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2024 (10) TMI 1410 - AT - CustomsMisdeclaration of imported polished marble slabs as unpolished slabs - as alleged that during physical verification, quantity of 51.85 Sqm (slabs) were found in excess - customs duty demanded along with interest and imposed on the importer and other co-noticees' Importer admittedly paid total customs duty as prior to issue of show cause notice and after issue of show cause notice along with interest and 15% penalty and requested to close the proceedings in view of Section 28(5) and 28(6) of the Customs Act, 1962 - Commissioner instead of closing the proceedings under Section 28(5) and 28(6) of the Customs Act, held that show cause notice is pre-mature for demand of duty only, therefore proceedings cannot be closed. Whether the assessment was provisional or final? - HELD THAT - The adjudicating authority has clearly mentioned that not just release but assessment was also provisional under Section 18(2) of the Customs Act, 1962. The appellant requested to finalize the assessment quite a few times. All these requests to make the assessment final were made after provisional release. The letter dated 25.10.2018 is also available in case file at page number 198. The last line clearly mentions the request to finalize the Bill of Entry. Further, a letter dated 15.11.2018, submitted by the appellant to the Di, Gandhidham regional Unit is also available in case file at page number 201. This letter also requests to finalize the Bill of Entry. Therefore, as admitted by the appellant many times, the assessment of the Bills of Entry remained provisional. It was not just a provisional release but a provisional assessment also. The same fact has been recorded by the adjudicating authority in para 4.4 of the O-1-0. Though Provisional Release and Provisional Assessment are two independent concepts, in the instant case both are present. Whether Section 28(4) is applicable at all? - The adjudicating authority has held that it would be premature to demand duty under Section 28(4) of the Act. This is in consonance with various judicial pronouncements and it is a settled law that Section 28(4) kicks in only after final assessment. As explained in para 2, assessment was provisional, and therefore, the proceedings have been rightly concluded under Section 125. Provisions quoted in the Show Cause Notice - What is the recourse for adjudicating authority when assessment is provisional in case of provisional release? - Since the assessment was provisional, the proceedings were required to be concluded under Section 125 of the Customs Act after issuing a Show Cause Notice under Section 124. Various judicial pronouncements have held that when the assessment is not final, a Show Cause notice should be given under Section 124 of the Customs Act which as a corollary can be concluded under Section 125. The instant case is squarely covered by case of DEEP JYOTI WAX TRADERS PVT. LTD 2014 (8) TMI 1055 - CALCUTTA HIGH COURT since there is a mis-declaration of goods. As per case M/S PUSHPAK LAKHANI VERSUS THE COMMISSIONER OF CUSTOMS (PREVENTIVE) NEW DELHI 2022 (1) TMI 114 - CESTAT NEW DELHI allowing provisional release does not interfere in adjudication process or with the jurisdiction of adjudicating authority. Jurisdiction of the adjudicating authority in the instant case under Section 125 cannot be questioned by any stretch of imagination and hence, the adjudicating authority has correctly adjudicated the issue under Section 125. Mere mentioning of wrong provisions or not mentioning of it does not vitiate the proceedings till the time statutory authority has requisite authority therefore or not - mentioning Section 28(4) in the Show Cause Notice - Since order of dismissal of an army personnel was upheld despite the fact that wrong provision was quoted in the order of discharge but the authority had power, though in a different section, to dismiss him. In the instant case also, though wrong section Le. Section 28(4) has been quoted, authority of adjudicating authority cannot be questioned under Section 125 after the goods were seized and found liable for confiscation on account of mis-declaration. See RAM SUNDER RAM VERSUS UNION OF INDIA ORS. 2007 (7) TMI 673 - SUPREME COURT Mentioning of a wrong provision ie. Section 28(4) and not mentioning of correct section i.e. Section 124 does not vitiate the proceedings till the adjudicating authority has the power to pass an order under Section 125 which is unquestionably present with the adjudicating authority. See MERINO PANEL PRODUCT LTD. 2022 (12) TMI 453 - SUPREME COURT Contention of the appellant is that since goods were released provisionally and were not available, redemption fine cannot be imposed - When the goods are released under bond, RF can be imposed under section 125 since RF is in lieu of confiscation of goods and not in lieu of goods. When the goods are liable for confiscation, RF should be imposed. See KAY BEE TAX SPIN LTD. 2017 (1) TMI 1223 - GUJARAT HIGH COURT Adjudicating authority has imposed a penalty u/s 112(a) of the Customs Act, 1962 whereas the Show Cause Notice proposes penalties u/s 112(a), 114(AA) and 117 of the Act - defect in the order can be considered as omission on the part of the adjudicating authority as adjudicating authority has erred by not imposing any penalty under Section 114(AA) - We find that it is not coming out clearly as to whether the goods were provisionally released or assessment were done provisionally as the former relates to seized goods and later in part of interim assessments required to be subjected to finalisation. In case demand under Section 28 (4) was applicable and duty was demandable then the party is very much entitled to claim the amnesty under Section 28 (5) and the same on following of the requisite conditions. In which case confiscation of goods and interest thereof does not get triggered nor any provisional assessment is required to be finalized to the prejudice of the party. We are therefore, remanding the matter back to the adjudicating authority to decide firstly nature of proceedings by determining the appropriate facts and if assessment was not provisional to allow benefit of provisions of Section 28(5) 28 (6) to the party on fulfilment of the conditions or otherwise to finalise assessment first and then demand duty under Section 28 (4) and allow amnesty under Section 28 (5) and 28 (6) on fulfilment of conditions.
Issues Involved:
1. Applicability of Section 28(5) and 28(6) of the Customs Act, 1962 for closure of proceedings. 2. Provisional versus final assessment of goods. 3. Legality of imposing redemption fine and penalties under provisional assessment. 4. Correctness of penalties imposed under specific sections of the Customs Act, 1962. Issue-wise Detailed Analysis: 1. Applicability of Section 28(5) and 28(6): The appellants argued that since they had paid the entire customs duty along with interest and 15% penalty within 30 days of the issuance of the show cause notice, the proceedings should be closed under Section 28(5) and 28(6) of the Customs Act, 1962. They contended that the learned Commissioner erred by not concluding the proceedings, as the conditions for closure under these sections were met. The Commissioner held that the show cause notice was premature for demand of duty, thus denying closure under the said sections. 2. Provisional versus Final Assessment: The core issue revolved around whether the assessment of goods was provisional or final. The adjudicating authority found that the assessment was provisional as the goods were released provisionally after being seized, and the final assessment was pending. The appellants disputed this, asserting that the assessment should be considered final since they had requested finalization multiple times. The authority maintained that the relevant date for demanding duty under Section 28(4) would commence only after the final assessment, not provisional clearance. 3. Legality of Imposing Redemption Fine and Penalties: The appellants argued that if the show cause notice was premature, as held by the Commissioner, then imposing redemption fine and penalties was unjustified. They cited several judicial precedents to support that penalties and fines could not be imposed when the assessment was not finalized. The adjudicating authority, however, upheld the imposition of redemption fine and penalties, asserting that provisional release does not impede adjudication proceedings under Section 124, and the confiscation of goods was justified under Section 111 due to mis-declaration. 4. Correctness of Penalties Imposed: The adjudicating authority imposed a penalty on the appellant under Section 112(a) but did not impose penalties under Sections 114(AA) and 117, despite the show cause notice proposing penalties under these sections. The department argued this omission as a defect and sought either imposition of penalties under these sections or a remand to the adjudicating authority for reconsideration. The tribunal noted that the department was not in appeal and had attempted to make a fresh case for penalties. Conclusion and Remand: The tribunal found that the nature of the assessment-whether provisional or final-was not clearly established. It remanded the matter back to the adjudicating authority to determine the facts regarding the nature of assessment. If the assessment was not provisional, the authority was directed to allow the benefit of Sections 28(5) and 28(6) to the appellant upon fulfillment of conditions. If the assessment was provisional, it was to be finalized first, and then duty could be demanded under Section 28(4), with the possibility of amnesty under Sections 28(5) and 28(6) post-finalization. The penalties on other parties were contingent upon the availability of amnesty to the main appellant. The appeals were allowed by way of remand for further proceedings in line with these directives.
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