Customs investigation payments may be adjusted against final adjudicated liability; follow-up letters are not always Section 28 demand notices.

A communication issued after an importer's authorised representative expressed willingness to pay differential customs duty was treated as a follow-up during investigation, not as a formal demand notice under Section 28 of the Customs Act. Amounts deposited during investigation, even if paid under protest, do not prevent statutory adjudication and may be adjusted against any final liability determined later. On that basis, immediate refund was declined, and the deposited sum was left to be appropriated, if warranted, against the outcome of adjudication.

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Issues: (i) Whether the impugned communication dated 12.12.2025 was a formal demand notice under Section 28 of the Customs Act, 1962. (ii) Whether the amount of Rs. 3,20,87,688/- deposited during investigation was liable to be refunded or could be appropriated towards any eventual adjudicated liability.

Issue (i): Whether the impugned communication dated 12.12.2025 was a formal demand notice under Section 28 of the Customs Act, 1962.

Analysis: The communication was issued after the petitioner's authorised representative expressed willingness to pay differential duty and requested issuance of a letter. It was treated as a follow-up communication during investigation, not as a statutory demand notice in the sense contemplated by Section 28.

Conclusion: The communication was not treated as a formal demand notice under Section 28.

Issue (ii): Whether the amount of Rs. 3,20,87,688/- deposited during investigation was liable to be refunded or could be appropriated towards any eventual adjudicated liability.

Analysis: The payment was made after the petitioner itself recomputed the differential duty, and the Court held that such an amount, whether paid under protest or otherwise during investigation, does not bar the statutory adjudication process. The amount may be adjusted against the final liability, if any, determined in adjudication, and refund was declined at this stage.

Conclusion: Refund was declined and the deposited amount was permitted to be appropriated towards any eventual demand arising from adjudication.

Final Conclusion: The petitioner obtained quashing of the impugned communication dated 12.12.2025, but no immediate refund was granted and the disputed amount was left to be dealt with in the forthcoming adjudicatory process.

Ratio Decidendi: Amounts paid during investigation may be retained and adjusted against the final liability determined in adjudication, and a communication issued as a consequence of a taxpayer's own willingness to pay differential duty is not necessarily a formal demand notice under Section 28 of the Customs Act, 1962.

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