2018 (12) TMI 735 - HC - Customs

Recovery of dues - Section 28 of the Customs Act, 1962 - Held that - Clause (a) to sub-section 1 of Section 28 of the Customs Act envisages a proper officer requiring the assessee to show cause why the duty or the interest which has not been levied or short paid or short levied or erroneously refunded, should not be recovered. The second proviso to said clause, however, provides that before issuing such notice, the proper officer shall hold pre-notice consultation with a person chargeable with duty or interest in such manner as may be prescribed. The impugned communication is in the nature of pre-notice consultation. - if the petitioner does not accept the request of the Authority in said notice and if the Authority wishes to seek recovery, the procedure in terms of Section 28 shall be followed. Petition disposed off.

Summary

Issues:
1. Challenge to a communication from the Dy. Commissioner of Customs raising a demand.
2. Interpretation of Section 28 of the Customs Act in relation to recovery of duties.
3. Requirement of pre-notice consultation before issuing a recovery notice.

Analysis:
1. The petitioner challenged a communication from the Dy. Commissioner of Customs dated 30.10.2018, raising a demand of &8377; 71,87,475. The petitioner contended that the demand was made without granting a hearing and before the dues were crystallized. The Department argued that the communication fulfilled the requirement of the second proviso to Clause (a) of sub-section 1 of Section 28 of the Customs Act, 1962. The Court noted the petitioner's submission that no further order was passed by the Authorities before seeking recovery.

2. The Court delved into the relevant provision of Section 28 of the Customs Act, which deals with the recovery of duties not levied or short-levied. It highlighted that the proper officer must serve a notice on the person chargeable with the duty, requiring them to show cause before recovery. The second proviso to this clause mandates pre-notice consultation with the person chargeable with duty or interest. The Department argued that the impugned communication was in the nature of pre-notice consultation, and if the petitioner does not comply, the recovery procedure under Section 28 would be followed.

3. The Court accepted the Department's argument that the impugned communication served as a pre-notice consultation. It clarified that if the petitioner does not accept the Authority's request and if recovery is sought, the procedure under Section 28 would be initiated. The Court emphasized that the petitioner could raise all contentions before the proper office if such a situation arises. Consequently, the Court disposed of the petition, stating that no further order was necessary based on the clarification provided by the Department.