The Delhi High Court has held that there is no provision for pre-notice consultation on Customs Show Cause Notice (SCN) issued under section 124 of the Customs Act, 1962 read with Rule 16A of Customs, Central Excise & Service Tax Drawback Rules, 1995 [‘1995 Rules’].
M/S Gunjan Exports, the petitioner questions the validity of the Show Cause Notice [‘SCN’] which has come to be issued under Section 124 and Section 75(1) of the Customs Act, 1962 [‘Act’] read with Rule 16A of Customs, Central Excise & Service Tax Drawback Rules, 1995 [‘1995 Rules’].
A show cause notice was issued mentioning the following allegations, “The goods covered under 04 Shipping Bills not be confiscated under the provisions Section 113(i) of the Customs Act, 1992, as the goods are not available for confiscation, redemption fine on above Shipping Bills should not be imposed.
The FOB value declared for the four Shipping Bills should not be rejected and redetermined to Rs. 86,98,607/-. Hence drawback claimed for the impugned Shipping Bills should not be reduced to Rs. 2,66,171/-. The drawback claim amounting to Rs. 1,86,47,322/- (Rs. One Crore Eighty Six Lakh Forty-Seven Thousand Three Hundred and Twenty-Two Only) against the FOB amount Rs. 31,94,56,897.4/- between the year 2006 to 2017 should not be rejected and re-determined to Rs. 40,90,773/-.
The inadmissible drawback amounting to Rs. 1,45,56,549/- (One Crore Forty-Five Lakh Fifty-Six Thousand Five Hundred And Forty-Nine Only) against the FOB amount Rs. 31,94,56,897.4/- between the year 2006 to 2017 should not be recovered from the exporter M/s. Gunjan Exports (IEC No. 0593002253) under Rules 16 & 16A of the Customs, Central Excise Duties and Service Tax Drawback Rule, 1995 read with Section 75(1) of the Customs Act, 1962.
The interest on wrongly availed duty drawback of Rs. 1,45,56,549/- (One Crore Forty-Five Lakh Fifty-Six Thousand Five Hundred and Forty-Nine Only) should not be recovered from the exporter M/s. Gunjan Exports (IEC No. 0593002253), Exports under Section 75(2) of the Customs Act, 1962.
Penalty should not be imposed under Section 114 A of the Customs Act, 1962 on M/s. Gunjan Exports (IEC No. 0593002253) for wilful Mis-Declaration of the subject goods.”
The SCN is challenged principally on a perceived statutory requirement of pre-notice consultation being undertaken before the issuance of an SCN. It was submitted that pre-notice consultation is a mandatory pre-requisite.
A division bench comprising Justice Yashwant Varma and Justice Dharmesh Sharma observed that “the concept of pre-notice consultation stands incorporated only in Section 28 of the Act and more particularly in terms of the First Proviso appended to sub-section (1) of that provision. The action which is proposed to be taken in terms of the SCN, however, rests on the provisions of Section 124 and the 1995 Rules. Those provisions neither mirror nor adopt the principles of pre-notice consultation.”
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