The Delhi High Court held that issuance of notice after the expiry of the period prescribed under section 28(9) of Customs Act, 1962 doesn’t survive.
Swatch Group India Pvt ltd & Ors. , Petitioner No. 1 is an importer and an exclusive authorised distributor of Swatch products and distributes various brands of luxury watches, accessories, etc. The watches and accessories are imported by petitioner No. 1.
Respondent No. 2/DRI stated that it received credible information that Petitioner No. 1 is importing consignments of branded watches of Swiss origin falling under Customs Tariff item 91021100/ 91021900, from different related overseas suppliers and is resorting to mis-declaration of retail sale prices (“RSP”) to evade payment of appropriate customs duty. It was alleged that watches were notified for retail sale price-based assessment for payment of CVD less abatement.
It was alleged that certain authorised retailers of Petitioner No. 2 were changing the MRP. Searches were carried out by the officers of Respondent No. 2 on 17.02.2017 at various premises of Petitioner No. 1 and also at the premises of various retailers.
Certain watches valued at ₹5,68,87,800/-were detained during the search on 17.02.2017. During the pendency of the investigation, the said watches were seized vide Seizure Memo dated 06.06.2017. The investigation culminated in the issuance of the impugned show cause notice dated 14.02.2018 and corrigendum under Sections 28 & 124 of the Customs Act, 1962 (‘the Customs Act’), proposing recovery of custom duty of ₹38,94,832/- along with interest and penalty, confiscation of the seized watches in terms of Section 111(d) and Section 111(m) of the Customs Act and imposition of penalty under Section 112(b) of the Customs Act. A penalty was also proposed under Section 112(a), 112(b), and Section 114AA of the Customs Act on the officials of petitioner No. 1.
It was admitted that the show cause notice was not adjudicated till the date of the filing of the present writ petition on 15.04.2021. It was argued by the petitioner that respondent No. 2 is not a proper officer appointed under Section 2(34) of the Customs Act for the assessment and reassessment of goods under Section 28 of the Customs Act.
Further argued that the show cause notice was issued in the month of February 2018, and in terms of Section 28(9) of the Customs Act, the same having not been adjudicated within a period of 12 months, any adjudication now was time-barred.
As per the amended Sub-sections (9) and (9A) of Section 28 of the Customs Act, it is evident that the proper officer is bound to pass an order within six months or one year from the date of notice as the case may be, in cases of duties not paid or short-levied or short-paid or erroneously refunded. The said period can be extended for a further period of six months or one year in the cases specified in clause (a) and (b) of Section 9, respectively, by an officer, senior in rank to the proper officer having regard to the circumstances under which the proper officer was prevented from determining the amount of duty or interest within the prescribed period.
A division bench comprising Justice Vibhu Bakhru and Mr Justice Amit Mahajan observed that there is no material to show that the proper Officer couldn’t determine the amount of duty within the prescribed period. The mention of the words, “where it is not possible to do so”, in our opinion, does not enable the Department to defer the determination of the notices for an indeterminate period.
“In the absence of any ground that the officer couldn’t determine the amount of duty within the prescribed period, the impugned SCN has lapsed and cannot be adjudicated.” The court held while allowing the writ petition.
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