✦ High Court of India · 01 Sep 2023

Mr. Tarun Gulati, Sr. Adv. with Mr. Tarun Jain, Ms. Kritika Tuteja, Mr. Devansh v. UNION OF INDIA AND OTHERS

Case Details High Court of India · 01 Sep 2023

Court

High Court of India

Decided

01 Sep 2023

Bench

YASHWANT VARMA HARISH VAIDYANATHAN U D G M E N T HARISH VAIDYANATHAN SHANKAR

Length

9,277 words

Acts & Sections

Customs Act 1962

Cited in this judgment

Judgment

1. The present petition impugns the Show Cause Notice1 dated 01 September 2023 issued under Section 28(4) of the Customs Act, 19622 by Respondent No. 2 and seeks a suitable writ quashing the same relying on various grounds inter alia, as follows: i. The impugned SCN dated 01 September 2023 is a subsequent (second) SCN and since a prior SCN, dated 25 July 2023, was already issued under Section 28(1) of the Act, the subsequent 1 SCN 2 The Act Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 SCN (hereinafter ―the impugned SCN‖) is bad in Law and not maintainable particularly since the previously issued SCN dated 25 July 2023 was on a similar factual matrix relating to the importation of similar goods. Such a notice, would in fact, constitute a ―change of opinion‖. ii. The impugned SCN does not satisfy the requirements of Section 28(4) of the Act as the same lacks any particulars regarding any alleged (a) collusion (b) deliberate misrepresentation, or (c) the withholding of crucial information. The impugned SCN does not satisfy the mandatory conditions for issuance of the same. iii. The Petitioner has been making continuous and consistent imports of the very same goods since the year 2016 and it is for the first time that by the previous SCN dated 25 July 2023 and the present impugned SCN that the Respondents have sought to classify the imported goods under a different tariff heading (Parts of Mobile Phones as against Complete Mobile Phones). iv. The classification Petitioner under CTH 85171400/85171219 is held as disputed by the Respondent as the Respondent claims that the said classification is incorrect. Such incorrect classification or declaration by the Petitioner cannot form the basis for a SCN under Section 28(4) of the Act as the same would not fulfill the pre-requisites mandated by Section 28(4) of the Act.

2. The primary grounds raised during arguments by Respondent in their defence, in respect of issuance of SCN under Section 28(4) of the Act appears to be the following: i. The Petitioner did not submit the requisite data nor reply and Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 the same amounts to intentional suppression. ii. The impugned SCN has been issued under Notification No. 42 of 2019 Customs (NT) dated 18 June 2019 which provides for a supplementary notice to be issued once a notice under Sections 28 or 124 of the Act has been issued under circumstances enumerated therein. iii. The subject matter of the said SCN is related to different periods and different bills of entries. ANALYSIS: 3. For convenience, we have reproduced the contents of, besides

the common background facts, the two SCNs alongside and underlined the differences between the two, as below: SHOW CAUSE NOTICE DATED 25.07.2023 (Annexure P-2) SHOW CAUSE NOTICE DATED 01.09.2023 (Annexure P-3) ****** ****** IT the good “The finding of the Investigation- 9.12 The NCTC has suspected that the declared weight of considerably low. However, the same has been verified and found to be 6610 Kgs against the declared weight of 6633 Kgs which almost tallies. Vide Goods ‗Electronics (Requirement Compulsory Registration) Order, 2021. The MeitY has notified the specific goods on which BIS norms will follow at the time of import. It was found that the said order does not cover parts of mobile phones. The goods mentioned IN 22*26mm‘ is only a label meant for affixing after completion of the final product and the same also do not fall i.e. BIS Label the alert IT the good “The finding of the Investigation- 9.12 The NCTC has suspected that the declared weight of considerably low. However, the same has been verified and found to be 6610 Kgs against the declared weight of 6633 Kgs which almost tallies. Vide Goods 'Electronics (Requirement Compulsory Registration) Order, 2021, The MeitY has notified the specific goods on which BIS norms will follow at the time of import. It was found that the said order does not cover parts of mobile phones. The goods mentioned IN 22*26mm‘ is only a label meant for affixing after completion of the final product and the same also do not fall i.e. BIS Label the alert Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 within the ambit of the said order. within the ambit of the said order. reveal importer Classification of unassembled goods in respect of imported model IT5607: 9.13 Facts of the case and submissions consignment imported vide B/E No. 2432709 dated 14.09.2022 and invoice no. 0090048807 contains all the parts required for the manufacturing of model No. IT5607 except for the battery and camera module. The goods in respect of model No. IT5607 were examined by the Chartered Engineer, who, vide report dated 29.11.2022, reported article shape of a mobile phone and thus, in light of the above, prima facie have the essential characteristics of the article..." Further, an essential feature of a mobile phone is communication between two or more people. All other features, viz. camera, torch, earphone slot, storage capacity, etc., are added features of a mobile phone. Therefore, a mobile phone will essentially remain a mobile phone even without a camera feature. that ―...they acquire reveal importer Classification of unassembled goods in respect of imported model IT5607: 9.13 Facts of the case and submissions consignment imported vide B/E No. 2432709 dated 14.09.2022 and invoice no. 0090048807 contains all the parts required for the manufacturing of model No. IT5607 except for the battery and camera module. The goods in respect of model No. IT5607 were examined by the Chartered Engineer, who, vide report dated 29.11.2022, reported article shape of a mobile phone and thus, in light of the above, prima facie have the essential characteristics of the article..." Further, an essential feature of a mobile phone is communication between two or more people. All other features, viz. camera, torch, earphone slot, storage capacity, etc., are added features of a mobile phone. Therefore, a mobile phone will essentially remain a mobile phone even without a camera feature. that ―...they acquire

