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Roochees Time Pvt. Ltd. and Ors. Vs. C.C.E., Jaipur-I - (Customs, Excise and Service Tax Appellate Tribunal) (14 Jun 2017)

Legal proceedings cannot be initiated without completing assessment proceedings



In facts of present case, Appellant imported P-68 watch movement from Hong Kang and filed Bills of Entry. On basis of invoice issued by overseas supplier, Appellant had indicated per unit value of imported goods (US $ 0.08 i.e. Rs. 3.66) for purpose of assessment of duty liability. Customs Department prima-facie formed opinion that, goods were undervalued by Appellant, and accordingly, subject goods were detained under Section 110 of Customs Act, 1962. Goods were assessed provisionally. Subsequently, Department further enquired into matter through DRI and Consulate General of India at Hong Kong. On basis of report received from various agencies, show cause proceedings were initiated against Appellants, seeking for enhancement of value, payment of differential Customs duty and for imposition of penalties. SCN was adjudicated vide order, wherein proposals made therein were confirmed. On appeal, adjudged demands were upheld by Commissioner (Appeals). Short question involved in present appeal for consideration by Tribunal is, as to whether, before finalization of Bill of Entry, which was provisionally assessed under Section 18 of Act, can Department proceed against importer to confirm differential duty demand and for imposition of penalty.

Tribunal found from endorsement in Bill of Entry that, same was provisionally assessed as per order dated 21st December, 2006. It has also been accepted in show cause notice as well as in impugned order that, goods were assessed provisionally on execution of Surety Bond and on payment of Customs Duty on provisionally assessed value of imported goods. Authorities below have not confirmed fact that, after finalization of Bill of Entry, demands were confirmed against Appellant. Thus, in absence of any documentary evidence to show finalization of Bill of Entry, it has to be construed that, same is still provisional, awaiting finalization.

Section 28 of Act, contemplates issuance of show cause notice for recovery of duties which were not levied or short levied. For issuance of show cause notice under such statutory provision, duty liability is required to be ascertained by proper officer. In present case, since assessment is provisional and proper duty liability has not been quantified/ascertained as per provisions of Section 18 of Act, there is no question of short levy or non-levy of duty. Thus, proceedings initiated under Section 28, which culminated in impugned order will not sustainable and will not stand for judicial scrutiny.

In this context, Supreme Court in case of ITC Ltd. and Anr. vs. Union of India (UOI)held that, proceedings under Section 11 A of Central Excise Act, 1944 (pari materia with Section 28) cannot be initiated without completing assessment proceedings. Since, present proceedings were initiated under Section 28 of Act, before finalization of assessment, same is not maintainable at this juncture. However, Department is at liberty to take appropriate measures after finalization of Bill of Entry in question. Impugned order was set aside, appeals allowed.

Relevant : I.T.C. Limited and Anr. vs. Union of India (UOI) and Ors.MANU/DE/2890/2009


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