2017 (7) TMI 633 - HC - Customs

Provisional assessment - applicability of Section 28 of the Act of 1962 - Held that - the petitioner had applied under Section 18(1) for the purpose of assessment. Section 18(1) of the Customs Act, 1962 permits the importer, where he is unable to make selfassessment, to make a request to the proper officer for assessment. In the present case, the petitioner had done so. Under Section 18(2) of the Act of 1962, it is the duty of the officer concerned to inform the duty leviable on the goods imported as finally assessed. In the present case, a final assessment of the duty has not happened. Nothing has been placed on record to suggest otherwise. The Customs Authorities have invoked Section 28 of the Act of 1962 without a final order of assessment. Section 28 of the Act of 1962 allows the Customs Authorities to recover duties not levied or short levied or erroneously refunded. In the present case, none of the situations contemplated under Section 28 has arisen. The duty is yet to be finally assessed for the petitioner to be said to be guilty of not paying the duty or paying short levy of the duty payable. The question of refund does not arise at all. Therefore, a failure contemplated under Section 28 of the Act of 1962 not happening, the authorities should not have invoked Section 124 of the Act of 1962. Section 124 of the Act of 1962 allows issuance of show-cause notice before confiscation of goods. The authorities could not have invoked Section 28 read with Section 124 of the Act of 1962 in the facts of the present case. The overwhelming inference, therefore, is that the impugned show-cause notice was issued without jurisdiction. The final order emanating out of the show-cause notice consequently suffers from the same defect - petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Invocation of Section 28 of the Customs Act, 1962 without final adjudication under Section 18(2).
2. Breach of principles of natural justice in passing the impugned order.
3. Lack of jurisdiction in issuing the show-cause notice-cum-demand notice.
4. Maintainability of a writ petition despite the existence of a statutory alternative remedy.
5. Validity of the final order of adjudication consequent upon a show-cause notice.

Issue 1:
The petitioner argued that the authorities cannot invoke Section 28 of the Customs Act, 1962 without a final assessment under Section 18(2). The petitioner had applied under Section 18(1) for assessment, but final adjudication had not been completed. The Court found that the authorities had not made a final assessment of the duty payable, making the invocation of Section 28 premature and unjustified.

Issue 2:
The Court noted a breach of principles of natural justice in passing the impugned order. The petitioner was not given a further opportunity of hearing after the matter was adjourned sine die on April 17, 2014. The impugned order dated February 27, 2015 was passed without adequate notice to the petitioner, violating the principles of natural justice.

Issue 3:
The Court considered the lack of jurisdiction in issuing the show-cause notice-cum-demand notice. The petitioner had applied under Section 18(1) for assessment, but a final assessment had not been made. The authorities invoked Section 28 without a final order of assessment, which was deemed improper. Section 28 allows recovery of duties not levied, but since no final assessment had occurred, the invocation of Section 124 for show-cause notice was unwarranted.

Issue 4:
The Court clarified that a writ petition challenging an order by a statutory authority is maintainable even if a statutory alternative remedy of appeal exists. The petitioner's contention that the impugned order was without jurisdiction was found valid. Despite the availability of a statutory alternative remedy, a writ petition is maintainable if the impugned order is shown to be without jurisdiction or in breach of principles of natural justice.

Issue 5:
The Court set aside the impugned order and directed the Customs Authorities to complete assessment proceedings in accordance with the law promptly. The DRI and Customs Authorities were allowed to take further steps if any infractions were found after the final assessment. The impugned order was deemed to lack jurisdiction, and the show-cause notice was considered invalid.

The judgment in WP No. 487 of 2015 was disposed of with no order as to costs.