10. Applicable legal provision in this regard is hereunder: Rule 2(a) The General Rules for The Interpretation of Import Tariff read as follows: "2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or provided unfinished, presented, unfinished articles have the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by that, incomplete Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 virtue of unassembled or disassembled." rule), presented virtue of unassembled or disassembled." rule), presented to refer this context

11. In order to find out that the mobile parts imported like the camera, Lens, Cover, Keypad, etc. by themselves have acquired the essential character of a mobile phone, it will be relevant to HSN Explanatory Notes to the Rules of Interpretation and also to the HSN Explanatory Notes to Section XVI thereof expression unassembled machines. Explanatory Notes to Section XVI in incomplete machines HSN, unassembled machines are of following types:- understanding incomplete In to refer this context

11. In order to find out that the mobile parts imported like the camera, Lens, Cover, Keypad, etc by themselves have acquired the essential character of a mobile phone, it will be relevant to HSN Explanatory Notes to the Rules of Interpretation and also to the HSN Explanatory Notes to Section XVI thereof expression unassembled machines. Explanatory Notes to Section XVI in incomplete machines HSN, unassembled machines are of following types: understanding incomplete In Incomplete Machines Section, "Throughout reference to a machine or apparatus covers not only the complete machine but also an incomplete machine (i.e., an assembly of parts so far advanced that it already has the main essential features of the complete machine). Thus, a machine lacking only a flywheel, a bed plate, calender rolls, tool holders, etc., is classified in the same heading as the machine and not in any separate heading provided for parts. Similarly, a machine or apparatus normally incorporating an electric motor (e.g., electromechanical classified in the same heading as the corresponding complete machine even if presented without that motor." tools of Heading 85.08) Incomplete Machines Section, "Throughout reference to a machine or apparatus covers not only the complete machine but also an incomplete machine (i.e., an assembly of parts so far advanced that it already has the main essential features of the complete machine). Thus, a machine lacking only a flywheel, a bed plate, calender rolls, tool holders, etc., is classified in the same heading as the machine and not in any separate heading provided for parts. Similarly, a machine or apparatus normally incorporating an electric motor (e.g., electromechanical classified in the same heading as the corresponding complete machine even if presented without that motor." tools of Heading 85.08) Unassembled Machines "For convenience of transport many machines transported in an unassembled state. Although in effect the goods are then a apparatus Unassembled Machines "For convenience of transport, many machines transported in an unassembled state. Although in effect the goods are then a apparatus Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 collection of parts, they are classified as being the machine in question and not in any separate heading for parts. The same applies to an incomplete machine having the features of the complete machine [see Part (IV) above], presented unassembled (see also in this connection the General Explanatory Notes to Chapters 84 and unassembled 85).However, components in excess of the number required for a complete machine or for an incomplete machine having the characteristics of a complete machine are classified in their own appropriate heading." collection of parts, they are classified as being the machine in question and not in any separate heading for parts. The same applies to an incomplete machine having the features of the complete machine [see Part (IV) above], presented unassembled (see also in this connection the General Explanatory Notes to Chapters 84 and unassembled 85). components in excess of the number required for a complete machine or for an incomplete machine having the characteristics of a complete machine are classified in their own appropriate heading." However,

11.1 The importer herein imported the parts designed and manufactured by a foreign entity as per their contracts resulting in merely assembling the parts at operation undertaken by them can be termed a simple assembly operation falling within the scope of Rule 2(a) of the Interpretative Rules. the site. Therefore,

11.2 Thus, the above clearly states that imported goods can be used assemble a mobile device that can be used to communicate or can also be used as a different layout to create a complete set without a camera module.

