2003 PLP (Trib (PTD)

Imran Tariq, D.R. with Obaid‑ur‑Rehman, D.S. for Respondent Date of hearing: 22nd January, 2002. MIAN ABDUL QAYYUM, MEMBER (JUDICIAL).‑--This appeal is directed against customs Order‑in‑Original No. 105 of 2000 passed by the Deputy Collector (Adjudication), Faisalabad whereby Messrs Shafqat Autos Mobile, Fatima Jinnah Road, Sargodha (the appellants herein), have been directed to pay an amount of Rs.2,01,775 on account of surcharge payable under section 98 of the Customs Act, 1969.

2. Relevant facts of the case are that the appellants imported some consignments of tyres and tubes and cleared the same for storage in a customs bonded warehouse. The consignments were subsequently cleared from the bonded warehouse vide four ex‑bond bills of Entry No.916, dated 26‑1‑1999, No. 758, dated 16‑12‑1998, No. 835, dated 4‑1‑1999 and No. 1171, dated 18‑3‑1999. Since the goods were ex‑bonded after the expiry of stipulated period of 3 months exceeded under section 98 of the Customs Act the Department held them liable to pay surcharge @ 2% per month. The appellants were accordingly served with a show‑cause notice, dated 22‑5‑2000 issued in terms of section 32(2) of the Customs Act requiring, them to pay an amount of Rs.2,01,775 on account of surcharge. The case was adjudicated by the Deputy Collector Adjudication, Faisalabad who vide the impugned order issued in the case of Messrs Awais International, Sargodha, which was applied to four other cases of similar nature including the appellants directed them to pay aforesaid amount of surcharge. Hence this appeal.

3. The appellants case is that before expiry of the prescribed period of three months on this section 98 of the Customs Act was amended whereby the warehousing period was enhanced from three months to one year and since the goods in question were ex‑bonded within the extended period of one year, they were not liable to pay the penal surcharge. It has also been argued on behalf of the appellants that the show‑cause notice was barred by time having been issued after the expiry of six months period provided under section 32(3) of the Customs Act as the case was one of misconstruction inadvertence and that there was no allegation of any collusion on the part of appellants and customs officials. Learned counsel for the appellants relied upon 1992 SCMR 1898(a) and 1984 MLD

562. He also quoted two precedents of this Tribunal in Appeal No.514 of 1997 and 15 of 2001 whereby it has been held that the cases where penal surcharge could not be recovered shall fall under subsection (3) of section 32 of the Customs Act.

4. Learned Departmental Representative opposed the appeal pleading that the amendment made in section 98 of the Customs Act through Finance Act, 1998 was not given retrospective effect and therefore, it was to effect and therefore, it was to apply prospectively. In support of his contention, he placed on record a copy of clarification issued by the C.B.R. vide letter C. No.14/S (T&W) of 1991, dated 24‑6‑1998. Regarding the judgment of this Tribunal passed in Appeal No. 15 of 2001, learned Department Representative contended that the same is sub judice before the High Court as it was challenged by way of an appeal by the Department. He also placed on record copies of the show‑cause notices alongwith a statement indicating numbers and dates of into bonded and ex‑bonded bill of entry.

5. We have examined the appellants' case in the light of submissions made by them and the facts on record. It is admitted that the period of three months prescribed under section 98(1) of the Customs Act was enhanced to one year through Finance Act, 1998 and that the three months period in respect of the in‑bonded consignments had not expired when the period was extended. The question whether under these circumstances, the amendment shall have retrospective effect or not is sub judice before the Honourable Lahore High Court and, therefore, we are not expressing any opinion on this question of law. But we find a good deal of merit in the appellant's contention about the show‑cause notice being time‑barred. The goods were allowed release by the Customs Authorities without charging penal surcharge ostensibly because the same were ex‑bonded within the extended period of one year. Omissions about non‑payment of penal surcharge was pointed out by the staff of DGRRA during the c6urse of audit at a belated stage. So there does not seem to be any element of collusion or false documents and this being a case of inadvertence or error, the Department could invoke the provisions of section 32(3) of the Customs Act which prescribed a period of six months for raising a demand. Same view has been held by this Tribunal in its detailed judgment in Appeal No.514 of 1997 titled Messrs Nishat Mills Ltd. v. The Collector of Customs, Dry Port, Faisalabad.

6. Considering the case-law quoted by the appellants and the aforesaid precedent of this Tribunal we hold that the show‑cause notice issued by the Adjudicating Officer was barred by time as the same was issued after a period of six months as prescribed under section 32(3) of the Customs Act. Therefore, without going into the question of law sub judice before the High Court, we find that the impugned order is not sustainable on the above ground alone. The appeal is accordingly accepted and the' impugned order is set aside to the extent of the appellants. C.M.A./724/Tax (Trib.) Appeal accepted accordingly.