SUPPLEMENTARY NOTICE UNDER CUSTOMS ACT, 1962

[Mr. M. GOVINDARAJAN]

Show cause notice

Section 28 of the Customs Act, 1962 (‘Act’ for short) provides the procedure for recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded.  Section 28(1) of the Act provides that the proper officer shall, within 2 years from the relevant date, serve notice on the person chargeable with the duty or interest which has not been so levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice.  Before issuing notice, the proper officer shall hold pre-notice consultation with the person chargeable with duty or interest in such manner as may be prescribed. 

Invoking extended period

Section 28(4) provides that where any duty has not been levied or not paid or has been short-levied or short-paid or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of,-

• collusion; or
• any willful mis-statement; or
• suppression of facts,

by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within 5 years from the relevant date, serve notice on the person chargeable with duty or interest which has not been so levied or not paid] or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice.

SCN before confiscation of goods

Section 124 of the Act provides that no order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person –

• is given a notice in writing with the prior approval of the officer of Customs not below the rank of an Assistant Commissioner of Customs, informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;
•  is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and
• is given a reasonable opportunity of being heard in the matter .

The second proviso to this section provides that the proper officer may issue a supplementary notice under such circumstances and in such manner as may be prescribed.

Supplementary notice  

Vide section 68 of the Finance Act, 2018, Section 28(7A) has been inserted under Customs Act, 1962 (‘Act’ for short) which came into effect from 01.04.2018.  The newly inserted section provides for the issue of supplementary notice by the Department.  It provides that the proper officer may issue a supplementary notice under such circumstances and in such manner as may be prescribed, and the provisions of this section shall apply to such supplementary notice as if it was issued under the said sub-section (1) or sub-section (4).

Customs (Supplementary Notice) Regulations, 2019

For the purpose of issuing supplementary notice under section 28(1) and section 124 of the Act the Board framed the ‘Customs (Supplementary Notice) Regulations, 2019 vide Notification No. 42/2019-Customs (NT), dated 18.06.2019.  The said regulations came into effect from 18.06.2019.

These regulations shall be applicable to the notices issued under section 28(1)(a) or under section 124 of the Act including those which have not been adjudicated on the date of enforcement of these regulations.

The proper officer may, under any of the sections above mentioned, issue a supplementary notice in any of the following manner-

•  in case there is a difference in the quantum of duty demanded in such notice including the cases which may necessitate change in adjudicating authority;
• for invoking penal action under the provisions of the Act against a person/persons in addition to those charged in such notice;
• for invoking additional section/sections of the Act in such notice;
•  in case there is any additional evidence that may have a significant bearing on the outcome of the case.

Where a notice has been issued under section 28 or section 124 of the Act, the supplementary notice shall be issued within the time limit as prescribed in the relevant sections of the Act.

Proper Officer

Vide Notification No. 43/2019-Customs (NT), dated 18.06.2019 the Board assigns the proper officer to the following officers for the purposes of section 28 and 124 of the Act-

• Additional Director Generals, Additional Directors or Joint Directors, Deputy Directors or Assistant Directors in the Directorate General of Revenue Intelligence.
• Commissioners of Customs (Preventive), Additional Commissioners or Joint Commissioners of Customs (Preventive), Deputy Commissioners or Assistant Commissioners of Customs (Preventive).
• Additional Director Generals, Additional Directors or Joint Directors, Deputy Directors or Assistant Directors in the Directorate General of Central Excise Intelligence.
• Commissioners of Central Excise, Additional Commissioners or Joint Commissioners of Central Excise, Deputy Commissioners or Assistant Commissioners of Central Excise.
• Deputy Commissioner or Assistant Commissioner of Customs and Central Excise.