SHOW CAUSE NOTICE, DEMAND AND ADJUDICATION
Assessment of duty is a quasi-judicial
function wherein the assessing officers decide the classification, rate of duty,
applicability of exemption etc. Subsequently, when errors prejudicial to Revenue
are found, show cause notices are issued under Section 28 of the Act. On the
side of the Importers refund claims are filed for recovery of allegedly excess
duties paid, under Section 27.
The provision of Section 28 applies to
demand of both duties and interest. Under following circumstances, duty can be
demanded.
(i)
A case of short-levy
(ii) A
case of non-levy
iii.
A case of erroneous refund of duty or interest.
Time Limit for Issue of Demand Notice
1.
If the importer is an individual who uses goods personally, or is a
government, or a research or educational institution, or charitable institution,
or hospital, a notice under this section has to be issued within a year.
2.
In all other cases of imports or exports, this limitation is six
months.
3.
In case where there has been collusion, willful mis-statement or
suppression of facts by the importer or the exporter or their agents or
employees, the period of limitation will be five years, instead of six months or
one year
1.
In cases of non-levy or non-charge from the date of order of clearance
2.
In case of provisional assessment, from the date of adjustment of duty
after final assessment
3.
In case of erroneous refunds, the date of refund
4.
In all other cases, date of payment of duty or interest
The show cause notice must clearly
specify the amount of duty or interest demanded. The amount confirmed after
adjudication cannot exceed this amount. The notice must specifically require the
person to show cause why the duty or interest should not be demanded from him.
It is essential that the show cause notice must clearly state the department’s
case against the affected person. Where extended period of limitation is sought
to be invoked, the notice must clearly make such allegations as collusion, or
willful mis-statement or suppression of facts etc Where the amount of duty has
not been levied or short-levied or erroneously refunded, or interest payable has
not been paid or erroneously refunded up to Rs.1 crore or less, a notice shall
be served by the Commissioner of Customs or with his approval by any officers
subordinate to him. Similarly, if the amount is more than 1 crore the same shall
be issued only with the prior approval of Chief Commissioner of Customs.
The adjudicating authority is bound to
grant hearing to the affected person before confirming the demand. After
confirmation of demand, the person is bound to pay it, subject to the provisions
of appeal against the order.
Interest
liability on duty demand:
If a person chargeable to duty
determined under Sub Section 2 of Section 28 and fails to pay such a duty within
3 months from the date of such determination, he shall liable to pay interest at
such rate not below 10% and not exceeding 30% per annum, as for the time being
fixed by the Board (presently 24%), on such duty from the date immediately after
the expiry of the said period of 3 months till the date of payment of such duty
under Section 28AA of the Customs Act 1962.
If any duty has not been
collected or short levied or erroneously refunded by reason of collusion or
suppression of facts, the person who is liable to pay duty as determined under
Section 28 of the Act, in addition to duty, be liable to pay interest at such
rate not below 10% and not exceeding 30% per annum, as for the time being fixed
by the Board (presently 24%), from the first day of the month succeeding the
month in which duty ought to have been paid or from the date of such erroneous
refund is made, till the date of payment of duty under Section 28 AB of the
Customs Act 1962.
Section 124 of the Act deals with the
confiscation and imposition of the penalty. The provisions relating to the
seizure of the goods and those relating to the confiscation of the goods or
imposition of penalty stand on different footing. Section 124 of the act does
not lay down any period within which the notice required by it has to be given.
Notice under Section 124 of the Customs Act must necessarily be given in respect
of the acts already done and can never be in respect of any act to be done in
future. At the time when the notice is issued the act complained of must
necessarily have been completed. Section 124 (a) provides for issue of a notice
to appear before the adjudicating authority. The law requires that such notice
must contained grounds on which it is proposed to confiscate the goods or to
impose penalty.
