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TMI Blog2000 (2) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... l of entry for the clearance of goods. The supplier's invoice indicated the description and quantity of the goods. Appellant had earlier imported identical consignments and claimed exemption and the authorities had allowed the said exemption. He was under a reasonable belief that even the import made in October 1996 would be exempted from duty. 4.However, the Customs Authorities made certain enquiries, and, despite the appellant's objections, the Additional Commissioner (Customs) passed an order dated 14-3-1997 bearing No. 29/97 confiscating the said goods under Section 111(d) and 111(m) of the Customs Act, 1963 (for short 'the Act'). He levied a redemption fine of Rs. 35 lakhs and imposed a penalty of Rs. 5 lakhs under Section 112 of the Act. 5.Aggrieved by this order, the appellant filed an appeal before the Appellate Commissioner of Customs who by his order dated 25-7-1997 reduced the fine from Rs. 35 lakhs to Rs. 30 lakhs, but otherwise confirmed the order of the Additional Commissioner of Customs. The Appellant went in further appeal before the Customs Excise and Gold (Control) Appellate Tribunal (for short, 'the Tribunal'). Tribunal reduced the fine from Rs. 30 lakhs to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act, the Parliament, in its wisdom, provided for oral notice in the place of written show cause notice. Oral notice coupled with the requirement of clause (c) of Section 124, is no lesser than the written show cause notice, in its efficacy and its objective of meeting the requirement of natural justice. That the respondent was wrong in presuming that the show cause notice means only a written show cause notice. That even Section 95 of the Finance Act (No. 2), 1998 does not restrict the applicability to the scheme, not covered by a written show-cause notice. That the scheme is applicable to all cases in which notice under Section 124, either written or oral, is issued. In the alternative it was pleaded that in case oral notice is not taken as a show-cause notice, then it will lead to an absurd situation where fine or penalty is imposed without show cause notice and therefore, violative of the principles of natural justice and Article 14 of the Constitution. Once an adjudication order is passed, the person against whom such an order is passed is bound to pay under the said order and no separate demand notice is issued under the Customs Act. The adjudication order itself would const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cesses, interest, fine or penalty, such payment shall not be deemed to be the amount unpaid for the purpose of determining tax arrear under this sub-clause;" 13.Section 88 deals with the settlement of tax payable and the relevant portion of the same relating to indirect taxes reads : "88 : Subject to the provision of this scheme, there any person makes, on or after the 1st day of September, 1998 but on or before the 31st day of December, 1998, a declaration to the designated authority in accordance with the provisions of Section 89 in respect of tax arrear, then, notwithstanding anything contained in any direct tax enactment or indirect tax enactment of any other provision of any law for the time being in force, the amount payable under this scheme by the declarant shall be determined at the rates specified hereunder, namely :- (a)…………………………. (b)…………………………. (c)………………………….. (d)…………………………. (e)………………………….. (f) Where the tax arrear is payable under the indirect tax enactment :- in a case where(i) the tax arrear comprises fine, penalty or interest but does not include duties (including drawback of duty, credit of duty or any amount representing duty) or cesses, at the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovides where the tax arrears comprises fine, penalty or interest but does not include duties (including drawback of duty, credit or duty or any amount representing duty) or cesses at the rate of 50% of such fine, penalty or interest, due or payable as on the date of making a declaration under Section 88. In any other case at the rate of 50% of the amount of duties (including drawback of duty, credit of duty or any amount representing duty) or cess due or payable on the date of making a declaration under Section 88. 17.Under Section 87(m) tax arrears in relation to indirect tax have been divided into two categories, namely (a) and (b). Clause (a) deals with the amount of duties, cess, interest, fine or penalty already determined as due or payable under that enactment as on 31st March, 1998 but remain unpaid as on the date of making a declaration under Section 88 and in sub-clause (b) the amounts of duties, interest, cess, fine or penalty which constitutes the subject matter of a demand notice or a show-cause notice issued on or before the 31st day of March, 1998 under the enactment but remaining unpaid on the date of making a declaration under Section 88. Clause (a) deals with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce referred in Cl. (a) and the representation referred to in Cl. (b) may at the request of the person concerned, be oral." 20.It is apparent that Section 124 contemplates both a notice in writing and at the option of affected person, oral notice. It is an admitted fact that the order of the Additional Commissioner dated 14-3-1997 was passed only after hearing the parties which means a reasonable opportunity of hearing was accorded thus satisfying the requirement of Section 124. Assumption of the authorities that Section 95(ii)(b) contemplates only a written show-cause notice is incorrect. They have failed to notice the fact that Section 124 covers an oral notice also. In case it is accepted that oral notice is not a show-cause notice, then it will lead to absurd situation where fine or penalty is imposed without show-cause notice and therefore violative of principles of natural justice and Article 14 of the Constitution. A demand made in the form of fine or penalty raised after following the procedure laid down in proviso to Section 124 should be treated as show-cause notice for the purpose of Section 95(ii)(b) of the scheme. Such an interpretation would not only be in accordance ..... 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