2014 (8) TMI 1055 - HC - Customs

Validity of Customs Act show cause notice; final duty assessment not prerequisite; Section 28 applies

The Court found that the show cause-cum-demand notice issued under the Customs Act was valid, rejecting the petitioner's argument that final duty ... Demand of Customs duty - imported goods were provisionally assessed to duty - Petitioner contended that final assessment was not carried out and without carrying out the final assessment the demand show cause notice could not have been issued according to it - Held that:- according to the department there was final assessment. So the submission of the petitioner is not accepted, that assuming that there is only provisional assessment, no other step apart from final assessment can be taken. Provisionally assessed goods are required to be finally assessed under Section 18 of the Customs Act, 1962 but that provision assumes that there is no complaint regarding the goods or the importer. Here, respondent points out that there is an allegation of misdeclaration regarding the value of the goods. In such a case the department is empowered to issue a show cause notice under Section 124 of the Customs Act, 1962 read with Section 111 thereof. But it does appear that although from all practical purposes the final assessment had been made of the goods but such final assessment was taken to be “deemed”. There was no final order of assessment. Therefore, the department is enjoined to pass formal order of assessment. Section 28 of the Act would apply to the writ petitioner accordingly. No reason found to set aside and quash the show cause notice. Application disposed of Issues:Challenge to show cause-cum-demand notice under Customs Act - Invocation of Section 28 - Final assessment of duty - Allegation of misdeclaration - Deemed final assessment - Quashing of show cause notice - Adjudication by appropriate authorities.Analysis:1. The writ petitioner challenged a show cause-cum-demand notice issued under Section 124 read with Section 28 of the Customs Act, contending that the notice could not be issued without final assessment of duty. The petitioner argued that Section 28's invocation would affect the demand for interest, emphasizing the importance of final assessment before issuing such notices.2. The respondent, represented by Mr. Roy, countered the petitioner's claim by referring to the affidavit-in-opposition, which denied the petitioner's assertions and explained that final assessments were routinely finalized without formal orders if no changes were needed, as it was not prejudicial to the importer's interests. The respondent argued that the department had the authority to issue a show cause notice under Section 124 due to allegations of misdeclaration.3. The Court examined the conflicting claims and found that while the department maintained there was a final assessment, the petitioner's argument of only provisional assessment was not accepted. It was noted that provisionally assessed goods must be finally assessed under Section 18 of the Customs Act, but in cases of misdeclaration, a show cause notice under Section 124 could be issued.4. Despite practical final assessments being deemed to have occurred, the absence of a formal order of assessment necessitated the department to pass such an order. The Court determined that Section 28 of the Act would be applicable to the petitioner, and thus, the show cause notice dated 31st May, 2013 was not set aside but directed for adjudication by the authorities within three months.5. The Court disposed of the application, emphasizing that it had not delved into the merits of the case beyond the discussed points. The petitioner was granted the opportunity to contest the demand under Section 28 during the adjudication process, ensuring a fair hearing and a reasoned order by the authorities.