Natural justice and Section 28 notice requirements govern customs valuation disputes and short-levy recovery proceedings.

Waiver of a written show cause notice does not dispense with the duty to disclose the proposed action and the grounds for it; without disclosure of the material relied upon, the affected party is denied an effective opportunity to meet the case, and the resulting confiscation and penalty are vitiated by breach of natural justice. A demand for short-levied customs duty must be initiated through notice under Section 28 of the Customs Act, and no waiver of that formal notice is permissible for such recovery. The order was set aside and the matter remitted for fresh adjudication with directions to issue the requisite notice and proceed expeditiously.

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Issues: (i) Whether enhancement of value, confiscation and penalty in respect of goods covered by Bill of Entry No. 118 could be sustained when the material and grounds for proposed action were not disclosed after waiver of a written show cause notice; (ii) Whether recovery of differential duty in respect of the earlier Bill of Entry No. 485 required a notice under Section 28 of the Customs Act.

Issue (i): Enhancement of value and consequential confiscation and penalty were proposed on the basis of departmental material and valuation exercise. The noticee having waived a written show cause notice was still entitled to know the action proposed and the grounds on which it was based. Since the material relied upon and the basis of escalation were not disclosed, the appellants were denied an effective opportunity to meet the case against them. Such denial of natural justice vitiated the adjudication on confiscation and penalty.

Conclusion: The order relating to Bill of Entry No. 118 could not be sustained and required reconsideration.

Issue (ii): The demand relating to Bill of Entry No. 485 arose from alleged short-levy of duty. Recovery of short-levied duty had to proceed under Section 28 of the Customs Act, and there was no provision permitting waiver of the formal notice required for such demand. The demand was therefore procedurally defective and also suffered from the same want of disclosure that affected the other bill of entry.

Conclusion: Recovery in respect of Bill of Entry No. 485 could not proceed without notice under Section 28 of the Customs Act.

Final Conclusion: The impugned order was set aside and the matter was sent back to the jurisdictional Commissioner for fresh adjudication in accordance with law, with directions to issue the requisite notice and to complete the proceedings expeditiously.

Ratio Decidendi: Even where a written show cause notice is waived, the affected person must be informed of the proposed action and the grounds for it; and a demand for short-levied customs duty must be initiated through notice under Section 28 of the Customs Act.

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