IMPORTANT POINT
Although issuance of show cause notice u/s. 28 of Customs Act, 1962 is mandatory yet it can be waived by the party as it is for his benefit and in the facts of this case it was waived voluntarily.

JUDGMENT

Santosh Hegde, J.-M/s. Associated Cement Company Ltd. (for short ACC ) had embarked upon a project of substantial expansion and modernisation of its cement factory at Shahabad in Karnataka. The ACC had floated a tender inviting supply of high standard deformed steel bars. In that tender, ACC had claimed that the project was aided by the International Bank for Reconstruction and Development (for short the IBRD ), which would give the importer exemption from the import duty. In response to the said tender, M/s. Virgo Steels made an offer to supply 5,187 MT of steel. The offer was accepted by the ACC and the said Virgo Steels obtained an advance licence under the Deemed Export Scheme for duty-free import of the concerned steel under Notification No.210/82. This notification specifically required that if the goods in question was rot used for the purpose for which importation was permitted then the importer was liable on demand to pay a sum equivalent to the duty leviable. Sometime in November 1988, the ACC decided to abandon the work of expansion, hence, the licence obtained under the above said scheme for importation of duty-free steel became invalid. In spite of the same M/s. Virgo Steels imported certain quantities of steel duty-free knowing very well that the expansion project by the ACC had been abandoned. It is on record that M/s. Virgo Steels asked ACC to issue a signed export certificate in regard to actual quantities of steel supplied by it for the purpose of duty exemption, but the ACC pleaded their inability to provide such Deemed Export Certificate in view of the fact that it had abandoned its project.

2. In the above factual background and on the basis of certain information received by the Marine Preventive Wing of Mumbai, Customs investigations were conducted in regard to the import and illegal sale of steel by M/s. Virgo Steels. Based on the said investigation, Commissioner of Customs, Mumbai came to the conclusion that the import made by M/s. Virgo Steels after the abandonment of the project by the ACC was in contravention of the provisions of the Customs Act, 1962 ( the Act ), hence, decided to initiate proceedings against M/s. Virgo Steels and ACC. Having come to know of this decision of the Commissioner of Customs, to pre-empt any penal proceedings, consequences of which could have been very serious, M/s. Virgo Steels wrote a letter dated 30.3.1991 to the Assistant Collector of Customs, Marine Preventive Wing, Mumbai admitting in clear terms that the import of 24,326 MT of Billets and 2300 MT of Lead Ingot by them, and cleared duty-free under the DEC Scheme was illegal. They also admitted that the said material was sold in the market contrary to the terms of said Import Scheme and assured the former that they were ready to pay the duty chargeable under the said import as also any other penalty that may be imposed on them. The relevant part of the said letter is as under: "In this respect it is our humble submission that we are ready to pay the duty chargeable of 24,326 MT of Billets and 2300 MT of Lead Ingot along with any other penalty imposed on us. We do not want any show cause notice and personal hearing in the matter." (emphasis supplied). Along with the said letter they also enclosed a cheque for a sum of Rs. 50 lacs though post dated as a token of their commitment made in the said letter.

3. Based on the said letter, the Collector of Customs vide his order dated 16.3.1993 held that duty amounting to Rs.1,50,11,858 was leviable on the goods cleared by M/s. Virgo Steels and after giving deductions for such amounts already deposited by them, a demand for the balance sum of Rs.72,02,060/- was made on M/s. Virgo Steels along with a penalty of Rs. 5 Lacs. In regard to ACC, the Collector imposed a penalty of Rs. 5 lacs for having abetted the illegal import of the said sale.

4. M/s. Virgo Steels and ACC preferred their respective appeals before the Customs, Excise & Gold (Control) Appellate Tribunal (