1992 (11) TMI 206 - AT - Customs

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the less charge demand notice issued under Section 28(1) of the Customs Act was validly served on the importer within the prescribed six-month period from the date of payment of duty.

- Whether service of the less charge demand notice on the clearing agent, as a representative of the importer, constitutes valid service under the Customs Act.

- Whether the delay in issuing the less charge demand notice beyond the six-month period renders the demand illegal and unenforceable.

- The evidentiary burden on the Department to prove proper and timely service of the notice.

2. ISSUE-WISE DETAILED ANALYSIS

Validity and Timeliness of Service of Less Charge Demand Notice

The relevant legal framework is Section 28(1) of the Customs Act, which mandates that any demand for additional duty must be served on the person chargeable within six months from the date of payment of duty. The Tribunal has consistently held that strict compliance with this time limit is mandatory and failure to adhere to it vitiates the demand.

Precedents cited include the Tribunal's decisions in Collector of Customs, Bombay v. M/s. Presto Works and Shri Damodar Kery Naikaware v. Collector of Customs, Bombay, which emphasize that the service of notice must be on the importer and that the Department bears the burden of proving such service. The presumption that an order communicated is valid is rebuttable by evidence to the contrary.

In the present case, the Collector (Appeals) examined the documentary evidence, including the file notes and confirmation notices, and found that the less charge demand notice was effectively issued on 6-3-1987, well beyond the six-month period from the duty payment date of 22-10-1983. The file notes indicated a lack of timely follow-up and corroborated this delay.

The Court's reasoning was that the absence of an acknowledgment card or clear evidence of timely service, combined with the documentary record, established beyond doubt that the demand was not issued within the statutory period. The Tribunal agreed with this conclusion, rejecting the Department's contention that the demand notice dated 12-4-1984 was validly served.

Service of Notice on Clearing Agent as Representative of Importer

The Department argued that service on the clearing agent, who acts as the importer's representative, sufficed for valid service within the six-month period. This contention was rejected based on established case law, including the Tribunal's ruling in Collector of Customs, Cochin v. M/s. Trivandrum Rubber Works Limited.

The Tribunal clarified that service of a show cause or demand notice on the clearing agent after goods have been released does not constitute valid service on the importer. The legal principle is that the person chargeable with duty must be directly served, and mere service on a clearing agent cannot substitute for this requirement.

The Court noted that the Department's reliance on the clearing agent's receipt and signature, which was illegible and uncorroborated, was insufficient to prove valid service. The Tribunal underscored that the law does not impose an impossible administrative burden but requires clear and timely proof of service on the importer.

Burden of Proof and Evidentiary Findings

The Tribunal emphasized that the Department carries the burden of proving that the less charge demand notice was served within the statutory period. The absence of an acknowledgment card, coupled with inconsistent file notes and delayed follow-up, led to the conclusion that the Department failed to discharge this burden.

The Tribunal accepted the Collector (Appeals)'s reasoning that the signature on the purported demand notice was illegible and not sufficient evidence of service. The corroborative documentary evidence, including the timing of the confirmation notice and internal file notes, supported the conclusion that the notice was issued beyond the six-month period.

The competing argument that human error in filing the acknowledgment card should not invalidate the demand was considered but rejected in light of the overall evidence and legal requirements.

3. SIGNIFICANT HOLDINGS

"Section 28 of the Customs Act requires the service of notice on the person chargeable with the duty and, therefore, it would not be enough merely to issue a copy of the notice to the clearing agent in time."

"The burden of proving communication of the order is on the Department on the presumption that the order which has been communicated is rebuttable."

"The less charge demand under Section 28(1) issued after the expiry of six months period prescribed by law is illegal."

"Service of Show Cause Notice demanding the duty on clearing agent is not a valid service after the goods have been released."

"The importer to whom the demand notice was issued beyond the period of six months cannot be made to pay the duty under Customs Act, merely because a copy of the notice was sent to the clearing agent in time."

The Tribunal conclusively held that the less charge demand notice was not validly served within the statutory period, and service on the clearing agent does not satisfy the legal requirement of service on the importer. Consequently, the demand for additional duty was held to be illegal and unenforceable. The appeal filed by the Revenue was rejected for lack of merit.