confiscation of goods by DRI after payment of duty and interest

[Muthukumar Muthunarasimhan]

Dear Experts,

I am having one case, where the importer has paid the differential IGST and interest before issuing Show cause Notice by DRI and the importer has sent the letter to DRI for waiver of further Show Cause Notice, since the liability is settled in full. But, after waiver of Show Cause Notice by DRI for duty and interest U/s 28(2) of the Customs Act, ( Duty and interest paid on 28.11.2019 and Show cause Notice for confiscation and penalty issued on 4.12.2019 ) they have issued show cause notice for reclassification and confiscation, penalty and personal penalty u/s 111(m) and 112 (a) of the Act. Moreover, the importer did not sign and send any supratnama and undertaking for seizure which was sent by DRI earlier.

My questions are as follows;

1. Is such Show Cause Notice is valid in the eyes of law when the entire liability has been paid before the date of show cause Notice?

2. Is it valid seizure under Customs Act and confiscation proceedings in this aspect?

[KASTURI SETHI]

Yes. SCN is valid. If the contravention is proved, the Adjudicating Authority may pass the order, " ______ since the goods are not available for confiscation, a penalty of Rs.____ is imposed upon the Noticee under Section _____.

[YAGAY andSUN]

Agreed that Customs Duty (IGST) along with interest at applicable rate had been paid by you before issuance of SCN. However, to appropriation of IGST so deposited, the DRI had issued a SCN. You will have to submit reply and pray to not imposing any penalty since IGST and interest was paid earlier. Further, DRI may impose penalty @ 1% as law related to penalty was amended long back.

AI Summary

Payment of duty before show cause notice does not preclude confiscation or penalty proceedings under customs law. An importer paid differential IGST and interest before issuance of a DRI show cause notice; DRI waived SCN for duty and interest under Section 28(2) but issued a subsequent SCN for reclassification, confiscation and penalties under Sections 111(m) and 112(a). The record states an SCN remains valid despite prior payment, and the adjudicating authority can impose a monetary penalty where goods are unavailable for confiscation; DRI may also pursue appropriation and penalty proceedings notwithstanding earlier deposit.