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TMI Blog2024 (7) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... levied etc. involving fraud, if any, becomes operative. By issuing a legally defective notice, the opportunity to examine the probative value of the documents including statements on which reliance was placed by the department, in support of its allegations, was lost. The judgments cited by revenue regarding fraud are hence not found relevant in the peculiar facts of this case. The Hon ble Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] held that the nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import, under section 28 of CA 1962, is broadly a power to review the earlier decision of assessment. Hence the section comes into play only when assessment is final. In the case of AS Syndicate (Warehousing) P. Ltd. Vs Commissioner of Customs (Port) [ 2009 (12) TMI 609 - CALCUTTA HIGH COURT] , the Hon'ble High Court had an occasion to analyse the issue as to whether the demand under Section 28 of the Customs Act, 1962 can be raised before the finalization of assessment. The Hon'ble High Court after referring to the analogous provisions under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(a) and 114AA of the CA 1962, for the BE s filed during the period from 04/2007 to 08/2009. After due process of law, the adjudicating authority confirmed the proposals in the Show Cause Notice. Hence the appellants are before this Tribunal. 3. Shri S. Murugappan, learned counsel appeared for the appellants and Shri Anoop Singh, learned Joint Commissioner (AR) appeared for the respondent. 3.1 The Ld. Counsel for the appellant submitted that M/s. Shami Impex is engaged in import of various plastic products including reprocessed LDPE/HDPE granules. Pending examination of the correctness of the values declared for the import of regenerated LDPE/HDPE granules, the Bill s of Entry (BE) were provisionally assessed in terms of section 18 of The Customs Act 1962 (CA 1962). Pending finalization of the BE, investigations were made, searches conducted and statements were recorded by DRI from Mr.Kamlesh Gupta and Mr. Dhiraj Gupta. After completion of investigation a SCN dated 30.05.2011 was issued demanding differential duty on account of alleged misdeclaration of values of the imported goods. In respect of consignments covered under Annexure I to the SCN duty of Rs.57,80,508 was demanded und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes later than the shipment date. On account of all these the extra demand made comes to Rs.21,08,501/-. The learned counsel stated that the impugned order was issued without any legal basis even at a time when they wanted to cooperate with the department and had deposited an amount of Rs.37,12,364/- to buy peace of mind and complete the assessment. The impugned order hence merits to be set aside. 3.2 The Ld. AR submitted on behalf of revenue that the claim made by the appellant that the Original Authority proceeded to adjudicate their matter ex parte and the same is in violation of Principles of Natural Justice is not correct. None of the noticees submitted their final reply nor attended any of the four opportunities for PH given to them. There is nothing on record to suggest that the matter has ever been dealt/ admitted by Settlement Commission. Even the issue before Settlement Commission is related to their sister concern M/s Radha Enterprises and not relating to the SCN issued to M/s Shami Impex. Further with regard to the issue of raising demand in terms of Section 28 and confiscation of goods under Section 111 of the CA 1962 in respect of provisionally assessed goods under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) in such a situation a notice to finalise the assessment and demand duties etc. can be issued under section 28 of CA 1962 (revenue) or under section 18 ibid (appellant)? (b) Whether the involvement of fraud and collusion would justify the SCN issued under section 28 of CA 1962 along with invoking provision for confiscation and penalties. 5. We find that the BE s were filed prior to 08-04-2011 i.e. before Self-Assessment of customs duties had become the norm. The department instead of finalising the assessment of the provisionally assessed goods under section 18, has sought to straight away demand duties under section 28 of CA, 1962 as it stood at the relevant time. Section 28 provided for recovery of duty which had not been levied or had been short levied or erroneously refunded etc, provided a notice demanding such duties/ refund was issued within the time limit specified in the said section. Relevant date for issue of notice had been defined in the section to mean, in a case where duty is provisionally assessed under section 18 ibid, the date of adjustment of duty after the final assessment thereof. Hence it is only when after final assessment, it is found that there has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to feel aggrieved. 