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2025 (5) TMI 414 - AT - CustomsInvocation of extended period of limitation contemplated under the proviso to section 28(1) of the Customs Act 1962 - jurisdiction to issue SCN - denial of benefit under Sr. No 363A List 37 Sr. No 22) of N/N. 21/2002-Cus dated 1.3.2002 - competence to issue SCN - HELD THAT - Annexure-A to the show cause notice gives details of the 13 Bills of Entry that had been filed by the respondent. The dates are from 23.09.2025 to 09.02.2010. The show cause notice mentions that the extended period of limitation contemplated under the proviso to section 28(1) of the Customs Act was being invoked in respect of all the 13 Bills of Entry - It is not in dispute as has also been noticed by the Commissioner (Appeals) that the appellant had declared all the particulars of goods in the Bills of Entry. He had also submitted the import documents and it is after examination that the goods were cleared. It has therefore to be examined whether in such a situation the extended period of limitation could be invoked. The appellant had claimed the benefit of an exemption notification believing that it was entitled to exemption. If this belief of the appellant was found to be incorrect it was for the officers at the time of processing the Bills of Entry to have raised a query and taken a decision. But in the present case the Bills of Entry were assessed and out of charge was given after the goods were examined. The Commissioner (Appeals) has relied upon the decision of the Supreme Court in Northern Plastic Ltd. vs. Collector of Customs Central Excise 1998 (7) TMI 91 - SUPREME COURT wherein the Supreme Court also observed that whether the appellant was entitled to the benefit of exemption under a notification or not was a matter of belief of the appellant. The other finding recorded by the Commissioner (Appeals) that the Directorate of Revenue Intelligence did not have the competence to issue this show cause notice is not sustainable in view of the recent decision of the Supreme Court in Canon India 2024 (11) TMI 391 - SUPREME COURT (LB) . Conclusion - The finding recorded by the Commissioner (Appeals) that the extended period of limitation under the proviso to section 28(1) of the Customs Act could not have been invoked does not suffer from any illegality. Appeal dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal were:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Invocation of the extended period of limitation under proviso to section 28(1) of the Customs Act Relevant legal framework and precedents: The proviso to section 28(1) of the Customs Act allows for extended limitation periods in cases involving suppression of facts or willful misstatement. The Supreme Court decisions in Northern Plastics Ltd. and Commissioner of C.Ex. & Customs vs. Reliance Industries Ltd. were heavily relied upon. In Northern Plastics Ltd., it was held that claiming exemptions based on a bona fide belief, even if incorrect, does not amount to mis-declaration. In Reliance Industries Ltd., the Court emphasized that a bona fide belief held by the assessee, even if later found incorrect, does not constitute mala fide intent or suppression warranting extended limitation. Court's interpretation and reasoning: The Tribunal noted that the importer had declared all particulars of the goods in the Bills of Entry and submitted relevant import documents. The goods were examined and cleared after assessment. There was no finding that any particulars in the Bills of Entry were incorrect or suppressed. The importer claimed exemption under a notification based on a bona fide belief that the goods qualified, although this belief was later found mistaken. The Tribunal observed that the extended period of limitation is invoked only if there is suppression or willful misstatement. Since the importer had disclosed all facts and the goods were examined and cleared, no such suppression was established. The Tribunal relied on the Supreme Court's observation that a mistaken but bona fide belief does not amount to suppression or mala fide intent. Key evidence and findings: The 13 Bills of Entry were filed between 2005 and 2010. The importer had declared all relevant particulars and submitted import documents. The goods were examined by customs officers before clearance. The show cause notice did not allege any incorrect particulars or suppression in the Bills of Entry or documents. Application of law to facts: Applying the principles from the Supreme Court decisions, the Tribunal found that the extended period of limitation could not be invoked because the importer acted in bona fide belief and disclosed all facts. The clearance of goods after examination further negated any claim of suppression. Treatment of competing arguments: The department argued that the extended limitation period was rightly invoked due to suppression. The importer contended that the belief was bona fide and no suppression occurred. The Tribunal sided with the importer, emphasizing the absence of mis-declaration or concealment and reliance on authoritative precedents. Conclusions: The Tribunal upheld the Commissioner (Appeals) finding that the extended period of limitation under section 28(1) proviso could not be invoked, thereby rendering the demand barred by limitation. Issue 2: Competence of the Directorate of Revenue Intelligence to issue the show cause notice Relevant legal framework and precedents: The competence of officers issuing show cause notices is governed by statutory provisions and judicial pronouncements. The Supreme Court decision in Commissioner of Customs vs. Sayed Ali was cited, which held limitations on the authority of certain officers to issue notices. However, the recent Supreme Court decision in Canon India review petition clarified and expanded the jurisdiction of the Directorate of Revenue Intelligence. Court's interpretation and reasoning: The Commissioner (Appeals) had held that the Additional Director of DRI, Ahmedabad, was not competent to issue the notice. However, the Tribunal noted that the recent Supreme Court ruling in Canon India superseded this view and confirmed the competence of the DRI officers to issue such notices. Key evidence and findings: The show cause notice was issued by the Additional Director of DRI, Ahmedabad. The Tribunal took judicial notice of the evolving jurisprudence on the competence of DRI officers. Application of law to facts: Given the updated Supreme Court ruling, the Tribunal held that the DRI had jurisdiction to issue the show cause notice. Treatment of competing arguments: The department relied on the Canon India ruling to assert competence. The importer relied on the earlier Sayed Ali decision to challenge jurisdiction. The Tribunal gave precedence to the latest authoritative ruling. Conclusions: The Tribunal concluded that the DRI was competent to issue the show cause notice. However, since the demand was barred by limitation, this issue became moot. Issue 3: Necessity to examine the merits if the limitation period is not invoked The Tribunal observed that if the extended period of limitation was not invokable, then the entire demand would be barred by limitation. Therefore, it was unnecessary to delve into the merits of the case regarding entitlement to exemption or classification of goods. 3. SIGNIFICANT HOLDINGS The Tribunal held that:
The Tribunal established the principle that a bona fide belief in entitlement to exemption, even if erroneous, negates invocation of the extended limitation period under section 28(1) proviso of the Customs Act. It was also held that the Directorate of Revenue Intelligence has competence to issue show cause notices as per the recent Supreme Court ruling in Canon India, but this competence is irrelevant if the demand is barred by limitation. Finally, the Tribunal dismissed the department's appeal and upheld the Commissioner (Appeals) order allowing the respondent's appeal, confirming that the extended period of limitation could not be invoked and that the demand was time-barred.
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