11.3 Whereas, the importer cited the judgment dated 23.09.2008 in the matter of Commissioner of Customs, New Delhi Vs. M/s Sony India Ltd. (Citation 2008(231) E.L.T 385 (SC)) wherein the Hon'ble Supreme Court had dismissed the appeal filed by the department and upheld the decision of the CESTAT Final Order No. 237/2002-B dated 28.05.2002 Appeal No. C/122/99-B – Sony India Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 Ltd. vs. Commissioner of Customs, ICD New Delhi (Citation 2002(143) E.L.T. 411 (Tri-LB). However, the facts and circumstances of the case cited by the importer are different from the instant case. In the cited case, imported 94 consignments of various components of CTV, whereas in the instant case, in a single goods were brought consignment. appellant had Ltd. vs. Commissioner of Customs, ICD New Delhi (Citation 2002(143) E.L.T. 411 (Tri-LB). However, the facts and circumstances of the case cited by the importer are different from the instant case. In the cited case, imported 94 consignments of various components of CTV, whereas in the instant case, in a single goods were brought consignment. appellant had Order assembly,

11.4 In contradiction, it appears that the findings in the case of M/s Bird Retail Pvt. Ltd. vs. Commissioner of Customs (Import), ICD Tughlakabad No. Final (CESTAT's 50362/2020 dated 24.02.2020 Appeal No. 51007-09 of 2019) are applicable in the instant case. In this case, the appellant has been importing "Segway" products in CKD condition in the form of very assemblies such as transmission assembly, wheel etc., wherein they have filed bills of entry for assessment and clearance of the imported consignment, declaring the product as "CKD Parts of electrically operated two-wheeler/personal transport – lithium ION battery for captive use." The product has been classified under Customs Tariff 87149990/87144011.The Heading ordered Adjudicating classifying the product under CTH 87119091. The Hon'ble CESTAT, after due consideration, held as under: assembly, Authority "22. It can also be seen that as per the interpretative rules to the Customs Tariff Act, the General Rules for Interpretation of Schedule II provide as follows: "22. It can also be seen that as per the interpretative rules to the Customs Tariff Act, the General Rules for Interpretation of Schedule II provide as follows: ―Rule 2(a): Any reference in a heading “Rule 2(a): Any reference in a Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 incomplete to an article shall be taken to include a reference to that article incomplete that, as or unfinished, provided presented, unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or failing to be classified as complete or finished by virtue of rule), presented unassembled or disassembled." heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or failing to be classified as complete or finished by virtue of rule), presented unassembled or disassembled."

23. The above-mentioned Rule 2(a) makes it clear that any product which is imported in the form of completely knocked down (CKD) condition, and if such components imported in CKD condition have all the essential ingredients to work as a complete vehicle after assembly, in that case, such components need to be classified vehicle, complete motor motorcycle, etc.” Therefore, it appears that the ratio of the above judgment is applicable in the instant case. a

12. The issues were also examined in view of the Notification No. 33/2023- Cutsoms dated 27.04.2023 submitted by the importer on 18.05.2023 (RUD- X) which Notification No. 11/2022- Customs dated 01.02.2022 & 12/2022- Customs dated 01.022023. It appears that the same is applicable in the case or Hearable devices like speakers & wearable devices like smart watches and not on mobile phones. Hence, the same doesn't appear to be applicable in the instant case.

12. The issues were also examined in view of the Notification No. 33/2023- Customs, dated 27.04.2023, submitted by the importer on 18.05.2023 (RUD- X) which references Notification No. 11/2022-Customs dated 01.02.2022 12/2022-Customs 01.02.2023. It appears that the same is applicable in the case of Hearable Devices like speakers and wearable devices like smartwatches and not on mobile phones. Hence, the same doesn't appear to be applicable in the instant case.

