2021 (9) TMI 1135 - AT - Customs

Levy of penalty - Scope of the Show Cause notice (SCN) - corrigendum to the SCN - Misdeclaration of quantity in the impugned consignments - shifting of goods to an unit in free trade warehousing zone in Chennai - breach of trust - HELD THAT - In the instant case a show cause notice was issued on 29.07.2020. The office of the Commissioner of Customs, Chennai III have vide letter dt.11.09.2020 informed the Additional Commissioner of Customs of Chennai VII Commissionerate that duty with interest and penalty has been paid in full within 30 days of the receipt of the demand cum show cause notice;the proceedings are deemed to be conclusive in respect of the matters stated therein under Section 28 (6) of the Customs Act, 1962; and that necessary order in this regard be issued - the payment of differential duty penalty and interest has been made on 28.08.2020 within one month of the issue of the show cause notice and the adjudicating authority was duly informed that corrigenda dt.28.09.2020 and 01.10.2020 have been issued much after the provisions of Section 28 have been complied with - the provisions of Section 28 (5) have been fully complied and have been endorsed by the authority who has investigated the case and issued the show cause notice. Under these circumstances, revision of show cause by way of Corrigenda, aftersuch compliance and subsequent adjudication of the case is not permissible. It defeats the very purpose of the provisions of Sections 28(5) and Section 28(6) of the Customs Act, 1962. It amounts to breach of Trust and defeats the very purpose of the provisions of Sections 28(5) and Section 28(6) of the Customs Act, 1962, which understandably, is to reduce the litigation. It is a settled principle of law that a corrigendum cannot be issued altering the issues causing undue disadvantage to the Noticee. The corrigenda to the SCN were issued well after the compliance contemplated in sub-section (5) of Section 28 of the Customs Act, 1962 has been made and accepted. No reasons whatsoever have been discussed in the OIO as to why the compliance under sub-section (5) of Section 28 was not accepted and as to why the proceedings were not treated as final in terms of sub-section (6) of Section 28.Therefore, the corrigenda issued and the OIO are to be held to have been issued without jurisdiction and without authority of law. The penalty was imposed under Section 114A, even though the same was not proposed in the Show Cause Notice. Therefore, the impugned order suffers from legal infirmities and such an order cannot be upheld. In this case, the appellants having adhered to the provisions of Section 28 of the Customs Act, 1962 have rightful claim as per the provisions of Section 28(6) ibid. The issue need to be deemed to have been finalised. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Misdeclaration of quantity in imported goods
2. Compliance with provisions of Section 28(5) and Section 28(6) of Customs Act, 1962
3. Validity of corrigenda to show cause notice
4. Imposition of penalty under Section 114A without proposal in the Show Cause Notice

Analysis:

Issue 1: Misdeclaration of quantity in imported goods
The appellants imported goods and shifted them to a free trade warehousing zone in Chennai. The department found misdeclaration of quantity in the consignments, leading to a show cause notice proposing confiscation of goods, revision of value, and penalties. The appellants paid the differential duty, interest, and penalty, requesting conclusion of the matter under Section 28(6) of the Customs Act, 1962.

Issue 2: Compliance with provisions of Section 28(5) and Section 28(6) of Customs Act, 1962
The appellants complied with Section 28(5) by paying duty, interest, and penalty within 30 days of the show cause notice. The Commissioner informed that the proceedings were conclusive under Section 28(6). However, corrigenda were issued after compliance, seeking to revise the show cause notice, which was deemed impermissible as per the Act.

Issue 3: Validity of corrigenda to show cause notice
The Tribunal held that issuing corrigenda after compliance with Section 28(5) and without challenging the closure of the case breached trust and defeated the purpose of reducing litigation. The corrigenda were issued without proper authority and were deemed to be without jurisdiction, as the compliance had been accepted and the proceedings should have been concluded under Section 28(6).

Issue 4: Imposition of penalty under Section 114A without proposal in the Show Cause Notice
The Tribunal noted that penalty under Section 114A was imposed without being proposed in the Show Cause Notice, rendering the impugned order legally infirm. The appellants, having followed the provisions of Section 28, were entitled to the finality of the issue under Section 28(6), leading to the setting aside of the impugned order.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal with consequential relief as per law. The judgment emphasized the importance of adhering to the procedural requirements of the Customs Act to ensure fairness and legal validity in customs proceedings.