2006 (5) TMI 381 - AT - Central Excise

Summary

Issues:
Appeals against Orders-in-Original dropping proceedings initiated by adjudicating authority. Allegation of incorrect dropping of proceedings by adjudicating authority. Appellants declared incorrect value for imported consignment of cloves. Subsequent self-correction by appellants and payment of differential duty and interest. Show cause notices issued demanding duty on re-assessment. Confirmed duty, penalty, and fine imposed by adjudicating authority. Interpretation of Section 28(2B) of the Customs Act, 1962 regarding self-payment of duty and interest. Violation of Section 28(2B) by issuing show cause notice after self-payment. Dismissal of appeals by Revenue.

Analysis:
The judgment revolves around two appeals directed against Orders-in-Original issued by the adjudicating authority, dropping proceedings initiated against the appellants. The Revenue contested the dropping of proceedings, arguing that the adjudicating authority erred in doing so. The core issue in both cases was the declaration of incorrect value by the appellants for imported cloves, leading to subsequent self-correction and payment of differential duty and interest. Show cause notices were then issued, demanding duty on re-assessment, resulting in the confirmation of duty, imposition of penalty, and fine by the adjudicating authority.

Upon examination, it was found that the appellants had voluntarily paid the differential duty and interest for the misdeclared consignments, falling under the purview of Section 28(2B) of the Customs Act, 1962. This section allows the person liable to pay duty to self-pay the amount before the issuance of a notice, negating the necessity for a show cause notice. The judgment highlighted that the act of self-payment by the respondents absolved them from the obligation of a show cause notice, as the duty had been accepted by the department.

The court emphasized that the show cause notice issued post the self-payment on 17-3-2005 contravened Section 28(2B) of the Customs Act, 1962. As per the legal interpretation of the section, the issuance of a show cause notice after self-payment by the liable party is unwarranted. Consequently, the appeals filed by the Revenue were deemed meritless, leading to their dismissal. The judgment concluded by affirming the legal position regarding self-payment of duty and interest under Section 28(2B) and upheld the dismissal of the appeals by the Revenue.