2017 (6) TMI 1056 - AT - Customs

Customs Tribunal: Penalty proceedings cannot precede assessment completion. Appellants favored as duty not determined.

M/s. Saharsh Distributors Pvt. Ltd., Harkirat Singh Versus C.C., New Delhi

The Tribunal held that proceedings initiated under Section 28 of the Customs Act before finalizing provisionally assessed bills of entry were not ... Validity of proceedings initiated u/s 28 of the CA, 1962 - N/N. 21/2012-Cus. dated 17.03.2012 - Held that: - Section 28 ibid deals with recovery of duties not levied or short levied or erroneously refunded. On perusal of the said statutory provisions, it reveals that in order to invoke the said statutory provisions, two things must be satisfied, i.e. non-levy of duty or short levy of duty - In the present case, since the assessment is provisional, the duty liability has not been determined by the Department, hence, there is no question of short levy or non-levy. Thus, proceedings initiation u/s 28, which culminated in the impugned order dated 5th March 2014 in our opinion is not sustainable and will not stand for judicial scrutiny - appeal allowed - decided in favor of appellant. Issues:1. Whether the Department can proceed to confirm duty demand and impose penalty under Section 28 before finalization of provisionally assessed bills of entry.Analysis:The appeal was against an order passed by the Commissioner of Customs where the Department initiated proceedings under Section 28 of the Customs Act, 1962, regarding the import of 'Electro Refined Copper Cathode' claiming benefits under Notification No.21/2012-Cus. The appellant admitted in the hearing that they were not eligible for the benefit claimed. The key question before the Tribunal was whether the Department could proceed with confirming duty demand and imposing penalties under Section 28 before finalizing the provisionally assessed bills of entry. The appellant argued that the proceedings under Section 28 were premature as the assessment under Section 18 had not been finalized, citing a judgment of the Hon'ble Supreme Court in a related matter.The Tribunal examined the provisions of Section 28 of the Customs Act, which deal with recovery of duties not levied or short-levied. It noted that for Section 28 to apply, there must be non-levy or short levy of duty. Since the assessment was provisional and duty liability had not been determined, there was no question of short levy or non-levy. The Tribunal referred to a judgment related to the Central Excise Act, which stated that penalty proceedings cannot be initiated without completing the assessment proceedings. Therefore, the Tribunal held that the proceedings initiated under Section 28 before finalization of the assessment were not sustainable and could not stand for judicial scrutiny.Consequently, the Tribunal found no merit in the impugned order and allowed the appeals in favor of the appellants. It concluded that the Department could take appropriate measures after finalizing the bills of entry in question.