7. The department has stated that the facts relating to suppression of facts and fraud have been collaborated by the statements of concerned persons recorded under Section 108 of the Customs Act,1962; that once these facts are admitted they need not be proved again, since fraud and collusion vitiate even the most solemn proceedings. We find that the Apex Court in Sounds N Images Vs Collector of Customs [2000 (117) E.L.T. 538 (S.C.)] examined a case of alleged under valuation and held as under; 5. A fax message setting out a quotation by one party in Singapore to another party in Singapore cannot be made the basis of valuation of goods imported into India, particularly so when the importer s request to be allowed to cross-examine the alleged offendor is declined. It is always for the Customs authorities to establish by methods known to law and in a satisfactory manner that the value of imported goods is not what the importer says it is and what that value actually is. That onus cannot be shifted to the importer. We have no doubt that all this has been said by the courts again and again, but to no avail. ( emphasis added ) 7.1 This process of discharging its onus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to examine the probative value of the documents including statements on which reliance was placed by the department, in support of its allegations, was lost. The judgments cited by revenue regarding fraud are hence not found relevant in the peculiar facts of this case. 8. We also find that there have been a number of judgments of Constitutional Courts giving clarity on this issue. 8.1 The Hon ble Supreme Court in Canon India Pvt. Ltd. Vs Commissioner of Customs [2021 (376) E.L.T. 3 (S.C.) held that the nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import, under section 28 of CA 1962, is broadly a power to review the earlier decision of assessment. Hence the section comes into play only when assessment is final. The relevant portion of the judgment reads as follows: 12. The nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import, is broadly a power to review the earlier decision of assessment. Such a power is not inherent in any authority. Indeed, it has been conferred by Section 28 and other related provisions. The power has been so conferred specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso been directed to show cause why the goods should not be held confiscable and why penalty should not be imposed. There could be no question of confiscation, penalty or interest till after final assessment. ( emphasis added ) 8.2 The Hon'ble High Court of Bombay in the case of Commissioner of Customs (Import), Mumbai Vs Mahesh India [2006 (7) TMI 306 - BOMBAY HIGH COURT] held that the Show Cause Notice issued under Section 28 when the goods have not been finally assessed is bad in law and not maintainable. The relevant Paragraphs reads as under:- 2. The dispute in the present case pertains to the show cause notice issued by the Directorate of Revenue Intelligence unit of the customs department ( D.R.I.‟ for short) on 22-3-93 in respect of the goods admittedly cleared on provisional assessment basis. 3. By an order-in-original dated 9th February, 1996, the Commissioner of Customs, Mumbai had held that the above show cause notice issued by DRI was bad in law because the goods were provisionally assessed and moreover final assessment order has been passed on 22-6-94 that is after the impugned snow cause notice by DRI. *****. *****. ***** 6. It is true that in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an investigation on the suspicion of undervaluation. Such investigation conducted by DRI was commodity specific rather than importer specific. This fact appears from the impugned show cause notice as also the affidavits of the authorities. 16. The records made available to Court establish that, the petitioner had applied under Section 18(1) for the purpose of assessment. Section 18(1) of the Customs Act, 1962 permits the importer, where he is unable to make self-assessment, to make a request to the proper officer for assessment. In the present case, the petitioner had done so. Under Section 18(2) of the Act of 1962, it is the duty of the officer concerned to inform the duty leviable on the goods imported as finally assessed. In the present case, a final assessment of the duty has not happened. Nothing has been placed on record to suggest otherwise. The Customs Authorities have invoked Section 28 of the Act of 1962 without a final order of assessment. Section 28 of the Act of 1962 allows the Customs Authorities to recover duties not levied or short- levied or erroneously refunded. In the present case, none of the situations contemplated under Section 28 has arisen. The duty is yet t ..... 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