2025-VIL-249-DEL-CU
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CUSTOMS High Court Cases

Customs - Section 28(1), Section 28(4) of the Customs Act, 1962 – Issue of Show Cause Notice by Change of Opinion, Suppression of Facts - Petitioner challenged two Show Cause Notices (SCNs) issued by the Respondents. The first SCN was issued under Section 28(1) of the Customs Act, 1962 on 25 July 2023 and the second SCN was issued under Section 28(4) of the Act on 01 September 2023. Both SCNs alleged that the petitioner had misclassified the imported goods as parts of mobile phones instead of complete mobile sets in CKD condition, and thereby evaded payment of applicable customs duty - Whether the issuance of the second SCN under Section 28(4) is valid and maintainable when a prior SCN under Section 28(1) was already issued on a similar factual matrix – HELD - The Sections 28(1) and 28(4) of the Customs Act operate in different scenarios and cannot be used interchangeably. Section 28(1) is applicable where the elements of Section 28(4), namely collusion, wilful misstatement or suppression of facts, are absent. Since a prior SCN under Section 28(1) had already been issued, the issuance of the subsequent SCN under Section 28(4) on a similar factual matrix is not maintainable - Further, the two SCNs were almost identical in every respect, except for the different provisions under which they were issued. The Court relied on the principles laid down by the Supreme Court in cases like State of U.P. v. Aryaverth Chawal Udyog and Commr. of Customs v. G.C. Jain, and held that the issuance of the second SCN within a short span of 6 weeks, based on the same facts and reports, amounted to a "change of opinion" by the authorities, which rendered the impugned SCN unsustainable - The impugned SCN under Section 28(4) is set aside and the writ petition is allowed - Whether the impugned SCN under Section 28(4) fulfills the requirements of the provision - HELD - The Respondents had not been able to establish the requirements of Section 28(4), namely collusion, wilful misstatement or suppression of facts, to justify the issuance of the SCN under that provision. A genuine dispute over the classification of goods cannot be elevated to "suppression of facts", and in the absence of any evidence of collusion or wilful misstatement, the impugned SCN under Section 28(4) did not fulfill the requirements of the provision.
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