2017 (6) TMI 696 - AT - Customs

Whether, before finalization of Bill of Entry, which was provisionally assessed under Section 18 ibid, can the Department proceed against the importer to confirm the differential duty demand and for imposition of penalty? Held that - Section 28 of the Act contemplates issuance of SCN for recovery of duties which were not levied or short levied. For issuance of SCN under such statutory provision, the duty liability is required to be ascertained by the proper officer - In the present case, since the assessment is provisional and the proper duty liability has not been quantified/ ascertained as per the provisions of Section 18 ibid, there is no question of short levy or non-levy of duty - the proceedings initiated u/s 28, which culminated in the impugned order dated 17.12.2013, will not be sustainable. Hon ble Supreme Court in the case of ITC Ltd. 2006 (10) TMI 149 - SUPREME COURT OF INDIA held that proceedings under Section 11 A of the CEA, 1944 (perimateria with Section 28 ibid) cannot be initiated without completing the assessment proceedings - Since the present proceedings were initiated u/s 28 ibid before finalization of the assessment, the same is not maintainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Provisional assessment of imported goods.
2. Proper issuance of show cause notice and adjudication order under Section 28 of the Customs Act, 1962.
3. Confirmation of differential duty demand and imposition of penalties before finalization of Bill of Entry.

Analysis:

Provisional Assessment of Imported Goods:
The appellant imported P-68 watch movement and declared a low value for assessment purposes. The Customs Department detained the goods under Section 110 of the Customs Act, 1962, due to suspicion of undervaluation. The goods were provisionally assessed, and show cause proceedings were initiated for enhancement of value, payment of differential Customs duty, and penalties. The appellant argued that the assessment was provisional and relied on legal judgments to support this claim.

Proper Issuance of Show Cause Notice and Adjudication Order:
The appellant contended that the show cause notice and adjudication order under Section 28 of the Customs Act, 1962, were not justified as the assessment was provisional and had not been finalized. The Department argued that the assessment was not provisional under Section 18 of the Act, leading to the confirmation of duty demand, confiscation of goods, and penalties. The Tribunal analyzed the provisions and legal precedents to determine the validity of the proceedings.

Confirmation of Differential Duty Demand and Imposition of Penalties:
The Tribunal considered whether the Department could proceed against the importer to confirm the differential duty demand and impose penalties before finalization of the Bill of Entry. It was observed that the Bill of Entry was provisionally assessed, and the duty liability had not been quantified as per Section 18. The Tribunal held that proceedings initiated under Section 28 before finalization of the assessment were not sustainable. Citing legal judgments, the Tribunal emphasized the need for completing assessment proceedings before initiating penalty proceedings.

The Tribunal concluded that the proceedings initiated before finalization of the assessment were not maintainable. The Department was advised to take appropriate measures after finalization of the Bill of Entry. Consequently, the impugned order was set aside, and the appeals were allowed in favor of the appellants.