Commissioner of Customs, Bangalore vs Merchant Impex

N. Kumar, J.—The Revenue has preferred this appeal challenging the order passed by the Tribunal [2007 (219) E.L.T. 508 (Tribunal) ] which has held that the proceedings are bad in law as the letter issued did not constitute a show cause notice which is a condition precedent for initiation of any proceedings under the Act.

The assessee filed a bill of entry dated 21-8-2003 for clearance of 1,70,050 pieces of Melamine spoons classified under Chapter sub-heading 3924.90 with concessional rate of duty under Customs Notification No. 26/2000. The Deputy Commissioner felt that the benefit of Notification No. 43/2003 is not applicable to them. Therefore, he issued a letter dated 17-1-2004 without issuing a show cause notice in terms of law and passed an order-in-original holding that the assessee is liable for payment of duty, interest and penalty. The same was challenged by the assessee before the Commissioner (Appeals) contending that a show cause notice is a pre-requirement for confirmation of demands as contemplated in Section 28 of the Customs Act which includes even short levy. However, the Commissioner dismissed the appeal. It is against the said order, the assessee preferred an appeal to the Tribunal. The Tribunal relying on the judgment of the Apex Court in the case of Metal Forgings and Another Vs. Union of India (UOI) and Others, , where it has been held that issue of show cause notice is a mandatory requirement for raising demands and that communications/orders suggestions or advises from the Department cannot be deemed to be a show cause notice, held that the letter issued by the Department cannot be treated as show cause notice and therefore the entire proceedings is vitiated. The Tribunal set aside the order passed by the appellate authority as well as the adjudicating authority. Aggrieved by the said order the Revenue is in appeal.

Admittedly, the letter which is served on the assessee did not satisfy the requirement of a show cause notice. Issue of a show cause notice is a condition precedent for initiation of proceedings u/s 28 of the Act. In the light of the aforesaid judgment of the Apex Court, as the proceedings were initiated without issuing show cause notice the entire proceedings is bad in law. Therefore the Tribunal was justified in setting aside the impugned orders. We do not see any merit in this appeal. Accordingly this appeal is dismissed The substantial question of law is answered in favour of the assessee and against the Revenue.

Liberty is reserved to the appellant to issue a fresh show cause notice subject to the law of limitation.