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Time bound adjudication in customs

February 1, 2018 6102 Views
Pradeep Jain
CA
Neetu Sukhwani
CA

The adjudication proceedings under section 28 of the Customs Act, 1962 have been drastically amended so as to align the provisions with the newly implemented GST regime. In the GST era, the time bound adjudication has been introduced wherein the cases are to be decided in time bound manner. It appears that the government wants to streamline the adjudication proceedings in Customs in line with GST. The present article highlights the important changes made in section 28 of the Customs Act, 1962.

 1.  Pre consultation hearing shall be granted by the proper officer before issuing notice to the assessee. This is appreciable provision as it enables the assessee to defend its case and avoid unnecessary issuance of show cause notice.

 2.  The proper officer has also been granted option to issue a supplementary notice under such circumstances and in such manner as may be prescribed and the time limits specified in sub-section (1) and sub-section (4) shall also apply to such supplementary notice. This provision is new but has adverse repercussions because at times, faulty show cause notices are issued and it is noticed that on pointing out the lacunae in the show cause notice, the demand raised against the assessee is quashed. However, after introduction of this provision, there is possibility that the lacunae in the show cause notice can be rectified by issuing supplementary notice. Furthermore, the pleading that the adjudication cannot be done on the basis of allegations not raised in the show cause notice will be futile as option of incorporating additional allegations by issuance of supplementary notice will be available to the revenue authorities.

 3.  The deletion of words 'where it is possible to do so' in sub-section (9) of section 28 prescribing the time limit for passing orders clearly indicates that the proper officer is required to adjudicate the case within the prescribed time limits of six months in case of normal period of limitation and one year in case of extended period of limitation. This will lead to speedy disposal of show cause notices. Furthermore, the provision of granting extension by senior officer for passing order has also been introduced. However, the proviso that failure to adjudicate the case within the prescribed period or extended period will lead to closure of case is appreciable provision. The failure on part of officers to pass orders within prescribed time period will lead to favourable position for assessee as it will be deemed that no show cause notice had been issued. This will pressurize the officers to adjudicate the cases timely.

 4.  The sub-section (9A) specifies the circumstances and reasons for not adjudicating the case within the prescribed time period as follows:-

 (a)  An appeal in similar matter of the same person or any other person is pending before the Appellate Tribunal or the High Court or the Supreme Court; or

 (b)  An interim order of stay has been issued by the Appellate Tribunal or the High Court or the Supreme Court; or

 (c)  The Board has, in a similar matter, issued specific direction or order to keep such matter pending; or

 (d)  The Settlement Commission has admitted an application made by the person concerned.

In the above cases, the adjudication is to be made within six months/one year from the date when the above reasons ceases to exist and not from the date of notice. It is submitted that the above provision can be misused by the officers as it is quite possible that similar matter is pending before the Appellate Tribunal/High Court/Supreme Court.

 5.  It is also provided that if notice has been issued by invoking extended period of limitation but subsequently it is found that the charges of collusion or wilful mis-statement or suppression of facts to evade duty has not been established against the person to whom such notice was issued, then the amount of duty and interest to the extent of normal period of limitation will be confirmed and it will be deemed that notice was issued by invoking normal period of limitation. This provision will guard the revenue authorities from losing the duty by wrongful invocation of extended period of limitation.

 6.  The provisions of new section 28A shall not be applicable for the notices issued after 14th May, 2015 but before the date on which Finance Bill, 2018 receives the assent of the President. Hence, the new provisions will apply to show cause notices issued after the date when the Finance Bill, 2018 receives the assent of the President.

In our opinion, although the move of time bound adjudication is a step welcomed by the assessees but incorporation of sub-section 9(A) may not fulfil the ultimate intention of the government to ensure speedy disposal of cases.

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