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of <h1>Revenue cannot issue dual show cause notices under Sections 28(1) and 28(4) for identical facts</h1> <h3>M/s. Ismartu India Pvt. Ltd. Versus Union Of India And Others</h3> M/s. Ismartu India Pvt. Ltd. Versus Union Of India And Others - 2025:DHC:1478 - DB 1. ISSUES PRESENTED and CONSIDEREDThe Court considered the following core legal questions:i. Whether the issuance of a subsequent Show Cause Notice (SCN) dated 01 September 2023 under Section 28 (4) of the Customs Act, 1962 is valid when a prior SCN dated 25 July 2023 under Section 28 (1) had already been issued on a similar factual matrix.ii. Whether the impugned SCN satisfies the requirements of Section 28 (4) of the Customs Act, specifically regarding allegations of collusion, deliberate misrepresentation, or withholding of crucial information.iii. Whether the issuance of the impugned SCN constitutes a 'change of opinion' by the authorities, rendering it unsustainable.iv. Whether the impugned SCN can be considered a supplementary notice under the Notification No. 42 of 2019 Customs (NT) dated 18 June 2019.2. ISSUE-WISE DETAILED ANALYSISi. Validity of Issuance of Subsequent SCN under Section 28 (4)The legal framework under Section 28 of the Customs Act distinguishes between notices issued under subsection (1) and subsection (4), with the latter being applicable only in cases involving collusion, wilful misstatement, or suppression of facts. The Court noted that both SCNs were issued based on an almost identical factual matrix and relied on the same reports by a Chartered Engineer. The issuance of two SCNs under different subsections, when one can only operate in the absence of the conditions prescribed in the other, was deemed unsustainable.ii. Satisfaction of Requirements under Section 28 (4)The Court examined whether the impugned SCN fulfilled the criteria of Section 28 (4), which necessitates allegations of collusion, wilful misstatement, or suppression of facts. The Court found that the Respondents did not substantiate claims of collusion or wilful misstatement and that the classification dispute did not amount to suppression. The complete disclosure of goods by the Petitioner negated any claim of suppression.iii. Change of OpinionThe Court referred to precedents from the Hon'ble Supreme Court on 'change of opinion,' emphasizing that a mere change of opinion cannot justify reassessment. The issuance of two SCNs under different sections for the same set of facts was seen as a change of opinion, rendering the impugned SCN unsustainable.iv. Supplementary Notice under Notification No. 42 of 2019The Respondents argued that the impugned SCN was a supplementary notice under the 2019 notification. However, the Court noted the Respondents' failure to specify under which head the notice was issued as a supplementary notice. The Court rejected this argument, stating that Section 28 posits the issuance of a SCN under either subsection (1) or (4), not both.3. SIGNIFICANT HOLDINGSThe Court held that the issuance of the impugned SCN under Section 28 (4) was unsustainable due to the following reasons:- The issuance of two SCNs under different subsections for the same factual matrix is not permissible.- The impugned SCN did not satisfy the requirements of Section 28 (4) regarding collusion, wilful misstatement, or suppression of facts.- The issuance of the impugned SCN constituted a change of opinion by the authorities.- The impugned SCN could not be considered a supplementary notice under the 2019 notification.The Court allowed the petition, setting aside the impugned SCN under Section 28 (4) and disposing of the pending applications.
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