The object of law of limitation is to quiet long possession and to extinguish long demands. It prescribes the period within which existing right can be enforced through Court of law. Another corollary of this, to forbid the suits brought after prescribed period and it aids the diligent not the indolent (behaves like laches of equitable laws). A person who has slept over his rights for an undue length of time will not be permitted to raise the controversy. The doctrine off limitation has been founded upon public policy and expediency, operation of which keeps to maintain the peace of society.
Now adverting to the Customs Law, often assessee/importer/exporter questions the validity of delayed issuance of SCN and stale demand of duty. Customs Officers are creation of statute therefore they are bounded by the law to observe prescribed period of limitation given under different provisions .
As soon as the prescribed period comes into discussion, our minds straightway goes to six months time mandated by the vires of Section 110(2) read with Section 124 of the Act. It is not a secret any more that when goods are seized under Section 110(1) of the Act, Notice is mandatorily required to be given under Section 124 of the Act, irrespective of the facts whether goods are provisionally released under Bond and surety or still remaining in the custody of customs. The said period can be permitted to be extended by Commissioner of Customs by another six months on reasonable grounds. Procedure of extension, involves issuance of SCN by Commissioner and completes with issuance of O-in-O which appears to me very cumbersome. Therefore, issuance of SCN may not be unnecessarily delayed and it is exhorted to complete the investigation in six months time. Another frequently asked question is whether provisional release of seized goods under Section 110A give unbridled power to issue SCN at any time and make redundant the rule of limitation, the answer is negative.
Recently Hon’ble Delhi High Court in WP (C) No. 2952/2012 in the case of Jatin Ahuja Vs DRI has, vide decision dated 04.09.2012 – 2012-TIOL-986-HC-DEL-CUS has held that -“Sec 110A does not absolve or override provisions of Sec 110(2) – Though seized goods are released provisionally under Sec 110A, if no Show Cause Notice is issued within stipulated time under Sec 110(2), goods shall be returned”
Now coming to Section 28(1) of the Act, prescribed period for recovery of duty in the case of other than reason of collusion/willful misstatement/suppression of facts has been increased from one year to two year by Finance Act, 2016. In the case of collusion under Section 28(4) prescribed period is still 5 years. Increase of period of one year to two years appears to be right step though the same was criticized by the trade as this will increase the lethargies of the Customs authorities. In my view, Section 28 is applied for those goods which are already cleared from the customs and no more in possession of Department. Therefore, it does not materially affect the right of owner or importer. However , it gives wide scope and power to Customs authority to cause investigation as the cause of action starts from the date of clearance of goods.(see Explanation to Section 28(11).
Likewise period of one year is prescribed for refund of duty or interest in Sec 27 of the Act, whereas the period is six months in case of Section 26 and 26 A of the Act.
Interestingly, for the erroneous recovery of drawback under Rule 16 or recovery in case where exports proceeds has not been realized under Rule 16 A of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, no time limit is prescribed for initiating action for recovery.
Similarly limitations have been imposed by Customs Act, by prescribing time limit for preferring Appeal before various Appellate authorities and Court. Time limit of sixty days is prescribed for filing appeal before Commissioner(A) under the provisions of Section 128(1) of Act. By the powers bestowed by proviso to said section, the aforesaid period can be extended by 30 days by Commissioner (A), if the Commr(A) is satisfied that the appellant was prevented by sufficient cause from presenting the appeal. Prescribed time limit for filing appeal before Tribunal is three months from the date on which order sought to be appealed against is communicated to the Commissioner of Customs-Section 129A(3). Likewise for preferring appeal before HC time limit is 180 days from the date on which order sought to be appealed against is communicated to the Commissioner of Customs.(Section 130(2)(a).
Another frequently asked question is in respect of commencement and termination of time that how the prescribed period of six months/two years/five years would be computed, the answer lies in Section 9 of the General Clauses Act, 1897 which says that first days is excluded and last day is included for computing the prescribed period. It means that that first day of detention/seizure while counting prescribed period is excluded.
With regard to computation of time, another issue crop up what to do when the last day of issuance of SCN/filing appeal falls on Saturday/Sunday or any public holidays, then recourse is taken to Section 10 of the General Clauses Act, 1897 and Section 4 of the Limitation Act, 1963 and proceedings can be considered to be done in due course, if it is done on next working day.
What it follows from the above, in spite of subsistence of right, remedy is extinguished by operation of law of limitation and it cannot be enforced.
## MORE WORTHWHILE READS on MY TAX VIEWS:
Interesting Provisions Relating to Interest Under Customs Act
Attempt And Preparation in Exports under Customs Act
Burden of Proof in Criminal & Quasi-Judicial Proceedings- How it Works?
Demand of Customs Duty- Constitutional & Legal View Points
Self Assessment in Customs- The Concept & Objectives
In my view, Section 28 of Customs Act , 1962 is not applicable in those cases where goods have been allowed for clearance for home consumption. It is applicable only where goods are imported under Post-import conditions like Section 143 of Customs Act. It is important to peruse the definition of “Imported good” provided under Section 2(25) of Customs Act.