Show cause notices issued prior to 29.03.2018 must be adjudicated within one year from that date; otherwise, they lapse.

DATE OF DECISION : 20.01.2026 PER: ASHOK JINDAL

These appeals have been filed against the impugned order dated 28.05.2019, in which the show cause notices have been issued on 07.10.2016.

2. The facts of the case are that the appellants are importers of bicycle parts. An intelligence was gathered that the appellants were engaged in evasion of customs duty by loading bicycles parts from China routing the same through Malaysia and availing wrongly benefit of Notification No. 46/2011-Cus dt. 01.06.2011 issued under Preferential Trade Agreement between the Governments of Member States of the ASEAN and the Republic of India by way of mis- declaring the country of origin, therefore, the investigation was conducted. On the basis of the investigation, it was revealed the modus operandi of the appellants, whereby, it was found that the bicycles parts of China origin were routed through Malaysia port to avail wrongly the benefit of exemption notification issued under Preferential Trade Agreement which was admitted by the appellants; therefore, the show cause notices were issued and adjudicated on the basis of documents recovered and statements recorded during the course of investigation. The impugned demand were confirmed along with interest. A redemption fine was also imposed on provisionally released goods. In view of confiscation, penalties were imposed on both the appellants. Against the said order, the appellants are before us.

3.1 The ld. Counsel for the appellants submitted that the impugned order is not sustainable in the eyes of law as in this case, the show cause notices were issued on 07.10.2016, whereas adjudication has taken place on 28.05.2019 as per amended explanation 4 to Section 28 of the Customs Act, 1962 and as held by Hon’ble Punjab & Haryana High Court in the case of M/s Prabhat Fertilizers & Chemical Works vs. CC (Import) in C.W.P. No. 23433 of 2019 and M/s Harkaran Dass Vedpal vs. U.O.I. in C.W.P. No. 10889 of 2015 dt. 22.07.2019.

3.2 He further submitted that Section 28 deals with demand of duty not levied or short levied or not paid or short paid. It is a case of entitlement of exemption notification which can be denied only after re-assessment of bill of entry. Section 28 does not deal with determination of entitlement of exemption. In civil law, it may be called as execution of decree and it is well known fact that execution is meaningless without decree. There is no Section or Rule under Customs Act which prescribes mode, manner or method of re- determination of exemption notification. In the absence of power prescribed under the Act/Rule itself, the Department has no authority to issue show cause notice under Section 28 to re-determine or hold any claim of exemption as duty not levied or short levied or not paid or short paid. It is a settled law that no demand can be made in the absence of power/mechanism prescribed under the Act or Rule made thereon. To support, he relied on the decision of Hon’ble Apex Court in the case of CCE vs Larsen & Toubro – 2015 (39) STR 913 (SC). He also relied on the decision of Hon’ble Apex Court in the case of ITC Ltd vs. CCE, Kolkata-IV – 2019-TIOL-418-SC-CUS-LB to say that without challenging the assessment made under Section 17 of the Customs Act, 1962 , the refund claim cannot be entertained under Section 27 of the . It is his submission that Section 27 and Section 28 are the machinery provisions which provide the procedure to be adopted in case of refund or demand of duty. In the absence of amendments/modifications have been made in the bill of entry on the basis of which assessment has been made, the proceedings under Section 28 of the Act cannot be initiated. He also submitted that the said view of the Hon’ble Apex Court has been followed by the Hon’ble Punjab & Haryana High Court in the case of M/s Jairath International And Another vs. U.O.I. – 2019-TIOL-2459-HC-P&