Customs Commissioner Rightly Extend Time for SCN in Branded Goods Mis-Declaration Case: CESTAT
Pranav B Prem
The Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has upheld the order of the Commissioner of Customs, ICD Tughlakabad, extending the statutory period for issuance of a show cause notice in a case involving large-scale mis-declaration of imported goods. Dismissing the importer’s appeal, the Tribunal held that the Commissioner had acted within the scope of Section 110(2) of the Customs Act, 1962, and had provided valid reasons for granting the extension.
The case arose from the seizure of three consignments declared as “toilet seats and wash basins.” However, upon detailed physical examination, customs authorities uncovered that the front section of the containers had been deliberately packed with the declared sanitary ware, while the remaining portion contained high-value branded goods. These included footwear from Nike, Adidas, Reebok, and Puma; apparel from premium brands such as Lacoste and Polo; and cosmetics from Lakme and Garnier. The strategic concealment indicated a planned attempt at mis-declaration to evade customs duty.
The consignments were seized in March 2010 under suspicion of fraudulent import practices. Under Section 110(2), once goods are seized, customs authorities must issue a show cause notice within six months. However, the provision also empowers the Commissioner to extend this period by an additional six months where justified. In this case, given the complexity of the investigation and the incomplete nature of inquiries, the Commissioner exercised this power and formally extended the deadline.
Challenging the extension, the importer argued that the Commissioner’s order lacked sufficient reasons, was passed mechanically, and violated principles of natural justice. It was contended that mere pendency of investigation cannot be a ground for extension and that the Commissioner had failed to demonstrate any compelling circumstances warranting deviation from the statutory time limit.
The Tribunal rejected these arguments after noting that the importer had not cooperated with the investigation. The record revealed that multiple summons issued by the customs department had gone unanswered. Critical aspects such as verification of ownership of the goods, details of foreign exchange payments, procurement documents, and amendments made to the bill of lading were still under active examination. The Tribunal held that these pending issues demonstrated that the investigation could not reasonably have been completed within the original statutory period.
CESTAT further observed that the Commissioner had recorded specific reasons for the extension and had provided the importer ample opportunity to be heard. Since the importer was duly served with notice and had participated in the proceedings, the allegation of violation of natural justice was rejected. The Tribunal emphasized that procedural fairness had been adhered to and that the extension order reflected due application of mind. Affirming the Commissioner’s order, the Tribunal held that the extension was legally valid, necessary, and justified in the interest of completing the investigation into the mis-declaration. Consequently, the appeal was dismissed and the seized goods were ordered to remain under restraint until the investigation concludes.
Appearance
Counsel For Appellant: None
Counsel For Respondent: AR Rakesh Kumar
Cause Title: M/s Mehra Fabrics Versus Commissioner of Customs
Case No: Customs Appeal No. 569 Of 2010
Coram: Justice Dilip Gupta (President), P.V. Subba Rao (Technical Member)
