IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN THURSDAY, THE 18TH SEPTEMBER 2008 / 27TH BHADRA 1930 OP.No. 23882 of 2000(R) ----------------------- PETITIONER: --------------- M/S. DYNAMIC ORTHOPEDICS(P) LTD., POST BOD NO.45, ASOKAPURAM, ALUVA REPRESENTED BY ITS MANAGING DIRECTOR, P. VASUDEVAN. BY ADV. SRI.C.N.RAMACHANDRAN NAIR SRI.ANTONY DOMINIC SRI.A.K.JAYASANKAR NAMBIAR RESPONDENTS: ------------------ 1. UNION OF INDIA REPRESENTED BY SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI 110001. 2. THE DEPUTY COMMISSIONER OF CUSTOMS, ARRERS SECTION, CUSTOMS HOUSE, COCHIN 682 009. BY ADV. SRI.JOHN VARGHESE, SCGSC FOR R1,R2 SRI.P.S.SREEDHARAN PILLAI, SCGSC FOR R1,2 SRI.P.PARAMESWARAN NAIR,ASST.SOLICITOR FOR R1-2 THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 18/09/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP.No. 23882 of 2000 ORDER ON C.M.P.NO.40244/2000 IN O.P.NO.23882/2000 DISMISSED 18.9.2008 SD/- S. SIRI JAGAN, JUDGE. APPENDIX EXT.P1: COPY OF THE ORDER OF THE COMMISSIONER OF CUSTOMS (APPEALS) DATED 8.3.2000. EXT.P2: COPY OF THE SAID DEMAND DRAFT DTD 12.4.2000. EXT.P3: COPY OF THE LETTER DTD 19.4.2000 RECEIVED BY THE PETITIONER. EXT.P4: COPY OF LETTER DTD 23.5.2000 SENT BY THE PETITIONER IN REPLY TO EXT.P3 LETTER. EXT.P5: COPY OF THE LETTER SENT BY R2. EXT.P6: COPY OF THE DETENTION NOTICE DTD 3.8.2000 RECEIVED BY THE PETITIONER. RESPONDENTS' EXHIBITS EXT.R1(a0: COPY OF THE ORDER CONFIRMATION DT5D 22.6.1998. EXT.R1(b): COPY OF THE ORDER IN APPEAL NO.4/2000 DTD 8.3.2000. EXT.R1(c): COPY OF THE LETTER NO.S61/10/2000 CUS.(AS) DTD 19.4.2000 ADDRESSED TO THE PETITIONER. EXT.R1(d): COPY OF THE LETTER NO.561/10/2000 AS DTD 4.4.2000, ADDRESSED TO THE PETITIONER. TRUE COPY PA TO JUDGE. S. SIRI JAGAN, J. ------------------------------------ O.P.No. 23882 OF 2000 ---------------------------------------- Dated this the 18th day of September, 2008 JUDGMENT The petitioner is an importer of certain goods. They imported the goods under Bill of Entry No.7152 dated 10.12.1997 and cleared the same by paying import duty classifying the item imported under heading 9021.10 of the Schedule to the Customs Tariff Act. The Bill of Entry, covered the goods, as per two invoices namely, Invoice Nos.97000233 and 97000234. Subsequently, the Asst. Commissioner of Customs issued a show cause notice directing the petitioner to show cause why an amount of Rs.23,820/- short levied in respect of the goods covered by Invoice No.97000233 should not be recovered from them for the reason that the classification of the goods given in the Bill of Entry was not correct. It resulted in an order confirming the demand. The petitioner challenged the order of demand in an appeal before the Commissioner of Customs (Appeals), which was dismissed by Ext.P1 order dated, 8.3.2000. The petitioner did not pursue the matter further and paid the said O.P.No.23882/2000 2 amount on 12.4.2000, after receipt of the order on 21.3.2000. Subsequently, the petitioner was served with Ext.P3 demand notice dated 19.4.2000, demanding an amount of Rs.52,728/- also on the ground that there was a calculation error in the earlier proceedings and the actual amount due was Rs.76,548/- out of which the petitioner has paid only Rs.23,820/- leaving a balance of Rs.52,728/-. The petitioner objected to the said demand by filing Ext.P4. Dissatisfied with that reply again by Ext.P5, the 2nd respondent reiterated the demand. Subsequently, by Ext.P6, an order under Section 142 of the Customs Act was issued to the petitioner detaining their subsequent imports, for failure to pay the said amount of Rs.52,728/-. Exts.P3, P5 and P6 are under challenge before me. 2. The contention of the petitioner is that the assessment in respect of the Bill of Entry in question attained finality on the Commissioner of Customs (Appeals) passing Ext.P1 order. That being so, the said assessment could not have been reopened by Ext.P3 demand without complying with provisions of Section 28 of the Customs Act. They would also submit that this is not a calculation error at all, but a short