Customs recovery demands require valid notice, timely adjudication, and strict adherence to the scope of the initiating notice.

Customs recovery proceedings require a valid show cause notice under Section 28, because the notice must clearly set out the case and give the noticee a fair opportunity to defend; a bare demand is insufficient. Adjudication must also occur within a reasonable time, since an inordinate delay can prejudice the defence, especially where records are unavailable and witnesses have retired. The adjudicating authority must remain within the scope of the initiating notice and cannot confirm a demand beyond the amount specified unless the notice is amended or supplemented. These requirements reflect mandatory compliance with natural justice in customs demand proceedings.

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Issues: (i) Whether recovery proceedings were sustainable in the absence of a valid show cause notice under Section 28 of the Customs Act, 1962; (ii) Whether adjudication after an inordinate delay of about twenty-three years was sustainable in law; (iii) Whether the demand could be confirmed beyond the amount specified in the notice initiating the proceeding.

Issue (i): Whether recovery proceedings were sustainable in the absence of a valid show cause notice under Section 28 of the Customs Act, 1962.

Analysis: Section 28 requires a noticee to be called upon to show cause before any demand for short-levy, non-levy, or erroneous refund is confirmed. A bare demand for payment does not satisfy that requirement, because a show cause notice is the instrument that informs the noticee of the precise case and affords an opportunity of defence. The provision is mandatory and embodies the rule of audi alteram partem.

Conclusion: The recovery proceeding was not legally sustainable and was vitiated for want of a valid show cause notice.

Issue (ii): Whether adjudication after an inordinate delay of about twenty-three years was sustainable in law.

Analysis: The delay between the demand notice and adjudication was exceptionally long and caused real prejudice, as records had become unavailable and relevant personnel had retired. Fair hearing includes determination within a reasonable time so that the defence remains effective. An adjudication after such a prolonged period defeats the purpose of notice and results in grave unfairness.

Conclusion: The adjudication could not be sustained because the delay rendered the proceeding unjust and prejudicial.

Issue (iii): Whether the demand could be confirmed beyond the amount specified in the notice initiating the proceeding.

Analysis: The notice fixed the scope of the proceeding and the adjudicating authority was bound by its terms. Confirmation of a higher amount than that stated in the initiating notice amounted to exercise of jurisdiction beyond the notice and was not supported by any amended or supplementary notice.

Conclusion: The demand could not be confirmed beyond the amount specified in the initiating notice.

Final Conclusion: The proceeding was invalid on multiple independent grounds, namely absence of a valid show cause notice, excessive delay, and confirmation beyond the scope of the initiating notice, and the assessee succeeded.

Ratio Decidendi: In customs recovery matters, a demand can be validly sustained only if a mandatory show cause notice is issued under Section 28, the adjudication is concluded within a reasonable time consistent with fair hearing, and the adjudicating authority remains within the scope of the notice that initiates the proceeding.

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