Bombay High Court Allows Writ Petitions Challenging Customs Duty Demand on Imported Textile Machinery — Holds That Show Cause Notice Issued Beyond Limitation Period Under Section 28 of Customs Act, 1962 Is Time-Barred. The court quashed the show cause notice as the department failed to establish any fraud or suppression to justify the extended period of limitation.

High Court: Bombay High Court Bench: BOMBAY In Favour of Accused

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2026-05-18 15:22:04

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Case Note & Summary

The petitioners, Karl Mayer STOLL Textilmaschinenfabrik GmbH and M/s. Karl Mayer India Private Limited, imported textile machinery and cleared the goods for home consumption after paying customs duty. Subsequently, the Deputy Commissioner of Customs issued a show cause notice demanding differential duty, alleging misclassification. The petitioners challenged the notice on the ground that it was issued beyond the limitation period prescribed under Section 28 of the Customs Act, 1962. The court examined the relevant date for limitation, which is the date of clearance of goods. The notice was issued more than one year after clearance, and the department did not allege any collusion, wilful misstatement or suppression of facts by the petitioners. Therefore, the extended period of five years could not be invoked. The court allowed the writ petitions and quashed the show cause notice as time-barred.

Headnote

A) Customs Law - Limitation for Issuance of Show Cause Notice - Section 28 of Customs Act, 1962 - The court considered whether a show cause notice demanding differential duty was time-barred. The notice was issued beyond the normal period of one year from the relevant date. The court held that the extended period of five years could not be invoked as there was no allegation of collusion, wilful misstatement or suppression of facts by the petitioners. The notice was quashed as time-barred. (Paras 1-10)

B) Customs Law - Relevant Date for Limitation - Section 28 of Customs Act, 1962 - The court interpreted the 'relevant date' for computing limitation as the date of clearance of goods for home consumption. The show cause notice was issued more than one year after the clearance, and the department failed to establish any fraud or suppression to justify the extended period. (Paras 5-8)

Issue of Consideration

Whether the show cause notice issued by the Customs Department demanding differential duty on imported textile machinery was barred by limitation under Section 28 of the Customs Act, 1962, and whether the extended period of limitation could be invoked in the absence of any allegation of collusion, wilful misstatement or suppression of facts.

Final Decision

The court allowed the writ petitions and quashed the show cause notice as time-barred under Section 28 of the Customs Act, 1962.

Law Points

Limitation period for issuance of show cause notice under Section 28 of Customs Act
1962
Time-barred demand
Interpretation of 'relevant date' for limitation
Applicability of extended period of limitation only in cases of collusion
wilful misstatement or suppression of facts

Case Details

2026:BHC-AS:17704-DB

Writ Petition No.7882 of 2023 with Writ Petition No.10561 of 2023 and Writ Petition No.316 of 2024

2026-02-20

G. S. Kulkarni, Aarti Sathye

2026:BHC-AS:17704-DB

Mr. Abhishek A. Rastogi, with Ms. Pooja M. Rastogi, Ms. Meenal Songire, Ms. Aarya More, Mr. Chayank Bohra for Petitioner. Ms. Nitee Punde with Ms. Mamta Omle for the Respondents.

Karl Mayer STOLL Textilmaschinenfabrik GmbH and M/s. Karl Mayer India Private Limited

Union of India and The Deputy Commissioner of Customs

Nature of Litigation

Writ petition challenging show cause notice demanding differential customs duty on imported textile machinery.

Remedy Sought

Quashing of show cause notice and declaration that the demand is time-barred.

Filing Reason

The show cause notice was issued beyond the limitation period under Section 28 of the Customs Act, 1962.

Issues

Whether the show cause notice was barred by limitation under Section 28 of the Customs Act, 1962. Whether the extended period of limitation could be invoked in the absence of allegations of collusion, wilful misstatement or suppression of facts.

Submissions/Arguments

Petitioners argued that the show cause notice was issued beyond the normal period of one year from the relevant date and the department did not allege any fraud or suppression to justify the extended period. Respondents argued that the notice was within limitation as the extended period applied due to misclassification by the petitioners.

Ratio Decidendi

A show cause notice demanding differential duty under Section 28 of the Customs Act, 1962 must be issued within the normal period of one year from the relevant date unless the department establishes collusion, wilful misstatement or suppression of facts to justify the extended period of five years. In the absence of such allegations, the notice is time-barred.

Judgment Excerpts

The show cause notice was issued beyond the normal period of one year from the relevant date. There is no allegation of collusion, wilful misstatement or suppression of facts by the petitioners. The extended period of limitation cannot be invoked in the absence of such allegations.

Procedural History

The petitioners imported textile machinery and cleared the goods for home consumption. The Deputy Commissioner of Customs issued a show cause notice demanding differential duty. The petitioners filed writ petitions challenging the notice on limitation grounds. The court heard the matter and reserved judgment.