Importer's waiver of s.28 customs duty notice in duty evasion case upheld; recovery and penalty proceedings reinstated on appeal

The dominant issue was whether recovery of customs duty and penalty could be invalidated for want of a notice under s. 28 of the Customs Act where the importer had expressly waived notice. The SC held that although issuance of a s. 28 notice is mandatory as a statutory requirement, it exists solely for the benefit of the person proceeded against and is therefore a personal right capable of waiver; it is not a public notice and confers no right on third parties. Since the importer had specifically waived notice, it could not later invoke non-issuance to defeat recovery of duty allegedly evaded. Consequently, the Tribunal's order setting aside proceedings solely on absence of s. 28 notice was reversed and the revenue's appeal was allowed.

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Issues Involved:
1. Waiver of Notice under Section 28 of the Customs Act, 1962.
2. Legality of Import by M/s. Virgo Steels.
3. Abetment by ACC in the Illegal Import.
4. Procedural Validity of the Customs Proceedings.

Issue-wise Detailed Analysis:

1. Waiver of Notice under Section 28 of the Customs Act, 1962:
The Tribunal had allowed the appeal of M/s. Virgo Steels on the ground that the non-issuance of a show-cause notice under Section 28 vitiated the proceedings. The Supreme Court, however, held that the requirement of notice under Section 28 is procedural and can be waived by the concerned party. The Court cited several precedents, including Vellayan Chettiar v. Government of Province of Madras, Dhirendra Nath Gorai v. Sudhir Chandra Ghosh, and others to establish that a mandatory statutory requirement meant for the benefit of an individual can be waived by that individual. M/s. Virgo Steels had expressly waived their right to a notice in their letter dated 30-3-1991, thus they could not later claim that the absence of such notice invalidated the proceedings. The appeal of the Revenue against M/s. Virgo Steels was allowed, and the Tribunal's order was set aside.

2. Legality of Import by M/s. Virgo Steels:
The Tribunal and the Collector had found that M/s. Virgo Steels imported steel duty-free under the Deemed Export Scheme, falsely representing that it was for a project financed by the IBRD, and subsequently sold it in the open market. The Supreme Court upheld this finding, noting that it was based on substantial evidence. The appeals by M/s. Virgo Steels questioning this finding were dismissed.

3. Abetment by ACC in the Illegal Import:
The Tribunal had allowed the appeal of ACC, holding that there was no intentional abetment by ACC in the illegal import of steel by M/s. Virgo Steels. The Supreme Court affirmed this finding, noting that ACC had informed M/s. Virgo Steels about the abandonment of the expansion project and had refused to issue a certificate justifying the import. The appeal by the Revenue against ACC was dismissed.

4. Procedural Validity of the Customs Proceedings:
The Supreme Court addressed the procedural aspects under Section 28 of the Customs Act. It held that while the absence of a notice might invalidate the procedure, it does not take away the jurisdiction of the proper Officer to initiate action for the recovery of duty. The power to recover escaped duty is derived from the charging Section 12 of the Act, and not from Section 28. Thus, any procedural irregularity in issuing a notice does not denude the Officer of jurisdiction but makes the proceedings voidable, not void.

Conclusion:
The Supreme Court allowed the appeal of the Revenue against M/s. Virgo Steels, restoring the Collector's order, and dismissed the appeals of M/s. Virgo Steels and the Revenue against ACC. The procedural requirement of notice under Section 28 was found to be waivable, and the findings on the illegality of the import and the lack of abetment by ACC were upheld.

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