2026 (2) TMI 301 - AT - Customs

Maintainability of import duty demand on recycled LDPE granules challenged over missing reliedupon documents; demands and confiscation set aside

Maintainability of a demand under Section 28 was contested where assessment remained provisional and reliedupon documents (RUDs) were allegedly not ... Maintainability of demand u/s 28, when assessment is provisional - imported items viz. Recycled LDPE Granules - Provision of relied upon documents (RUDs) and procedural fairness in adjudication - payments made voluntarily by importers - Consequences for appropriation of deposits, confiscation and penalties where demand is unsustainable - HELD THAT:- In this case, we find that though relied upon documents have been mentioned in the SCN, it is claimed by the Assessee that such relied upon documents have not been given to them along with the SCN, as against which the Adjudicating Authority asserts that the RUDs were given along with the SCN, but the same does not go well with his own findings at paras 3.A & B of the Οrder-in-Original. Ld. Advocate has placed reliance on a decision/Order of this very Chennai Bench in the case of M/s. Shami Impex and Others Vs Commissioner of Customs [2024 (7) TMI 562 - CESTAT CHENNAI] wherein the Bench has set aside the demands raised under Section 28 ibid. Thus, we have to hold that the demands, the appropriation of deposits towards duty, the penalties imposed on the Appellants and the confiscation of the goods have to be set aside, which we hereby do. The Appellants are eligible for consequential reliefs as per law. The Appeals are disposed of accordingly. Issues: Whether a demand and show cause notice under Section 28 of the Customs Act, 1962 issuing demands, confiscation and penalties can be sustained where the imports were provisionally assessed and assessment had not been finally determined, and whether the consequential appropriation of deposits, confiscation and penalties must be set aside.Analysis: The Tribunal examined prior decisions of constitutional and High Courts and coordinate benches which hold that Section 28 for recovery of duties operates only after final assessment; issuance of a demand-cum-show cause notice under Section 28 before finalisation of assessment is legally defective. The Tribunal found that the factual matrix of the present appeals aligns with those precedents: the consignments were provisionally cleared pending finalisation, relied-upon documents were not available to the importers with the SCN, and therefore the prerequisites for invoking Section 28 were not fulfilled. Given that the demand under Section 28 fails for lack of a final assessment, the downstream actions of appropriating deposits towards duty, ordering confiscation under Section 111(m) and imposing penalties under Sections 114A/114AA cannot be sustained.Conclusion: The demands raised under Section 28 of the Customs Act, 1962, the appropriation of deposits towards duty, the confiscation of goods under Section 111(m) and the penalties under Sections 114A and 114AA are set aside; the appellants are entitled to consequential reliefs as per law and the appeals are allowed.