COMMISSIONER OF CUSTOMS, MUMBAI versus M.M.K. JEWELLERS & ANR.

Citation: [2008] 4 S.C.R. 661 · Decided: 11-03-2008 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Dismissed
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Judgment (excerpt)

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[2008] 4 S.C.R. 661 
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COMMISSIONER OF CUSTOMS, MUMBAI 
A 
.. 
V. 
M.M.K. JEWELLERS & ANR. 
(Civil Appeal No. 813-814 of 2004) 
MARCH 11, 2008 
B 
(ASHOK BHAN AND DALVEER BHANDARI, JJ.) 
~ "" 
Customs Act, 1962: 
s. 28(1), proviso, and s.114-A - Notice for payment of c 
duty and penalty - Invoking of extended period of limitation -
Shortage of duty free gold detected with assessees on 
11.11.1995-Assessees'standthat shortage was due to excess 
manufacturing wastage loss and the gold was available in form 
of dust/slurry - Further, notice dated 13. 11. 1997 related to 
imports from 1992-1993 - HELD: In view of the finding by D 
Commissioner of Customs that assessees were not guilty of 
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collusion or misstatement or suppression of facts, duty cannot 
be imposed by invoking extended period of limitation - Nor 
can imposition of penalty u/s 114-A be sustained. 
The respondent in C.A. No. 813-814 of 2004 was 
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engaged in manufacturing plain/studded/unstudded gold 
jewellery in Santacruz Electronics Export Processing 
Zone from directly imported gold procured from Minerals 
and Metal Trading Corporation in terms of Notification No. 
F 
f, 
196/87-Cus dated 5.5.1987 as amended by Notification No. 
·-< 
155/92-Cus dated 30.3.1992 and 177/94-Cus dated 
21.10.1994. On 11.11.1995 the officers of Customs 
Preventive Commisionerate inspected the premises of the 
respondent and detected a shortage of 6410.885 grams 
of duty free gold worth Rs.28,72,076.48. The respondent G 
was also found not to have been maintaining the Wastage 
Account Register as required under the Public Notice No. 
211988 issued by Commissioner of Customs concerned. 
The respondent was stated to have violated the relevant 
661 
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662 
SUPREME COURT REPORTS 
[~008] 4 S.C.R. 
A Customs Notifications and made itself liable for an or:der 
of confiscation u/s 111 ( o) of the Customs Act, 1962. A show 
cause notice dated 13.11.1997 was issued u/s 28 of the 
Act calling upon the respondent to pay Rs. 20,82,225.45 
as customs duty at the rate of 50%(BCD) plus 15% CVD 
B on the shortage of 6410.885 grams of gold, as also to pay 
the penalty u/s 112(a) and (b) ands. 114A of the Customs 
Act. The stand of the respondent was that the excess 
manufacturing wastage/loss took place in manufacture 
of jewellery and the same was available in the form of dust/ 
C slurry and the gold was recoverable by refining the same. 
It was also contended that the show cause notice dated 
13.11.1997 related to imports from 1992-1993 and, 
therefore, was time barred. The Commissioner of 
Customs confirmed the demand except as regards 
0 
penalty u/s.114A of the Act, as in his opinion, no case of 
collusion, willful misstatement or suppression of facts was 
brought out in the show cause notice. But the appeal of 
the respondent was allowed by the Customs Excise and 
Gold (Control) Appellate Tribunal. Aggrieved, the Revenue 
filed the instant appeals. The other appeals also arose on 
E the identical facts. 
It was contended for the respondent that in view of 
the findings of the Commissioner of Customs that there 
was no suppression or mis-declaration on the part of the 
F respondent, the order confirming the duty beyond the 
period of six months from the relevant date was· not 
sustainable in law. 
Dismissing the appeals, the Court 
G 
HELD: 1.1Section114A of the Customs Act, 1962 
can be invoked for imposition of equivalent amount of duty 
as penalty in cases where the short levy or non-levy has 
occurred due to mis-declaration or suppression of facts 
on the part of the assessee-importer. Section 114A is a 
mirror-image of the proviso to section 28 of the Customs 
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GOMMISSIONER OF CUSTOMS, MUMBAI v. M.M.K. 
663 
JEWELLERS & ANR. 
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Act. [para 27] [677-G] 
A 
1.2 In the instant matters, the appellant cannot invoke 
the extended period of limitation in view of the 
Commissioner's categoric findings that no case of 
collusion, wilful mis-statement or suppression of facts has 
B 
been brought out in the show cause notice so as to invoke 
the provisions of section 114A of the Customs Act, 1962. 
t ..,. 
The legal position is clear and crystallized by a series of 
judgments that in case where the assessee is not guilty 
of suppression of facts, collusion or wilful misstatement c 
of facts, the extended period of limitation cannot be 
invoked under the proviso to section 28(1) of the Customs 
Act, 1962. In this view of the matter, the instant appeals 
are
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