If the proper officer has reason to
believe that any goods are liable to confiscation under Section 111 (a to p) and
Section 113 (a to l) of the Customs Act 1962 he may seize such goods and
a.
a notice should be served under Section 124 of the Customs Act 1962 on
him in writing informing him of the grounds on which it is proposed to
confiscate the goods or to impose a penalty.
b.
He may give an opportunity of making representation in writing within
such reasonable time as may be specified in the notice against the grounds of
confiscation or imposition of penalty mentioned therein.
c.
He may give a reasonable opportunity of being heard in the matter;
Provided that if the persons concerned
requested that no notice and personal
hearing is required, the same shall
considered be oral.
CONFISCATION OF IMPROPERLY IMPORTED GOODS AND
PENALTY
a.
Any person who in relation to any goods does or omits to do which act or
omission would render such goods which are liable to confiscation under Section
111 of the act or abets the doing or omission of such an act is liable for
penalty under Section 112 of the Customs Act 1962.
b.
Any person who acquires possession of or is anyway concerned in carrying,
removing, depositing, harboring, keeping, concealing, selling or purchasing or
has reason to believe or liable to confiscation under Section 111 is also liable
for penalty under Section 112 of the act.
The scale
of penalty amount is as follows:
i.
In the case of goods in respect of which any prohibition is in force
under this Act or any other law for the time being in force, to a penalty not
exceeding five time the value of the goods or one thousand rupees whichever is
the greater;
ii.
In the case of dutiable goods, other than prohibited goods, to a penalty
not exceeding five time the duty sought to be evaded on such goods or one
thousand rupees, whichever is the greater;
iii.
In the case of goods in respect of which the value stated in the entry
made under this Act or in the case of baggage, in the declaration made under
section 77 (in either cases hereafter in this section referred to as the
declared value) is higher than the value thereof, to a penalty not exceeding
five time the difference between the declared value and the value thereof or one
thousand rupees, whichever is the greater;
iv.
In the case of goods falling both under clauses i. And iii, to a penalty
not exceeding five times the value of goods or five times the difference between
the declared value and the value thereof or one thousand rupees whichever is the
highest;
v.
In the case of goods falling both under clauses ii and iii to a penalty
not exceeding five times the duty sought to be evaded on such goods or five
times the difference between the declared value and the value thereof or one
thousand rupees whichever is the highest.
In case of short levy or non levy of
duty or the interest has not been charged or paid or has been part paid or
erroneously refunded by reason of collusion or any willful mis-statement or
suppression of facts a penalty equal to the duty or interest so determined can
be imposed on the person under Section 114 (A) of the Customs Act 1962.
PENALTY FOR ATTEMPT TO EXPORT GOODS
IMPROPERLY
Where the duty has not been levied or
has been short-levied or the interest has not been charged or paid or has been
part paid or the duty or interest has been erroneously refunded by reason of
collusion or any willful mis-statement or suppression of facts, the person who
is liable to pay the duty or interest, as the case may be, as determined under
sub-section (2) of section 28 shall also be liable to pay a penalty equal to the
duty or interest so determined.
PENALTY FOR NON ACCOUNTING GOODS
If any goods loaded in a
conveyance for importation in to India are not unloaded at their place of
destination in India or if the quantity unloaded is short of the quantity to be
unloaded or the deficiency is not accounted for to the satisfaction of the Asst.
/Deputy Commissioner, the person in charge of the conveyance shall be liable for
penalty not exceeding twice the amount of duty that could have been chargeable
on the goods not unloaded under Section 116 of the Customs Act 1962. In case of
coastal goods a penalty of not exceeding twice the amount of export duty that
would have been charged can be imposed.
If any person contravenes any
provision of the Customs Act or abets any such contravention or fails to comply
any provision of the act where no express penalty is elsewhere provided for such
contravention or failure also liable for penalty not exceeding Rs.10000/-
(Rupees Ten Thousand) under Sec. 117 of the Customs Act, 1962.
