By TIOL News Service

NEW DELHI, AUG 31, 2018: REVENUE is in appeal before the Delhi High Court.

The question of law framed is as follows -

"Whether the revenue is entitled to recover the customs duty under Section 125(2) of the Customs Act on the goods which are confiscated under Section 111(d) and allowed redemption under Section 125(1) of the said Act, even when no specific demand is made in the show cause notice?"

The brief facts are that imported memory cards, RAMs etc. valued at Rs.28,29,550/- were seized from the respondent on 01.06.2007.

SCN u/s 124 proposing confiscation of goods was issued. The final order confiscated the goods with an option to redeem the same provided a fine of Rs.5 lakhs was paid.

Claiming to be aggrieved, the Revenue appealed to CESTAT alleging that duty was recoverable and that this obligation was implicit in section 125. Reliance was placed on the decision in Jagdish Cancer and Research Centre - 2002-TIOL-119-SC-CUS-LB .

The Tribunal while rejecting the appeal - 2009-TIOL-700-CESTAT-DEL relied upon the judgment in Mohan Meakins Ltd. - 2002-TIOL-448-SC-CUS-LB, which stated that the Adjudicating Officer is under a duty to firstly assess the market value of the goods and then levy the duty and charges apart from the redemption fine which he intends to levy under Section 125(1).

The counsel for the Revenue submitted that every show cause notice carries with it an implied condition that if the option of redeeming the goods proposed to be confiscated is given to the importer/noticee, the latter has to pay the relevant duties.

The High Court inter alia observed -

+ The provision relied upon, i.e. Section 125(2), no doubt, is in mandatory terms and suggests that when the duty is payable by the concerned party or importer, the quantum of the duty - even on a tentative basis should necessarily be spelt out in the show cause notice, which is essential under Section 124 of the Act.

+ The facts in Jagdish Cancer and Research Centre (supra) itself show that the show cause notice under Section 125 had proposed customs duties (Rs.64,93,598/-) and had invoked Section 111(o) and also proposed penalty under Section 112.

+ The Adjudicating Officer, who issues a show cause notice is in-charge of the goods - seized or otherwise pending clearance. He has the opportunity to tentatively assess the value and also indicate the duty payable.

+ Nevertheless, it broadly outlines the amount meant to be short levy or non levy and the same would have to be spelt out in the notice under Section 124.

+ If that primary obligation, which lies with the State Official is not discharged, it cannot be contended at a later stage that the importer was under an obligation to pay the relevant duty - which was never assessed in the first instance.

The question of law was answered against the Revenue.

The Revenue appeal was dismissed.

(See 2018-TIOL-1762-HC-DEL-CUS)