Delhi HC: M/s Ismartu India Pvt. Ltd. V. Union of India & Ors. : W.P.(C) 15199/2023
Background
The Petition was filed challenging a Show Cause Notice (SCN) issued under Section 28(4) of the Customs Act, 1962. The petitioner sought to quash the SCN on several grounds, including that a prior SCN dated July 25, 2023, had already been issued under Section 28(1) of the Act for similar goods and factual issues, rendering the subsequent SCN unsustainable. The petitioner contended that the impugned SCN did not meet the requirements of Section 28(4) of the Act, as it lacked particulars regarding any alleged collusion, deliberate misrepresentation, or withholding of crucial information. Additionally, the petitioner argued that they had consistently imported the same goods since 2016, and the respondents, for the first time, sought to classify the imported goods under a different tariff heading.
Department Contention
The respondents defended the issuance of the SCN under Section 28(4), arguing that the petitioner failed to provide the necessary data and replies, which amounted to intentional suppression of information. They also claimed that the SCN was issued under Notification No. 42 of 2019, which allows for a supplementary notice, and that the SCN pertained to different periods and bills of entries. The primary contention was that the petitioner misclassified the imported goods, which led to a short payment of duty.
Decision of the Court
The High Court of Delhi ruled in favor of the petitioner, and set aside the Impugned SCN issued under Section 28(4) of the Customs Act, 1962. The court found that the issuance of a second SCN under Section 28(4) was unsustainable, as a prior notice under Section 28(1) had already been issued for similar goods and allegations. The court reasoned that Section 28 of the Act provides for two separate types of notices under different circumstances, and they cannot be interchangeably issued. The court also agreed with the Petitioner’s contention that the impugned SCN did not fulfill the requirements of Section 28(4) as there was no indication of collusion or willful misstatement of facts.
Our View
This judgment reinforces that issuing two notices under different sections (28(1) and 28(4)) for similar circumstances is unsustainable, as these sections apply to distinct scenarios, It also highlighted the issue of “change of opinion,” where the same officer issued two notices under different sections based on an almost identical set of facts within a short period.
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