Legal principle

Even where a recovery provision like Section 28B of the Customs Act prescribes no limitation, the demand must be initiated within a reasonable period — reasonably benchmarked to the five-year limitation under Section 28 — and a notice issued about nine years later is barred by delay.

Court decision

The Division Bench (Vibhu Bakhru and Amit Mahajan, JJ.) dismissed the Department's appeal, holding there was no substantial question of law. It upheld CESTAT's order setting aside the ₹2,19,52,108/- demand under Section 28B as time-barred: even if Section 28's limitation cannot per se be imputed to Section 28B, action must be taken within a reasonable period, and CESTAT's finding that five years (the Section 28 period) was reasonable was sustainable; a notice issued approximately nine years after the last Bill of Entry was not within a reasonable period. The decision favoured the respondent/assessee.

Facts

Anurag Trading Company imported goods for supply to the Ordinance Equipment Factory (OEF), Kanpur without payment of duty, availing notification no. 39/96-Customs dated 23.07.1996 on the strength of allegedly forged duty exemption certificates purportedly issued by the General Manager, OEF. The dispute concerned 39 Bills of Entry filed between August 1996 and January 2004, on which the customs authority raised a demand of ₹2,19,52,108/- under Section 28B of the Customs Act by Show Cause Notice dated 06.03.2013. A separate Show Cause Notice dated 08.07.2011 covering six Bills of Entry (11.07.2006 to 28.06.2008) led to an upheld demand of ₹21,05,024/- with interest under Sections 28AB and 28AA and an equal penalty under Section 114(A). CESTAT, by final order dated 10.08.2017, set aside the ₹2,19,52,108/- demand as barred by limitation, and the Commissioner of Customs appealed to the Delhi High Court.

Key provisions

• Section 28B, Customs Act, 1962 — Duties collected from the buyer to be deposited with the Central Government
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 114(a), Customs Act, 1962 — Penalty for attempt to export goods improperly etc
• Section 28AB, Customs Act, 1962 — [Omitted] ****
• Section 28AA, Customs Act, 1962 — Interest on delayed payment of duty