2017 (5) TMI 1128 - AT - Customs

Issuance of SCN - scope of section 28 of CA - Classification of imported goods - thermistors - Whether no SCN u/s 28 of the CA can be issued to the appellant when the goods have been provisionally assessed and the said assessment has not been finalised u/s 18? - Held that - Section 18 of the Customs Act deals with provisional assessment of duty and Section 28 mainly deals with the recovery of dues from the concerned persons in case of short levies or non-levies of duty or erroneous refund. The SCN dated 24.4.2014 issued in this case to the appellant has not made a mention of reassessment or final assessment as per the provisions of Section 18(2) of CA, 1962, though subject goods initially were assessed and released provisionally. However, from the proceedings initiated by the SCN, it is clear that Revenue wants to have finalisation of provisional assessment , though specific mention of provisions Section 18(2) and Section 18(3) were not made. Therefore, considering the present facts, the SCN issued by the Revenue to appellant is the proceedings u/s 18(2) and 18(3) along with Section 28 of CA - the issuance of SCN for the present facts is legally valid recourse for finalisation of assessment . The original adjudicating authority will finalise provisionally assessed Bill of Entry during the fresh adjudication proceedings, which are being ordered by this order, for which the appellant shall be given opportunity of personal hearing and submission of necessary documents/evidence as admissible by law - appeal allowed by way of remand.

Summary

Issues:
1. Provisional assessment of duty and issuance of show cause notice for change in classification.
2. Applicability of Section 18 and Section 28 of the Customs Act.
3. Legal validity of the show cause notice for finalization of assessment.
4. Interpretation of relevant case laws and their application to the present case.

Issue 1: Provisional assessment of duty and issuance of show cause notice for change in classification:
The case involved an appeal against an Order-in-Appeal where the original assessment was set aside for a fresh look after finalization of a provisionally assessed Bill of Entry. The appellant imported goods and claimed a benefit of 'Nil' duty under a specific notification, but the Customs department proposed a different classification attracting duty. The Bill of Entry was provisionally assessed, and a Show Cause Notice was issued proposing a change in classification. The appellant argued that no show cause notice can be issued until the assessment is finalized, citing relevant case laws. The Revenue contended that the notice was necessary for finalizing the provisional assessment, supported by other case laws.

Issue 2: Applicability of Section 18 and Section 28 of the Customs Act:
The discussion revolved around the provisions of Section 18 dealing with provisional assessment and Section 28 regarding the recovery of dues. The appellant argued that final assessment should precede any show cause notice, while the Revenue justified the notice under Section 28 for proposing a change in classification. The Tribunal analyzed the legal framework and the necessity of issuing a notice before finalizing the assessment.

Issue 3: Legal validity of the show cause notice for finalization of assessment:
The Tribunal examined the specifics of the show cause notice issued by the Revenue and its legal validity. While the notice did not explicitly mention finalization of assessment, the Tribunal inferred that it aimed at finalizing the provisional assessment based on the proposed classification change. Citing a Gujarat High Court decision, the Tribunal concluded that the notice was a valid step towards finalizing the assessment, despite lacking specific wording related to Section 18 provisions.

Issue 4: Interpretation of relevant case laws and their application to the present case:
Both parties relied on various case laws to support their arguments regarding the issuance of show cause notices and finalization of assessments. The Tribunal carefully analyzed these precedents, particularly emphasizing a Gujarat High Court decision, to determine the legal standing of the show cause notice in the present case. The Tribunal's decision was influenced by the interpretations of these case laws and their alignment with the facts of the current dispute.

In conclusion, the Tribunal modified the impugned order to clarify that the original adjudicating authority would finalize the provisionally assessed Bill of Entry during fresh adjudication proceedings. The appellant was granted the opportunity for a personal hearing and submission of necessary documents. The appeal was disposed of accordingly, considering the legal framework, case laws, and the specific circumstances of the case.