2024 (12) TMI 1474 - HC - Customs

Simultaneous issuance of SCN under two provisions - Whether the authorities concerned, can issue show cause notice under Section 18 as well as Section 28 (4) of the Act simultaneously? - HELD THAT - Annexure-M is a show cause notice issued under Section 18 of the Act and the petitioner is required to reply for the said notice. It is not the case of the petitioner that the said notice has been issued by an Authority / Officer, who has no jurisdiction to issue the said notice. Under the said circumstances, interfering with issuance of the said notice by this Court does not arise. However, in respect of the notice issued under Section 28 (4) of the Act, under the given facts and circumstances of the case, there has to be assessment of the value of the goods and the duty payable by the Authorities concerned before issuance of such notice. Admittedly, the same has not happened insofar as it relates to certain goods mentioned in the said notice. Petitioner requests six weeks time to issue a reply to the show cause notice at Annexure-M to the writ petition. Conclusion - The notice under Section 28(4) was set aside, with the possibility of reissuance following the completion of the provisional assessment. The court granted the petitioner six weeks to respond to the show cause notice under Section 18. The petitioner is granted six weeks time from today for issuing a reply to the show cause notice dated 14.08.2024 issued by respondent No.2 - petition disposed off.

1. ISSUES PRESENTED and CONSIDERED

The core legal question considered by the Karnataka High Court in this judgment is:

Whether the authorities concerned can issue a show cause notice under Section 18 as well as Section 28(4) of the Customs Act, 1962 simultaneously.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Simultaneous Issuance of Notices under Section 18 and Section 28(4)

Relevant legal framework and precedents:

Section 18 of the Customs Act, 1962 allows for the provisional assessment of duty when the proper officer deems further inquiry necessary or when documents are pending.
Section 28(4) of the Act pertains to the recovery of duties not levied, not paid, short-levied, short-paid, or erroneously refunded due to collusion, willful misstatement, or suppression of facts.

Court's interpretation and reasoning:

The court noted that the show cause notice under Section 18 is for provisional assessment, whereas the notice under Section 28(4) is for recovery of duties based on alleged mis-declaration and short payment.
The court observed that before issuing a notice under Section 28(4), there must be an assessment of the value of the goods and the duty payable.

Key evidence and findings:

The petitioner challenged both notices, arguing that the simultaneous issuance was premature.
The respondents contended that the notices were preliminary and action would follow based on the petitioner's reply.

Application of law to facts:

The court found that the notice under Section 18 pertains to provisional assessment, which is a necessary step before any recovery action under Section 28(4).
The court determined that the issuance of the notice under Section 28(4) was premature as the assessment of goods had not been completed.

Treatment of competing arguments:

The court balanced the petitioner's argument of premature notices with the respondents' assertion that the notices are procedural and contingent on the petitioner's response.

Conclusions:

The court concluded that the notice under Section 28(4) should be set aside until the provisional assessment under Section 18 is completed.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning:

"In respect of the notice issued under Section 28 (4) of the Act, under the given facts and circumstances of the case, there has to be assessment of the value of the goods and the duty payable by the Authorities concerned before issuance of such notice."

Core principles established:

The court established that provisional assessment under Section 18 must precede any recovery action under Section 28(4) to ensure proper valuation and duty assessment.

Final determinations on each issue:

The court granted the petitioner six weeks to respond to the show cause notice under Section 18.
The notice under Section 28(4) was set aside, with the possibility of reissuance following the completion of the provisional assessment.
The respondents were directed to pass appropriate orders assessing the value of the goods within four weeks of receiving the petitioner's reply.
The petitioner was given the liberty to respond to any subsequent notice under Section 28(4) if issued.

Accordingly, the writ petition was disposed of with specific directions for both parties to follow the procedural steps outlined by the court.

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