Post-clearance customs demand and undervaluation: Section 28 recovery upheld, with enhanced value and penalty sustained.

A post-clearance demand for short-levied customs duty was held maintainable under Section 28 without first revising the assessment under Section 130, because Section 28 operates independently for recovery after clearance. Recorded statements admitting undervaluation and the lower declared invoice price supported enhancement of assessable value and consequential differential duty; the loading under Rule 9(2) was also upheld where freight and insurance were not shown to be ascertainable. Penalty under Section 114A was sustained on the basis of established undervaluation, but redemption fine could not survive because the goods were not available for confiscation.

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Issues: (i) Whether a demand under Section 28 of the Customs Act, 1962 could be issued without first revising the assessment under Section 130 of the Customs Act, 1962. (ii) Whether the enhanced assessable value, differential duty, penalty under Section 114A, and redemption fine were sustainable.

Issue (i): Whether a demand under Section 28 of the Customs Act, 1962 could be issued without first revising the assessment under Section 130 of the Customs Act, 1962.

Analysis: The statements of the importer disclosed undervaluation and short-levy after clearance of the goods. The legal position applied was that Section 28 operates independently for recovery of duty not levied or short-levied after clearance, and it is not a precondition that the assessment must first be set aside or revised under Section 130. The reasoning followed the settled view that post-clearance show-cause notice under Section 28 is maintainable where short-levy is alleged.

Conclusion: The objection to the proceedings under Section 28 was rejected and the demand machinery was held to be valid.

Issue (ii): Whether the enhanced assessable value, differential duty, penalty under Section 114A, and redemption fine were sustainable.

Analysis: The importer's statements under Section 108 constituted clear admissions that the invoices declared a lower price than the negotiated FOB price actually payable. The explanation that the first statement was involuntary was not accepted, as the later statement substantially confirmed it. The loading applied under Rule 9(2) was also upheld because freight and insurance were not shown to be ascertainable. On this basis, the enhanced assessable value and consequential differential duty were sustained, and the ingredients for penalty under Section 114A were treated as established. However, redemption fine under Section 125 could not survive as the goods were not available for confiscation.

Conclusion: The enhanced value, differential duty and penalty were upheld, but the redemption fine was set aside.

Final Conclusion: The appeals failed on the merits regarding duty and penalty, while only the redemption fine was deleted, resulting in a partial allowance.

Ratio Decidendi: A post-clearance demand for short-levied customs duty can be validly initiated under Section 28 without first revising the assessment under Section 130, and an admitted undervaluation supported by recorded statements justifies enhanced valuation, differential duty and penalty, though redemption fine cannot be imposed when the goods are not available for confiscation.

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