Case: Collector of Customs, Calcutta Vs. Tin Plate Company of India Limited

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; (h) 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. When the two demand notices were issued on 27/28-12-1984 on the ground that there was a short levy both of them were time- barred under Section 28(1) (b) of the Customs Act. On that there can be no dispute4. The proviso to Section 28(1) extends the period of limitation to five years in certain cases of collusion, wilful misstatement or suppression of facts by the assessee. In the case of suppression of facts the proviso would be attracted and the period of limitation would stand extended to five years. Therefore, when it was realised that so far as the two demand notices were concerned they were beyond the period of limitation prescribed by Section 28(1) (b) of the Customs Act, the Deputy Collector of Customs issued a notice dated 22-7-1985 in which for the first time the allegation in regard to suppression of facts came to be made. On the basis of that notice, it was stated that the two demand notices dated 27/28-12-1 984 were within time. It is interesting to note that even by this notice dated 22-7-1985 what was sought to be done was to relate back the matter to the two demand notices and overcome the difficulty of limitation by saying that since there was suppression those two demand notices were within time. Now, as pointed out earlier if action is contemplated under Section 28(l) (h) it is incumbent (or mandatory) on the part of the Department to serve the assessee a notice requiring him to show cause why he should not pay the amount specified therein. This requirement is in keeping with the principle of natural justice. Indisputably, no show- cause notice was issued to the assessee before the two demand notices were issued. Even the notice of 22-7-1985 is not "a show-cause notice" within the meaning of Section 28(1) of the Customs Act. It is only an answer to the assessees letter dated 1-2-1985 addressed to the Collector of Customs wherein he contended that the two demand notices were ultra vires and the Deputy Collector refers to the factum of suppression with a view to bringing those two notices within the period of limitation by the invocation of the proviso to Section 28(1) of the Customs Act. There was a nothing to stop the Department from issuing a proper show-cause notice, if suppression of fact was a valid ground for invoking Section 28(1) of the Customs Act. But instead of doing so, what the Deputy Collector does is to justify the two demand notices as being within time by pointing out that this was a case of suppression of facts and then stating in a cavalier fashion that if the assessee so desires he may approach the Assistant Collector for a hearing. It is incumbent on the part of the Department to issue a show-cause notice and thereby give the assessee an opportunity to make his representation as is envisaged by Section 28(2) of the Customs Act. It is a condition precedent. Instead of following that procedure the Department followed the circuitous method and left it to the assessee to approach the Assistant Collector of Customs, if he so desired. We are, therefore, of the opinion that the communication of 22-7-1985 could hardly be described as a show-cause notice under Section 28(1) of the Customs Act 5. The Tribunal has by the impugned order come to the conclusion and rightly in our opinion, that the communication of 22-7-1985 does not purport to be "a show-cause notice" and the two demand notices cannot be construed as show-cause notices as envisaged by the Act. It has further taken note of the fact that the two demand notices do not refer to any suppression of facts. On the question of suppression the Tribunal notices that there is no material tendered by the Department to indicate that there was any attempt on the part of the assessee to deceive the Government or induce the authorities to release the goods notwithstanding the expiry of the period of the exemption notification. The Tribunal notices that there is no active concealment; it rightly states that suppression envisages a deliberate or conscious omission to state a fact with the intention of deriving wrongful gain. It further points out that even the Department was aware that the outer date of the exemption notification had expired. In Bharat Surfactants (P) Ltd. v. Union of India a Constitution Bench of this Court had occasion to set out the procedure in detail to be followed in such cases. According to the procedure indicated in para 12 of the judgment, it is clear that the presentation of the manifest to the Customs authority could be effected before or after the arrival of the vessel and in the instant case (sic the presentation of) the manifest had been effected after the arrival of the vessels. Therefore, the authorities were also aware that the vessel had arrived after 31-12-1983, the last date for availing of the benefit of the exemption notification. The Tribunal, therefore, also came to the conclusion and in our opinion rightly, that the element of deliberate or conscious omission had not been established and, therefore, even on that count it did not uphold the Departments contention. We see no reason to take a different view

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]5. The Tribunal has by the impugned order come to the conclusion and rightly in our opinion, that the communication ofdoes not purport to be "anotice" and the two demand notices cannot be construed asnotices as envisaged by the Act. It has further taken note of the fact that the two demand notices do not refer to any suppression of facts. On the question of suppression the Tribunal notices that there is no material tendered by the Department to indicate that there was any attempt on the part of the assessee to deceive the Government or induce the authorities to release the goods notwithstanding the expiry of the period of the exemption notification. The Tribunal notices that there is no active concealment; it rightly states that suppression envisages a deliberate or conscious omission to state a fact with the intention of deriving wrongful gain. It further points out that even the Department was aware that the outer date of the exemption notification had expired. In Bharat Surfactants (P) Ltd. v. Union of India a Constitution Bench of this Court had occasion to set out the procedure in detail to be followed in such cases. According to the procedure indicated in para 12 of the judgment, it is clear that the presentation of the manifest to the Customs authority could be effected before or after the arrival of the vessel and in the instant case (sic the presentation of) the manifest had been effected after the arrival of the vessels. Therefore, the authorities were also aware that the vessel had arrived afterthe last date for availing of the benefit of the exemption notification. The Tribunal, therefore, also came to the conclusion and in our opinion rightly, that the element of deliberate or conscious omission had not been established and, therefore, even on that count it did not uphold the Departments contention. We see no reason to take a different view