Legal principle

A show cause notice under Section 28(1) of the Customs Act can validly be issued after the goods have been cleared under Section 47 where short-levy of duty is attributable to mis-declaration or suppression of facts by the importer, and a prior unappealed assessment does not oust that jurisdiction.

Court decision

The appeal was dismissed and the Tribunal's final order was upheld in favour of the revenue: questions 2 and 3 were held to be purely factual and not entertained, and on question 1 the Court held that the adjudicating authority had jurisdiction to issue the Section 28(1) notice notwithstanding the earlier assessment and clearance, there being no question of law, much less a substantial question of law.

Facts

Venus Enterprises filed 11 Bills of Entry in 1995-96 for clearance of computer parts and data cartridges; the declared value was accepted for some entries, enhanced for others, and the consignments were cleared after assessment. A DRI investigation revealed that the proprietor, T.S. Mani, was also a Director of M/s MBO Computers (India) Pvt. Ltd., and a search of the importer's premises recovered parallel invoices showing higher prices and a Cost Analysis Statement. The Commissioner rejected the appellant's explanation that these unsigned documents were used only for marketing purposes, held mis-declaration and suppression proved, and imposed a fine of Rs. 6.8 lakhs in lieu of confiscation, a penalty of Rs. 6 lakhs under Section 112(a), and a differential duty demand of Rs. 24,43,415 under Section 28(1). The Tribunal (CESTAT) confined the enhancement to parallel invoices issued prior to filing of the Bills of Entry, remanded for recomputation of duty, but confirmed that the cleared goods remained liable to confiscation under Section 111(m) with penalty under Section 112(a). The importer appealed to the Madras High Court under Section 130.

Key provisions

• Section 28(1), Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 28A, Customs Act, 1962 —  Power not to recover duties not levied or short-levied as a result of general practice
• Section 130, Customs Act, 1962 —  Appeal to High Court