Legal principle

No show cause notice can be issued under Section 28(4) of the Customs Act while assessment remains provisional under Section 18, since the 'relevant date' under Explanation 1(b) to Section 28 runs only from adjustment of duty after final assessment — and goods judicially found to be roasted areca nuts are not prohibited, so neither confiscation under Section 111 nor penalty under Section 114A can be sustained.

Court decision

All three writ petitions were allowed in favour of the petitioner: the seizure memo dated 06.12.2024, the communication dated 23.05.2025 and the SCN dated 17.12.2024 were quashed. Customs was directed to release the goods within 7 days adopting the petitioner's classification and valuation (the petitioner's FSSAI reports being sufficient compliance), and to issue a certificate of waiver of demurrage, detention and ground rent charges within 7 days.

Facts

M/s Vaibhav International imported 28 MTs of roasted areca nuts from Indonesia and filed Bill of Entry No.5470956 dated 06.09.2024 valued at Rs.35,65,800/- under tariff entry 2008 1920, based on MIP of Rs.351/kg. CRCL testing confirmed the sample as roasted areca nuts, but a later test by ICAR-CPCRI, Kerala stated it could not be ascertained whether the nuts were roasted and resembled raw dried areca nuts. Acting on the ICAR report, Customs seized the goods on 06.12.2024 under Section 110 for violation of foreign trade policy under the FTDR Act, and issued SCN dated 17.12.2024 proposing confiscation under Section 111(d), (m) and (o), a duty demand of about Rs.1.78 crore under Section 28(4) with interest under Section 28AA and penalty under Section 114A, while rejecting the petitioner's classification and valuation. On a coordinate bench direction, CRCL's second report dated 31.01.2025 reaffirmed the goods were roasted areca nuts (moisture 5.9%), after which Customs issued a communication dated 23.05.2025 calling on the petitioner to pay duty provisionally assessed under Ch. 08028090 to obtain release.

Key provisions

• Section 46, Customs Act, 1962 — Entry of goods on importation
• Section 17, Customs Act, 1962 — Assessment of duty
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 18, Customs Act, 1962 — Provisional assessment of duty
• Section 14, Customs Act, 1962 — Valuation of goods
• Section 15(1), Customs Act, 1962 — Date for determination of rate of duty and tariff valuation of imported goods
• Section 68, Customs Act, 1962 — Clearance of warehoused goods for home consumption
• Section 28AA, Customs Act, 1962 — Interest on delayed payment of duty
• Section 110A, Customs Act, 1962 — Provisional release of goods, documents and things seized
• Section 8A, Customs Tariff Act, 1975 — Emergency power of Central Government to increase import duties
• Section 124, Customs Act, 1962 — Issue of show cause notice before confiscation of goods etc
• Section 12, Customs Tariff Act, 1975 — Repeal and saving