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2025 (4) TMI 972 - AT - CustomsTime limitation for issuance of SCN - Proceedings initiated against the appellant by issuance of a SCN dated 05.03.2018 that is said to have been received by the appellant on 09.03.2018 - SCN deemed to be conclusive as to the matters stated therein in terms of section 28 (6) of the Customs Act 1962 or not - HELD THAT - The reason assigned by the Principal Commissioner for not giving benefit of section 28(6) of the Customs Act to the appellant is that an amount of Rs. 3, 249/- demanded by the corrigendum dated 16.07.2019 issued to the show cause notice dated 05.03.2018 was not deposited by the appellant within 30 days from the date of the show cause notice i.e. 05.03.2018 - This reasoning of the Principal Commissioner defies all logic and cannot be countenanced at all. The Principal Commissioner expected the appellant to have deposited an amount of Rs. 3, 249/- demanded through the corrigendum dated 16.03.2019 within 30 days of the show cause noticed on 05.03.2018. It clearly shows that the Principal Commissioner did not apply his mind at all while rejecting the plea of the appellant for closure of the proceedings in terms of section 28(6) of the Customs Act. Once the appellant had made the deposit in terms of section 28(5) of the Customs Act with interest and penalty and informed this fact to the department by a letter dated 12.04.2018 the department should have immediately taken steps to close the proceedings and should not have waited for over one year and six months to pass an order rejecting the plea of the appellant. The show cause notice was issued on 05.03.2018. It should therefore have been adjudicated upon by 04.03.2019. The personal hearing in fact took place on 27.09.2018. The Principal Commissioner decided the matter on 16.12.2019 much after the expiry of one year from the date the personal hearing was conducted on 27.09.2018. The corrigendum to the show cause notice was issued on 16.07.2019 much after the period within which the Principal Commissioner was required to adjudicate the show cause notice. Conclusion - The proceedings initiated by the show cause notice dated 05.03.2018 are deemed conclusively closed under section 28(6) of the Customs Act. Appeal allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal issue considered in this appeal is whether the proceedings initiated against the appellant by issuance of a show cause notice dated 05.03.2018 shall be deemed to be conclusively closed under section 28(6) of the Customs Act, 1962, given that the appellant had deposited the differential duty, interest, and penalty within 30 days of receipt of the show cause notice, but an additional amount of Rs. 3,249/- was later demanded by a corrigendum issued more than one year after the original notice. Specifically, the Tribunal examined whether the appellant was required to deposit the additional amount demanded through the corrigendum within 30 days of the original show cause notice to qualify for closure of proceedings under section 28(6). 2. ISSUE-WISE DETAILED ANALYSIS Issue: Applicability and interpretation of section 28(6) of the Customs Act in relation to closure of proceedings upon payment of duty, interest, and penalty within 30 days of the show cause notice, especially when a corrigendum demanding additional duty is issued after the 30-day period. Relevant Legal Framework and Precedents: Section 28 of the Customs Act, 1962, governs adjudication of duty liability where the transaction value is disputed. Sub-section (4) empowers the Commissioner to issue a show cause notice proposing rejection of declared transaction value and recovery of duty and penalty. Sub-section (5) allows the person to pay the differential duty, interest, and penalty within 30 days of receipt of the notice. Sub-section (6) provides that upon such payment within the stipulated time, the proceedings shall be deemed conclusively closed as to the matters stated in the notice. The statutory scheme aims to encourage voluntary compliance and early resolution of disputes. Court's Interpretation and Reasoning: The Tribunal observed that the appellant had deposited the entire differential duty, interest, and penalty demanded in the original show cause notice dated 05.03.2018 within 30 days of its receipt. However, the Principal Commissioner denied closure under section 28(6) on the ground that an additional amount of Rs. 3,249/- demanded through a corrigendum dated 16.07.2019 was not deposited within 30 days of the original notice. The Tribunal found this reasoning to be perverse and illogical, as the appellant could not have deposited an amount demanded more than one year after the original notice within the original 30-day period. The Tribunal emphasized that the Principal Commissioner failed to apply his mind to the temporal scope of section 28(6) and the impossibility of compliance with the corrigendum demand within the original time frame. Key Evidence and Findings: The appellant had voluntarily deposited Rs. 4,17,46,567/- during investigation and further deposited the balance duty, interest, and penalty within 30 days of receipt of the original show cause notice. The corrigendum increasing the differential duty by Rs. 3,249/- was issued more than one year later, after the statutory one-year adjudication period had expired. The appellant also appeared for personal hearing and requested closure of proceedings under section 28(6). The Principal Commissioner's order rejecting closure was based solely on non-payment of the corrigendum amount within 30 days of the original notice. Application of Law to Facts: The Tribunal held that section 28(6) requires payment of the duty, interest, and penalty specified in the show cause notice within 30 days of its receipt to deem proceedings conclusively closed. The corrigendum issued after the 30-day period and after the statutory adjudication period could not retrospectively extend the time for payment under section 28(6). The appellant was not obligated to anticipate or comply with demands made by corrigenda issued beyond the original notice period. Therefore, the additional amount demanded later could not invalidate the closure entitlement under section 28(6) based on timely payment of the original demand. Treatment of Competing Arguments: The department contended that the entire differential duty including the corrigendum amount must be paid within 30 days of the original notice to avail closure under section 28(6). The Tribunal rejected this argument as unreasonable and contrary to the statutory scheme. It was noted that the Principal Commissioner's expectation that the appellant deposit the corrigendum amount within the original 30-day period was an impossibility and showed lack of application of mind. The Tribunal also observed procedural lapses such as delay in adjudication beyond the one-year statutory period and the issuance of corrigendum after this period, which undermined the department's position. Conclusions: The Tribunal concluded that the appellant had complied fully with the requirements of section 28(6) in respect of the original show cause notice by depositing the demanded amounts within 30 days. The additional demand by corrigendum issued after the stipulated period could not be held to defeat the statutory closure of proceedings. The impugned order rejecting closure was set aside and the proceedings were deemed conclusively closed under section 28(6) of the Customs Act. 3. SIGNIFICANT HOLDINGS The Tribunal held: "Section 28(6) of the Customs Act, 1962 provides that when the duty, interest thereon and penalty equal to fifteen per cent of the duty specified in the notice has been paid within thirty days of the receipt of the notice, the proceedings in respect of such person or other persons to whom the notice has been served under sub-section (4) of section 28 of the Act ibid be deemed to be conclusive as to the matters stated therein." It was further observed: "The Principal Commissioner expected the appellant to have deposited an amount of Rs. 3,249/- demanded through the corrigendum dated 16.03.2019 within 30 days of the show cause notice on 05.03.2018. It clearly shows that the Principal Commissioner did not apply his mind at all while rejecting the plea of the appellant for closure of the proceedings in terms of section 28(6) of the Customs Act." The Tribunal established the core principle that the closure of proceedings under section 28(6) is contingent upon payment of amounts specified in the original show cause notice within 30 days of its receipt, and that subsequent corrigenda issued beyond this period cannot invalidate such closure. Final determinations on the issue are:
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