Legal principle

After the omission of 'where it is possible to do so' w.e.f. 29-03-2018, the six-month adjudication limit in Section 28(9)(a) for Section 28(1) demands is mandatory, and breach of that limit or of the mandatory pre-show-cause-notice consultation under the proviso to Section 28(1)(a) renders the adjudication order a void nullity liable to be quashed.

Court decision

Both writ applications were allowed in favour of the petitioner. The court held that the first appellate order dated 10-08-2022 was not sustainable, that both adjudication orders dated 19-11-2018 were passed after expiry of the mandatory six-month period under Section 28(9)(a), and that the two SCNs dated 20-04-2018 were issued without the mandatory pre-SCN consultation; consequently the OIOs and the appellate order were void ab initio and nullities, and the entire proceedings right from the SCNs dated 20-04-2018 were quashed and set aside.

Facts

M/s Bihar Foundry & Castings Ltd., a Jharkhand company and 'importer' under Section 2(26) of the Customs Act, 1962, imported Steam Coal (goods under Section 2(23)) of South African origin under High Seal Sale agreements dated 02-03-2012 with M/s QVC Exports Pvt. Ltd. for use in its factory. Bills of Entry Nos. 260 and 261/HC/2011-12 dated 20-03-2012 were provisionally assessed on 20-03-2012 but finally assessed only on 03-04-2018, after about six years. Show Cause Notices dated 20-04-2018 issued under Section 28(1) proposed differential Basic Customs Duty of Rs.24,69,401 @5% with interest under Section 28AA, penalty under Section 112(a), and confiscation of 3650 MT of coal valued at Rs.2,32,76,477 under Sections 111(d)/(m), with no allegation of collusion, wilful misstatement or suppression and no Section 114A penalty. Two Orders-in-Original dated 19-11-2018 passed by the Joint Commissioner under Section 28(8) confirmed the demand, penalty under Section 112(a) and a redemption fine of Rs.23,27,648 under Section 125, and the Commissioner (Appeals) by order dated 10-08-2022 set aside the OIOs and remanded for de novo adjudication. A connected writ (W.P.(T) No. 4340 of 2022) challenged final assessment orders finalizing provisional assessments of Bills of Entry 158/HC/2012-13 and 341/HC/2012-13 as barred by limitation and without jurisdiction.

Key provisions

• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 114A, Customs Act, 1962 — Penalty for short-levy or non-levy of duty in certain cases
• Section 28AA, Customs Act, 1962 — Interest on delayed payment of duty
• Section 151A, Customs Act, 1962 — Instructions to officers of customs
• Section 128A, Customs Act, 1962 — Procedure in appeal
• Section 18, Customs Act, 1962 — Provisional assessment of duty
• Section 128, Customs Act, 1962 — Appeal to Commissioner (Appeals)
• Section 2(26), Customs Act, 1962 — Definitions
• Section 3(1), Customs Tariff Act, 1975 — Levy of additional duty equal to excise duty, sales tax, local taxes and other charges
• Section 157(2), Customs Act, 1962 — General power to make regulations