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 furnished with the showcause notice, raising procedural fairness and disclosure issues; the adjudicator's record contradicted his assertion that RUDs were supplied. Reliance on a prior Chennai Bench order supporting setaside of similar demands was invoked. Consequently the tribunal set aside the duty demands, appropriation of deposits, imposed penalties and confiscation of imported recycled LDPE granules, and directed consequential reliefs to the appellants.

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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.

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