CONFISCATION OF
CONVEYANCES
If any conveyance or animal
used as a means of transport in the smuggling of any goods or in the carriage of
any smuggled goods shall be liable for confiscation under Section 115 of the
Customs Act 1962. Unless the owner of the conveyance or animal proves that it
was so used without the knowledge or connivance of the owner himself.
Section 118
Where Any goods imported in the
packages are liable for confiscation, the packages and any other goods in that
package shall also be liable for confiscation.
Similarly, then goods meant for export
are liable for confiscation. The packages and any other goods contained therein
shall also be liable for confiscation.
CONFISCATION OF GOODS USED FOR CONCEALING SMUGGLED
GOODS
Any goods used for concealing
smuggled goods shall also be liable for confiscation under Section 119 of the
Customs Act 1962.
CONFISCATION OF SMUGGLED GOODS NOTWITHSTANDING CHANGE IN
FORM
Section 120 provides that Smuggled
goods may be confiscated notwithstanding any change in their form This provision
is made to meet such cases as smuggled gold being converted into ornaments, or
where the smuggled go0ods are inextricably mixed with other goods. The combined
goods shall be liable to confiscation. However, an innocent owner who proves
that any part of the seized goods has not been smuggled is not deprived of that
part of goods.
CONFISCATION OF SALE PROCEEDS
Where any smuggled goods are sold by a
person having knowledge or reason to believe that goods are smuggled goods, the
sale proceeds thereof shall also be liable for confiscation. The intention is
that when it is found that the smuggled goods have already been found, the sale
proceeds in the hands of smuggler or his accomplice can be seized and
confiscated.
OPTION TO PAY FINE IN LIEU OF
CONFISCATION
Whenever confiscation is
done under the Customs Act, the officer adjudging the case may give to the owner
of the goods an option to pay in lieu of confiscation such fine has the said
officer thinks fit under Section 125 of the Customs Act 1962. Such fine shall
not exceed the market price of the goods confiscated less in the case of
imported goods the duty chargeable thereon.
Authorities competent to adjudicate the cases.
If any goods is liable to confiscation
or any person is liable to a penalty for the act or omission on his part, such
confiscation or penalty may be adjudicated under Section 122 of the Customs Act
1962.
a.
without limit by Commissioner of Customs.
b.
Additional Collectors may adjudicate cases involving cases whose value
does not exceed Rs.10 lakhs.
c.
that in cases invoking extended period of limitation and value involved
is Rs.5 lakhs, the Additional Commissioners of Customs may issue notices.
d.
where the value of the goods liable to confiscation does not exceed
Rs.50,000/- by an Assistant Commissioner of Customs
e.
where the value of the goods liable to confiscation does not exceed
Rs.2,500/- by a Gazetted Officer of Customs lower in rank than an Assistant
Commissioner of Customs.
Board Circular No.8/95-Cus, dated 23.1.1995
Board Circular No.122/95-Cus, dated 28.11.95
Board Circular No.47/97Cus, dated 6.10.1997
Board Circular No.41/98-Cus, dated 11.6.98
Board Circular No.4/99-Cus, dated 23.1.1995
Board Circular No.21/95-Cus, dated 10.3.1995
Board Circular No.64/95-Cus, dated 12.6.1995
Section 28 of the Customs Act, 1962.
Section 28 AA of the Customs Act, 1962.
Section 28 AB of the Customs Act, 1962.
Section 111 of the Customs Act, 1962.
Section 112 of the Customs Act, 1962.
Section 113 of the Customs Act, 1962.
Section 114 of the Customs Act, 1962
Section 114 A of the Customs Act, 1962.
Section 115 of the Customs Act, 1962.
Section 116 of the Customs Act, 1962.
Section 117 of the Customs Act, 1962.
Section 119 of the Customs Act, 1962.
Section 118 of the Customs Act, 1962.
Section 120 of the Customs Act, 1962.
Section 121 of the Customs Act, 1962
Section 142 of the Customs Act, 1962
Section 122 of the Customs Act, 1962.
Section 124 of the Customs Act, 1962.
Section 125 of the Customs Act, 1962