2026-VIL-1467-CESTAT-CHD-CU
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CUSTOMS CESTAT Cases

Customs - Provisional Assessment and Finalization - Mis-declaration of Classification - Appellants exported parboiled rice claiming classification under CTH 10063010 with nil duty. Provisional clearance was allowed upon execution of bonds under Section 18 of Customs Act 1962. Test reports indicated characteristics of non-parboiled rice classifiable under CTH 10063090 - Department issued Notice under Section 28 demanding duty at 20% along with interest, fine and penalty alleging deliberate mis-declaration - Whether Show Cause Notice can be issued and demand recovered under Section 28 when assessment remains provisional and has not been finalized within statutory two-month period from date of receipt of test reports - HELD - Provisional assessment is evident from explicit language of bonds executed by Appellants under Section 18 whereby Appellants undertook to pay duty finally assessed on receipt of test reports. Assessment is mandatorily required to be finalized in accordance with Customs Finalization of Provisional Assessment Regulations 2018 within two months from date of receipt of test reports – SCN issued under Section 28 dealing with recovery of duties not levied or short levied can only be invoked after duty liability has been determined through final assessment. Proceedings initiated under Section 28 before finalization of provisional assessment are premature and not maintainable - Test reports are merely expert opinion and serve only as guiding tool to understand technical nature of product but do not have binding effect on final classification. Determination of proper classification is quasi-judicial function to be decided by adjudicating authority strictly in accordance with law and not merely on basis of inconclusive test reports – The goods were exported on provisional basis and are unavailable for confiscation therefore redemption fine under Section 125 cannot be legally sustained – The impugned orders are set aside and the appeal is allowed
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