2007 (9) TMI 65 - AT - Customs

Whether the demand in terms of Sec. 28 Customs Act is time-barred Since credit can not be taken behind the back of central excise authorities so there is no suppression of facts Wrong availed credit reversed before issue of SCN so demand raised in SCN is time-barred

Summary

Issues:
1. Demand of duty of customs against holders of advance licences under Section 28 of the Customs Act, 1962.
2. Remand of the matter for verification by lower appellate authority.
3. Time-barred demand and penalty imposition.

Analysis:
1. The judgment dealt with the demand of duty of customs against the holders of advance licences under Section 28 of the Customs Act, 1962. The applicants contended that the demand against them, amounting to Rs. 4,45,792/-, was time-barred as they had already reversed input duty credit on a specific date. The lower appellate authority had remanded the matter for verification, leading to the appeal. The Tribunal considered the issue of limitation and the applicability of the proviso to Section 28 of the Customs Act in this case. It was established that the demand raised in the show cause notice was indeed time-barred, as the relevant events had occurred within specific timelines, rendering the demand invalid.

2. The lower appellate authority's decision to remand the matter for verification was also a crucial issue in the judgment. The Tribunal noted that the appellants had initially taken Modvat credit but later reversed it, which was a significant factor in determining the time-bar aspect of the demand. The Tribunal emphasized that Modvat credit cannot be taken without the knowledge of central excise authorities, and the appellants could not be held guilty of suppression in this regard. Therefore, the Tribunal concluded that the lower appellate authority should not have remanded the matter for verification, as the demand itself was time-barred based on the sequence of events and the relevant dates involved.

3. Another key issue addressed in the judgment was the imposition of penalty and the time-bar aspect related to it. The Tribunal considered the provisions of Section 28 of the Customs Act and the applicability of the proviso in the context of the case. By analyzing the timeline of events, including the filing of bills of entry, taking and reversing Modvat credit, and the issuance of the show cause notice, the Tribunal determined that the demand and penalty imposition were indeed time-barred. As a result, the impugned order was set aside, and the appeal was allowed on the grounds of the time-barred nature of the demand and penalty.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Mumbai, addressed the issues of demand of duty of customs against holders of advance licences, remand for verification, and the time-barred nature of the demand and penalty imposition under Section 28 of the Customs Act, 1962. The Tribunal ruled in favor of the appellants, setting aside the impugned order based on the established time-bar aspect and the sequence of events leading to the reversal of Modvat credit.