2026-VIL-533-DEL-CU
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CUSTOMS High Court Cases

Customs - Validity of Demand Notice – Investigation alleging misclassification of imported goods (screw washer/gasket). During investigation, the petitioner expressed willingness to pay differential duty and requested that a letter be issued to that extent. Subsequently, a communication indicating differential customs duty was issued by an Assistant Commissioner. The petitioner paid the demanded amount under protest - Whether a communication issued by an Assistant Commissioner without following the statutory procedure mandated under Section 28 of the Customs Act, 1962, and without issuing a formal show cause notice, can be treated as a valid demand notice and whether amounts paid under protest during investigation can be appropriated towards eventual demand raised in adjudicatory order – HELD - The impugned communication is not a formal demand notice but rather a letter issued as a follow-up to the petitioner’s own statement expressing willingness to pay differential duty. Although the petitioner admitted to an error in calculation of differential duty and voluntarily recomputed and paid the amount, this admission does not bar the petitioner from its entitlement to the statutory process of adjudication of its liability - The amounts paid during investigation, whether under protest or otherwise, may be appropriated towards the final liability of the assessee at the time of passing of an adjudicatory order. The impugned communication, though issued without following formal Section 28 procedure, does not preclude the respondents from issuing a proper show cause notice to adjudicate the petitioner's actual liability - The impugned communication is quashed and set aside. The respondents are directed to issue SCN regarding the petitioner's liability, if any. The amount already paid by the petitioner shall be appropriated towards any demand eventually raised in the adjudicatory order. No further demands or recovery shall be made against the petitioner in the interim - The petition is partly allowed
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