O.P.No.23882/2000 3 levy in so far as by earlier proceedings the Asst. Commissioner sought to recover only the short levy in respect of one of the two invoices covered by the Bill of Entry and the amount now demanded is only in respect of the other invoice. Therefore, clearly this is a case of short levy, in which case the amount could not have been demanded from them except in accordance with Section 28 of the Customs Act. According to the petitioner, no show cause notice, as contemplated under Section 28 of the Customs Act, had been issued to them, preceding Ext.P3 within the time limit prescribed under the said Section, without which no sustainable demand could have been made by the 2nd respondent. The petitioner points out that the Bill of Entry is dated 10.12.1997 and Ext.P3 is dated 19.4.2000 which is far beyond six months from the relevant date within which period the 2nd respondent was bound to issue a show cause notice, under Section 28 of the Customs Act, to sustain a valid demand. The petitioner therefore submits that Ext.P6 order issued for non-payment of amounts covered by Exts.P3 and P5, which the petitioner is not liable to pay, is also clearly illegal and unsustainable. The petitioner, therefore seeks quashing of Exts.P3, P5 and P6. O.P.No.23882/2000 4 3. The 2nd respondent has filed a detailed counter affidavit controverting the contentions of the petitioner. According to the 2nd respondent, Section 28 is not attracted at all to the particular case. Admittedly, the Bill of Entry is covered by two invoices. Both the invoices pertain to identical goods. Therefore, there was short levy in respect of the goods imported under both the invoices. By a clerical mistake only one of the invoices was included in the earlier demand which has only been sought to be corrected by Ext.P3. Therefore, according to the 2nd respondent , there is no question of applicability of Section 28 or any period of limitation as contended by the petitioner. On the above grounds, the Asst. Solicitor General appearing for the 1st respondent would argue to sustain Exts.P3, P5 and P6 orders. 4. I have considered the rival contentions in detail. I am not at all satisfied that this is a case of error in calculation or a clerical error. Clearly, the officer concerned omitted to include the two invoices in the original show cause notice. Therefore, this is a clear case of short levy of import duty. In fact in the counter affidavit the 2nd respondent refers to the same as a short levy in several places. The relevant portion of O.P.No.23882/2000 5 Section 28 of the Customs Act reads thus: [28. Notice for payment of duties, interest, etc.- (1)When any duty has not been levied or has been short-levied or erroneously refunded, or when any interest payable has not been paid, part paid or erroneously refunded, the proper officer may,- (a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year; (b) in any other case, within six months, from the relevant date, serve notice on the person chargeable with the duty or interest which has not been levied or charged or which has been so short- levied or part paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice”. As per Section 28, in the case of a short levy, the appropriate officer is duty bound to issue a show cause notice within six months from the relevant date. It is not disputed before me that Ext.P3 has been issued beyond six months from the relevant date applicable. That being so, Ext.P3 and all further proceedings based on the same are unsustainable for want of compliance with the provisions of Section 28 of the Customs Act. Consequently, the same are liable to be quashed. Accordingly, Exts.P3,P5 and P6 are quashed. It is declared O.P.No.23882/2000 6 that the petitioner is not liable to pay the amount demanded by Exts.P3 and P5 and consequently, no proceedings under Section 142 of the Customs Act could have been invoked against the petitioner for want of payment of amount covered by Exts.P3 and P5. The writ petition is allowed as above. S. SIRI JAGAN, JUDGE Acd O.P.No.23882/2000 7