2006 (2) TMI 178 - HC - Customs

Validity Of Show Cause Notice issued u/s 28(1) - demand for short-levy - Adjudication - clearance of parts for computer and data cartridges - penalty u/s 112(a)/114A - HELD THAT - The law is well settled that a show cause notice under the provisions of Section 28 of the Act for payment of customs duties not levied or short-levied or erroneously refunded can be issued only subsequent to the clearance of the goods u/s 47 of the Act vide Union of India v. Jain Shudh Vanaspati Ltd. 1996 (8) TMI 108 - SUPREME COURT . Therefore, as rightly held by the Tribunal, if the contention of the appellant's counsel that when the goods were already cleared, no demand notice can be issued u/s 28 of the Act is accepted, we will be rendering the words where any duty has been short-levied as found in Section 28(1) of the Act as unworkable and redundant, inasmuch as the jurisdiction of the authorities to issue notice u/s 28 of the Act with respect to the duty, which has been short-levied, would arise only in the case where the goods were already cleared. In view of the clear finding with regard to the mis-declaration and suppression of value, which led to the under-valuation and proposed short-levy of duty, we do not see any lack of jurisdiction on the part of the adjudicating authority to issue notice u/s 28(1) of the Act. Hence, finding no question of law much less substantial question of law that arises for consideration of this Court, the appeal stands dismissed. Consequently, connected C.M..P. also stands dismissed.

Summary

Issues:
1. Reopening of assessment based on fresh Show Cause Notice under Section 28(1) of the Customs Act.
2. Validity of using parallel invoices for enhancing value without foreign exchange remittance.
3. Tribunal's refusal to consider a previous decision regarding confiscation and redemption fine applicability.

Analysis:

Issue 1 - Reopening of Assessment:
The appellant challenged the Tribunal's decision allowing the reopening of assessment through a fresh Show Cause Notice under Section 28(1) of the Customs Act. The Tribunal justified its decision by emphasizing that the jurisdiction to issue such a notice arises post-clearance of goods, as per established legal principles. Citing the case of Union of India v. Jain Shudh Vanaspati Ltd., the Court reiterated that the authority's power to issue a notice under Section 28(1) is valid in cases of short-levied duty even after clearance. The Court found no lack of jurisdiction in the adjudicating authority's actions and upheld the Tribunal's decision.

Issue 2 - Validity of Using Parallel Invoices:
Regarding the use of parallel invoices to enhance value without foreign exchange remittance, the Tribunal differentiated between invoices issued before and after the filing of Bills of Entry. It held that post-filing invoices could not be considered for value enhancement. The Tribunal directed the original authority to recompute duty liability based only on pre-filing parallel invoices. It rejected the appellant's argument against imposing fines on already cleared goods, affirming the confiscation of offending goods and the imposition of penalties under Section 112(a) of the Act.

Issue 3 - Refusal to Consider Previous Decision:
The Tribunal's refusal to consider a prior decision regarding the applicability of confiscation and redemption fine led to the appellant's appeal. However, the Court deemed the factual findings, including the seizure of incriminating documents and the mis-declaration of value, as questions of fact not subject to appeal. Consequently, the Court dismissed the appeal, stating the absence of any substantial question of law for consideration.

In conclusion, the Court upheld the Tribunal's decision on the issues of reopening assessment under Section 28(1), the validity of using parallel invoices, and the refusal to consider the previous decision. The appeal was dismissed, affirming the confiscation of goods, imposition of penalties, and the re-computation of duty liability based on pre-filing parallel invoices.