Case Note & Summary
This case involved an appeal against the final order of the Customs, Excise & Gold (Control) Appellate Tribunal, which upheld the levy of customs duty and penalty on the appellant, M/s. Uniworth Textiles Ltd. The appellant, an Export Oriented Unit, contested the demand on the grounds that it was barred by limitation. The appellant had procured furnace oil for a captive power plant operated by its sister unit, Uniworth Ltd., and claimed exemption under relevant notifications. The Revenue issued a show cause notice demanding duty after the six-month limitation period, arguing that the appellant misutilized the duty-free facility. The court analyzed the applicability of the limitation period under Section 28 of the Customs Act, emphasizing that the Revenue must prove collusion or willful misstatement to invoke the extended period of five years. The court found that the appellant acted in good faith, seeking clarification from the Development Commissioner regarding its duty obligations. The court concluded that the Revenue's failure to provide specific allegations of mala fides in the show cause notice rendered the extended limitation period inapplicable. Consequently, the appeal was allowed, and the decisions of the lower authorities were set aside, with parties bearing their own costs.
Headnote
A) Customs Law - Limitation Period for Duty Demand - Applicability of Extended Limitation - Customs Act, 1962, Section 28 - The court held that the extended limitation period under the proviso to Section 28 could not be invoked as there was no evidence of collusion or willful misstatement by the appellant. The show cause notice was issued after the six-month period, and the Revenue failed to prove any deliberate intention to evade duty (Paras 9-26).
Issue of Consideration
Whether the demand for customs duty and penalty was barred by limitation under Section 28 of the Customs Act, 1962.
Final Decision
The Supreme Court allowed the appeal, set aside the decisions of the lower authorities, and ruled that the extended limitation period under Section 28 of the Customs Act could not be invoked against the appellant due to lack of evidence for collusion or willful misstatement.
Law Points
- Customs duty
- limitation period
- bona fide conduct
- exemption notifications
- collusion
- suppression of facts
