Pre import conditions

[Muthukumar Muthunarasimhan]

As per earlier Notification in the customs act my client didn't comply the pre import conditions and cleared.the goods without payment of IGST . This happened for wrong interpretation of Notification no intention to evade tax. Now, DRI issued show cause notice and paid full IGST and relevant interest. Now DRI issued show cause notice for equal penality. Which provisions and case laws we can quote in our reply for waiver of penalty?

[KASTURI SETHI]

Read section 28(2) of the Customs Act provided that full duty should be paid and full interest should be paid and nomala fide intention is involved. Now SCN has been issued invoking the ingredients of suppression of fact, fraud etc. your client can pay 15% of penalty under sub-section 5 of Section 28 of the Customs Act, 1962 within 30 days from the receipt of the SCN.

Burden of proof is cast upon the Noticee to prove that they had not acted in a mala fide manner.

Pl. note that SCN issued by DRI is always in letter and spirit of law. DRI is known for fool-proof investigation and issuance of SCN.

[SPIROTECHHEATEXCHANGERS PVTLTD]

Dear Muthukumar

Pre import condition , Please see the condition of pre-import inserted by Notification No.79/2017-Cus dated 13-10-2017 in Notification No.18/2015-Cus has been declared unconstitutional by the Hon’ble Gujarat High Court vide its Order Noc/sca/14558/2018 dated 4th February 2019 =2019 (2) TMI 1445 - GUJARAT HIGH COURT. The condition of pre-import inserted by Notification No.79/2017-Cus dated 13-10-2017 in Notification No.18/2015-Cus has been declared unconstitutional by the Hon’ble Gujarat High Court vide its Order Noc/sca/14558/2018 dated 4th February 2019 =2019 (2) TMI 1445 - GUJARAT HIGH COURT.

I have received same from DRI letter but in response reference High Court order submit , we have not received any letter from DRI .

Please note :notification dated 10th January, 2019 being Notification No.53/2015-20, the Government has found deletion of condition (xii) to be in public interest, and, therefore, now the controversy involved in the present case is limited to a period of about thirteen months only, between 13.10.2017 and 9.1.2019.

[YAGAY and SUN]

The Supreme Court has stayed the Gujarat High Court Order but refrain DRI to issue notices to the Traders of Gujarat. It is a latest Development.

AI Summary

Pre import condition invalidation may limit customs penalty exposure where tax and interest were paid and constitutional challenge succeeded.
Non compliance with a pre import condition resulted in clearance without IGST; after payment of IGST and interest, DRI issued a show cause notice invoking Section 28 penalties, noting suppression or mala fide conduct, while the noticee bears the burden to prove absence of mala fide. A High Court declared the pre import condition unconstitutional for the limited period it operated, and a higher court stayed that declaration while restricting enforcement measures against certain traders, affecting the temporal scope of penalty exposure.