Section 28 limitation does not bar appropriation of voluntarily deposited admitted customs duty.

The petitioner, a proprietary concern, imported 21 consignments of confectionery from M/s Seville Products Ltd. during 2008–09 to 2010–11.

The Directorate of Revenue Intelligence alleged under-invoicing and misdeclaration of transaction value and retail sale price, resulting in differential customs duty of ₹1,15,88,712, comprising ₹45,68,364 for imports within five years and ₹70,20,348 for imports beyond five years.

During investigation, the petitioner voluntarily deposited ₹85,00,000.

The DRI issued a show-cause notice proposing, inter alia, recovery of ₹45,68,364 under Section 28 of the Customs Act, 1962, appropriation of ₹70,20,348 from the voluntary deposit towards the imports beyond five years, and appropriation of the balance deposit towards duty and interest.

The petitioner approached the Settlement Commission, admitted the liability relating to the period within five years, but disputed the liability relating to the period beyond five years as time-barred.

Whether the Settlement Commission could appropriate ₹70,20,348 from the petitioner’s voluntary deposit towards differential duty relating to imports beyond the limitation period prescribed under Section 28 of the Customs Act, 1962?

Whether such appropriation amounted to a fresh determination or recovery of a time-barred customs-duty demand under Section 28?

Whether the Settlement Commission’s factual findings regarding the petitioner’s admission and the purpose of the voluntary deposit warranted interference under the High Court’s writ jurisdiction?

The Court applied Section 28 of the Customs Act, 1962, which limits the Department’s statutory power to initiate recovery proceedings after the prescribed period; however, limitation ordinarily bars the statutory remedy and does not, by itself, extinguish an admitted liability or prevent consideration of an amount already voluntarily deposited.

Section 127C(5) empowered the Settlement Commission to pass an order in settlement proceedings, while Section 127J attached finality to the settlement order, subject to constitutional judicial review.

Under Article 226, the High Court does not act as an appellate court over factual findings and may interfere only for jurisdictional error, breach of natural justice, manifest error of law, or a conclusion unsupported by the record.

The Court relied on India Cements Ltd. v. Collector of Central Excise, Madras, 1984 (18) E.L.T. 499 (Trib.), for the distinction between limitation of the Revenue’s recovery remedy and voluntary payment of an admitted liability, and distinguished C.J. Shah & Co. v. Union of India, (2018) 359 E.L.T. 22 (Bom.), on its materially different facts.

The Court distinguished between issuing a fresh statutory demand under Section 28 and appropriating money already voluntarily deposited during investigation.

The Settlement Commission had not independently raised or enforced a new demand of ₹70,20,348 after expiry of the limitation period; it had considered the existing deposit in light of the proprietor’s recorded admission that the total differential duty was payable and that the ₹85,00,000 deposit should be adjusted towards the relevant imports.

The petitioner did not file a rejoinder, produce the relevant statements, or show that the admissions had been retracted.

Accordingly, the factual findings of the Settlement Commission could not be displaced merely by a contrary assertion in the writ petition.

The Court held that the petitioner’s objection to the enforceability of the beyond-five-year liability did not prevent the Settlement Commission from determining the purpose and manner of adjustment of the amount already deposited.

It was a permissible adjustment of an amount already deposited, supported by the proprietor’s un-retracted admission and specific direction regarding adjustment.

The challenge to the Settlement Commission’s order was therefore rejected.

The writ petition and pending application were dismissed, and Final Order No. F.-3276 to 3278/CUS/2018-SC(PB) dated 26 February 2018 was left undisturbed.