ORDER

Per Moheb Ali M. :

This is a Revenue's appeal against the order of Commissioner (A) Customs Mumbai. In the impugned order the Commissioner held that the demand for Rs. 74,93,258/- is time barred.

2. Briefly the facts as brought out in the appeal memorandum are as follows:-

"A Contract of the Respondent was registered in the Contract Cell under Project Import Regulations, 1986, on 8.11.1993. On completion of imports, the importer submitted a Reconciliation Statement and accordingly project contract was finalized. At the time of registration, 2% Revenue Deposit was ordered to be recovered on account of importer's agreement with foreign supplier for payment of Royalty, Licence know-how fees; which was accepted by the importer (Respondent). However in respect of 3Bs/E, 2% revenue deposit was inadvertently not recovered, therefore, the same was proposed to be recovered from the respondent, who in turn requested to adjust the same from the amount of Rs. 50,00,000/- paid by them as Cash Security Deposit. Accordingly the duty of Rs. 7,28,733/- was adjusted and credited to Revenue vide Cash Challan No. 2133 dt. 12.02.2001, under Section 18 (2) of Customs Act, 1962".

3. The Revenues' contention is that the time period under Section 28 (3) (b) of the Customs Act starts from 13.2.2001 and so the demand notice issued on 9.8.2001 is not time barred. In the impugned order the Commissioner however held that the demand is time barred. He held we quote.

"The Bills of Entry have been finally assessed by the Appraising Officer on 13.8.99 which has been countersigned by the concerned Asstt. Commissioner on 31.8.99. The refund order was issued on 31.01.2001 against which cheque dated 6.2.2001 was issued by the Dy. Commissioner, Contract Cell, Group VI for an amount of Rs. 42,71,261/-. A challan dated 9.2.2001 was prepared for depositing Rs. 7,28,733/- to the cashier for adjusting the duty payable in this case.

On the basis of the above facts I do not agree with the contention of the department that the demand dated 9.8.2001 was within the time limit as after finalisation of the assessment and adjustment of duty refund order was issued on 31.01.2001 and even the cheque No. 894585 dated 6.2.2001 was issued. In such a situation nothing remains for adjustment of duty as stipulated under Section 18 of the Customs Act, 1962. The challan for short levied amount was prepared by the department on a subsequent date shows slackness on the part of the department and it has got no bearing on the appellants case.

In view of the above I hold that the said show cause notice dt. 2.8.2001 is time barred and hence the order passed by the lower authority confirming the same is neither legal nor proper. I set aside the impugned order on this ground only and I am not going on the merits of the case.

The appeal is allowed with consequential relief, if any".

4. Heard both sides.

5. The Ld. SDR Shri Ajay Saxena took us through the provisions of Section 28 (3) (b) of the Customs Act which reads that in a case where duty is provisionally assessed under Section 18, the date of adjustment of duty after final assessment thereof is the relevant date for computing the time limit under Section 28. He pleaded that the legislature consciously used the expression "adjustment of duty" and "after final assessment thereof". Thus it is possible that final assessment may take place on a particular date but the adjustment of duty may take place on a date a subsequent to that date. It is the date of adjustment that has to be taken into consideration and not the date of final assessment. These expressions used in the Section have to be given their full meaning. He argued that the legislature has specifically used the expression "date of adjustment" as it was conscious of the fact that the date of adjustment of duty can be different from the date of final assessment. He submitted that the demand notice issued on 9.8.2001 is not time barred when computed from the date of adjustment of duty is on 12