2009 (2) TMI 120 - AT - Customs

Demand and Recovery of Customs Duty show cause notice should necessarily state a proposal for levy of duty which is necessity of law since no such notice was issued to the Respondent - therefore, Revenue s grievance that duty shall be payable cannot be answered affirmatively Further, It may be stated that if the appeal of Revenue is canvassed to be a case of realisation of duty as well as confiscation with option given for payment of redemption fine in lieu of fine, the learned Commissioner who had issued show cause notice on 28-11-2007 should have taken benefit of decision of Apex Court in the case of Jagdish Cancer and Research Centre decided on 2-8-2001 decision in the case of Metal Forgings decided on 22-11-2002. But he has not taken at all any care as to the recovery of the duty in the present case. Therefore, learned Chairman of Central Board of Excise & Customs is expected to deal the matter appropriately as to loss of Revenue, if any, that has resulted in the present case that remained un-recovered.

Issues:
- Whether the show cause notice must indicate the amount of customs duty demanded for proper realization?
- Whether the provisions of Sections 124 and 125 of the Customs Act, 1962 require the issuance of a show cause notice before confiscation of goods?
- Whether the failure to issue a show cause notice proposing the levy of customs duty renders the demand unsustainable?

Analysis:

1. Issue 1 - Show Cause Notice and Demand of Customs Duty:
The appeal concerned the demand for customs duty despite the absence of a specific proposal in the show cause notice. The Respondent argued that the absence of a demand in the notice meant no real demand was made. The Appellant contended that duty realization for confiscable goods is mandatory under Section 125 of the Customs Act, even if not specified in the notice. The Tribunal analyzed the provisions of Sections 124 and 125, emphasizing the importance of the notice indicating the duty demanded. The judgment in Metal Forgings case highlighted the necessity of the notice specifying the amount of duty, a requirement not excluded by Section 125(2) of the Act.

2. Issue 2 - Provisions of Sections 124 and 125 of Customs Act, 1962:
The Tribunal delved into Sections 124 and 125 of the Customs Act, 1962, which mandate the issuance of a show cause notice before confiscation of goods. The show cause notice in this case was issued under Section 124 on 28-11-2007, aligning with the procedural requirements. Section 125(2) imposes the duty liability in addition to any fine imposed, necessitating a thorough understanding of Section 124 to invoke Section 125. The principles of natural justice embedded in Section 124 are crucial for invoking the duty realization provision of Section 125(2).

3. Issue 3 - Sustainability of Demand without Specified Notice:
The Tribunal compared the decisions in Metal Forgings and Jagdish Cancer & Research Centre cases to determine the sustainability of the demand without a specified duty in the notice. While the Jagdish Cancer case emphasized the duty proposal in the notice as integral to the proceedings, the absence of such a proposal in the present case made the demand unsustainable. The Tribunal highlighted the distinction between the two cases, emphasizing the necessity of the notice under Sections 124 and 125 for proper levy of duty.

4. Conclusion:
Ultimately, the Tribunal dismissed the Revenue's appeal, noting the failure to issue a notice proposing the levy of customs duty. The judgment underscored the importance of complying with procedural requirements, especially the necessity of the show cause notice specifying the duty demanded. The decision serves as a reminder of the essential procedural safeguards under the Customs Act, ensuring fair treatment and adherence to legal principles in duty realization proceedings.

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