The Jharkhand High Court held that issuance of a Show Cause Notice ( SCN ) consultation was mandatory before issuing SCN under the Customs Act, 1962. Since the mandatory Pre-SCN consultation as mandated under proviso to Section 28(1)(a) of the Customs Act, 1962 read with Pre-Notice Consultation Regulation, 2018 not complied with while issuing the impugned SCNs and the subsequent Order-in-Original are void ab initio.
M/s. Bihar Foundry & Castings Ltd., the Petitioner is a Company having its registered office and factories in the State of Jharkhand. The Petitioner imported Steam Coal within the meaning of Section 2(23) of the Customs Act, 1962 from outside the territory of India for use in its factory in the State of Jharkhand. The Petitioner is the importer of the Steam Coal within the meaning of Section 2(26) of the Act.
The Petitioner is challenging the legality and validity of the common Order-in-Appeal dated 1008-2022 passed by the Commissioner ( Appeal ), GST, Central Excise & Customs, Bhubaneswar, the Respondent No.3 by which he set aside the impugned Order-in-Original dated 19-11-2018 and the impugned Order-in-Original dated 19-11- 2018 and remanded the matter back for denovo adjudication ignoring that the impugned Orders dated 19-11-2018 are barred by limitation of Six months under Section 28 (9) (a) of the Customs Act, 1962 and also entire proceedings is carried out without Pre-Show Cause Notice consultation provided under Section 28 (1) (a) of the Act which provisions are mandatory and imperative and goes to the root of the matter.
Mr Kartik Kurmi assisted by Mr N. K. Pasari and Ms Sidhi Jalan, counsels for the petitioner submitted that the Show Cause Notice is issued under Section 28(1) as no case of collusion, wilful misstatement or suppression of facts is alleged and no penalty for such offences under Section 114A of the Customs Act, 1962 is proposed or imposed. He further submitted that the second proviso to Section 28(9) provides that where the Proper Officer fails to determine the amount of duty and interest within such extended period, such proceeding shall be deemed to have concluded as if no notice had been issued and in the instant case no case is made out which might have prevented the Proper Officer from determining the amount of duty, interest within six months specified under Clause (a) of Section 28(9) nor there is any extension of time limit by any senior Officer by the first proviso to section 28(9).
It was argued that no information for not determining the duty or interest is even communicated to the Petitioner as mandated under section 28(9A). It is further submitted by Counsel that the proviso to Clause (a) of sub-Section (1) of Section 28 provides for mandatory pre-show cause notice consultation. The Respondent No.2 in the exercise of powers under Section 157(2) read with Section 28(1)(a) of the Customs Act, 1962 has framed Pre-Notice Consultation Regulations, 2018 w.e.f. 02-04-2018 vide Notification No.29/2018-Cus. (NT) dated 02-042018.
A division bench of Justice Rongon Mukhopadhyay and Justice Deepak Roshan held that “though, penalties are imposed in the Order-in-Originals under Section 111(d) & (m) and Section 112(a) which does require ingredients of collusion, wilful misstatement or suppression of facts. In the instant case for absence of collusion, wilful misstatement or suppression of fact, no penalty under Section 114A has been imposed, hence, an extended period of one year is not attracted.”
Further observed that the mandatory Pre-SCN consultation as mandated under proviso to Section 28(1)(a) of the Customs Act, 1962 read with Pre-Notice Consultation Regulation, 2018 are not complied with while issuing the impugned SCNs both dated 20-04-2018, hence, the subsequent Order-in-Original both dated 19-11-2018 and the impugned 1st Appellate Order dated 10-08-2022 are bad in law being void ab initio and a nullity in the eyes of law.
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