was well within the knowledge of the jurisdictional Central Excise Officers and there is no question of suppression of facts regarding the cotton waste generated. To buttress the plea of no suppression, the Original Authority referred to ....
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....was not applicable to the facts of the case and it was not open to the Department to change their stand after having invoked Section 28 of the Customs Act for demanding duty. The Commissioner (Appeals) further held that the Department had no basis to sustain the duty in terms of Section 72 as they proceeded entirely on the basis of proviso to Section 28 of the Customs Act. Accordingly, the Commissioner (Appeals) upheld the order of the Adjudicating Authority holding as follows: " From the above, it may be seen that under four situations demand under Section 72 could be raised. It is seen in the show cause notice and in the order, situations mentioned in Section 72(1) (a), (b), (c) are not referred to. Though Section 72 had been invoked in the SCN, it has not been spelt out how the said Section would be applicable. Similarly in the Order in Original also the adjudication authority had only denied the benefit of notification 53/97-CUS for the reason that while manufacturing cotton yarn, excess waste has been generated in the use of imported raw materials in contravention of the notification in question and accordingly the adjudicating authority has confirmed the demand, though it ....
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....he proceedings does not lead to a particular section, which has been wrongly quoted or wrongly invoked, then a stand can be taken that such mistake was purely clerical in nature and in that situation quoting of wrong section or rule will be applicable and would not vitiate the proceedings. But in the instant case the situation is not the same. In Para 8 of the show cause notice there is a clear cut allegation regarding knowledge on the part of the respondents about the provisions of Exim policy about prescription of waste norms and a specific allegation to the extent that the respondents did not inform the department about the generation of such excess cotton waste. So, there is no mis10 quoting or wrong quoting of the provisions in the show cause notice as contended by the Department in review application." (emphasis supplied) 6. Aggrieved by the order of the Commissioner (Appeals), the Department once again pursued the matter before the Tribunal. 7. The Tribunal, concurred with the view of the Commissioner (Appeals), dismissed the appeal holding as follows: "After giving careful consideration to the submissions, I have found valid point in the submissions made by the ....
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.... power. Thus, there is a clear error apparent on the face of the Tribunal's order dated 23-6-1987. Rejection of the application for rectification by the Tribunal was, therefore, contrary to law." 10. Heard learned Standing Counsel appearing for the appellant and the learned counsel appearing for the first respondent and perused the materials placed before this Court. 11. It is not the case of the Department that the provision has been wrongly quoted. Factually, there is no allegation or material to support the invocation of Section 72 of the Customs Act. The claim of the Department to demand duty was not in terms of Section 72 of Customs Act. The entire exercise of the Department was on the question of invoking the extended period of limitation. A passing reference to Section 72 will not cure the defect because the assessee or the importer was not put on notice in respect of the charge or demand for duty in terms of Section 72 of the Customs Act. 12. The decision relied on by the appellant does not apply to the facts of the case, as the case before the Supreme Court arose out of the rectification petition. The stand of the Department before the Supreme Court was that t....