'Relevant Date' for Limitation u/s 28 of Customs Act for Provisional Assessment is Date of Adjustment of Duty after final assessment: CESTAT [Read Order]

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the "relevant date" for the purpose of limitation under Section 28 of the Customs Act is the date of adjustment of duty after the final assessment of the provisionally assessed goods.

S K Petrochem (Appellant) imported consignments of 'Rubber Processing Oil' (RPO) between September 2011 and September 2012, which were provisionally assessed under Section 18(1)(b) of the Customs Act, 1962.

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Subsequent test reports from Punjab Test House and CRCL, New Delhi, indicated that the imported goods had aromatic compounds of more than 50%. The Revenue Department concluded that the goods were incorrectly classified under CTH 2710.1990 and were appropriately classifiable under CTH 27079900.

A Show Cause Notice (SCN) was issued on 24.02.2016, along with a corrigendum dated 13.10.2016, to finalize the assessments. The Order in Original was issued on 29.12.2017, which confirmed a differential duty demand of ₹45 Lakhs. The Commissioner (appeals) upheld the demand order. The appellant challenged the order at the CESTAT.

The appellant argued that the impugned order was bad in law for the reasons the order finalizing the assessment was issued after more than five years from the date of provisional assessment, making it clearly time barred.

The appellant argued that while Section 18 provides no time period for finalization, it must be done within a reasonable time, and five to six years is an "inordinate delay". The appellant also submitted that after finalization of assessment, if any duty is due, it becomes a case of short payment recoverable only under Section 28 of the Act.

The appellant submitted that the SCN must be issued after finalization, with the date of finalization being the 'relevant date' as per Section 28. A demand confirmed under Section 28 without issuing an SCN is illegal.

The bench comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member), held that the finalization of provisional assessment is an essential prerequisite (sine qua non) for the issuance of a notice under Section 28 of the Customs Act.

Relying on the Hon'ble Supreme Court judgment in the case of ITC Ltd, the tribunal observed that a proceeding under Section 11A of the Central Excise Act (which is pari materia to Section 28 of the Customs Act ) cannot be initiated without completing the assessment proceedings.

The tribunal observed that section 28 of the Customs Act explicitly defines the 'relevant date' for provisionally assessed duty as the "date of adjustment of duty after the final assessment thereof or re-assessment, as the case may be".

The tribunal found the Revenue's argument that demand under Section 28 is a mere offshoot of Section 18 and requires no separate SCN to be "without logic," as this would render the definition of the relevant date in Section 28 meaningless.

The tribunal held that the proceedings and the impugned orders were not maintainable, as the demand was issued with an inordinate delay and without finalization of the provisional assessment and issuance of a Show Cause Notice under Section 28 of the Customs Act. The appellant appeal was allowed.

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