Hindustan Copper Delayed Demand Collapse

The dispute arose from importation of tyres, tubes, and flaps by Hindustan Copper Ltd. in 1990. After customs clearance and payment of duties, the assessee sought refund on the ground that excess Countervailing Duty had been charged. Following reassessment, customs authorities sanctioned refund of approximately Rs. 8.42 lakhs in 1994.

Subsequently, the Central Revenue Audit objected to the reassessment and alleged that concessional CVD under Notification No. 41/1989-CE had been wrongly extended to off-the-road vehicle tyres. Acting upon the audit objection, the Department issued a demand notice in December 1995 seeking recovery of allegedly erroneous refund.

Thereafter, the matter remained completely dormant for nearly nineteen years before the Department issued the first hearing notice in 2014. Ultimately, the adjudication order confirming recovery was passed in March 2018, approximately twenty-three years after the original demand notice. The Commissioner (Appeals) mechanically affirmed the recovery.

Before the Tribunal, the assessee challenged the proceedings principally on two grounds — absence of a valid show cause notice under Section 28 and grossly delayed adjudication causing irreparable prejudice. The Tribunal accepted both contentions. It held that the so-called demand notice merely directed payment and did not call upon the assessee to “show cause” as mandated by Section 28. The Bench further held that adjudication after nearly twenty-three years destroyed the assessee’s ability to effectively defend itself, especially when employees had retired and records were no longer available.