12.1 Hence, the importer was asked to submit details of consignments for the last two years consisting of PCBA Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 along with other items/inputs for the manufacture of mobile phones, vide office letter dated 25.01.2023 (RUD- XI), 22.02.2023, and 28.03.2023. letter

12.2 In response to this office letter, the details of goods imported for the last two years were submitted by the importer 31.03.2023. However, on perusal of the same, it was noticed that the importer submitted details of Model ‗IT5607‘ only which was the disputed the examined BE No. 2432709 dated 14.09.2022, and the details submitted were accordance with the prescribed format mentioned in the said letters.

11.05.2023

12.3 Further, the importer, vide email (RUD-XII), submitted data regarding details of shipments having PCBA for the past two years. On perusal, the Bill of Entry as submitted by the importer was checked from the ICES system. Accordingly, differential duty has been calculated for the consignments imported in the past 2 years.

13. Initial investigations were around Model No. IT5607. Whereas data submitted by the importer reveals that there has been importation of parts for manufacturing of mobile phones of models other than IT5607, wherein the shipments/consignments contain PCBA and other parts essential for assembly/manufacturing of the mobile phones. In other words, it appears that provisions of General Rules 2(a) would also be applicable in these cases as well. Redetermination of classification of Differential dutv: and Computation Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12

13. Initial investigations were around Model No. IT5607. Whereas data submitted by the importer reveals that there has been importation of parts for manufacturing of mobile phones of models other than 1T5607 wherein the shipments/consignments contain PCBA and other parts essential for assembly/manufacturing of the mobile phones. In other words, it appears that provisions of General Rules 2(a) would also be applicable in these cases as well.

13.1 The importer was asked to submit import data with respect to past import

14. Details of differential duty calculation in respect of the invoices containing PCBA for the period of the two years are attached as Annexure A. *** vide this office letter dated 25.01.2023 and in response to the same, the importer submitted import data for last two financial year only vide email dated 11.05.2023. Accordingly, Show Cause Notice No 103/2023-24/Gr. 2G/Pr Commr./ICD-lMP/TKD dated 25.07.2023, was issued to importer. in Annexure-A

14.1 From investigations as detailed above, it appears that the importer has misclassified the CTH of the goods imported vide all invoices as mentioned corresponding Bills of Entry filed by them, resulting in short-payment of duty. Therefore, it appears that the importer has wrongly self-assessed the Bills of Entry mentioned in the Table above under Section 17(1) of the Customs Act, 1962. The impugned goods do not correspond in respect of classification, being a complete mobile CTH attracting 85171400/85171219 with respect to the declaration given in the Bills of Entry as manufacturing parts of mobile phones. Further, under the provisions of Section 46(4A) of the Act, ibid, it is the responsibility of the importer to ascertain the accuracy of the information given in the Bill of Entry.

14.2 In view of the above and submission by the importer, it appears that the goods/mobile parts imported vide invoices for the past two years as mentioned in Annexure A have all the required components manufacture of the mobile phone which merit classification under tariff item 85171400 (Applicable BCD @ 20%) instead under differential tariff item of mobile parts. neither to submit

13.2 Further, the importer was also import data of remaining past import. However, it appeared importer submitted any data nor any reply. Accordingly, importer was retrieved from the ICES 2.0 and it was found that the importer manufacturing of mobile phones‖ vide Bills of Entry. as detailed in Annexure - A to D attached hereto. import data of imported ―PCBA Redetermination of classification of Differential duty: and Computation *** is observed

14.1 From the above table and as per WCO Tariff, complete mobile phones were classifiable under CTH 85171210 (till 31 .12.20 19), CTH 85171219 (after 01.01.2020 to 31.01,2022), CTH 85171400 w. e. f 01.02.2022.

14.2 Details of differential duly calculation in respect of the Invoices the period containing PCBA starting 24.07.2023 are attached as Annexure A to D hereto. The summary of the calculation in Annexure A to D, is as hereunder- 24.08.2018

15. WHEREAS. a Pre-notice *** Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 compliance Regulations, Consultation letter dated 07.07.2023, Pre-notice 2018. Consultation notified vide Notification No.29/2018- Cus (N.T) dated 02.04.2018, was this office importer by issued wherein it was requested to deposit short levy duty amounting to Rs. 5,31,48,005/-, in respect of Bills of Entry. as mentioned in Annexure-A & B. Further, the importer was also informed of the intention to issue the notice under Section 28(1) of the Customs Act. 1962 specifying the grounds on which such notice proposed to be issued. However, no reply against said pre-notice has been received from the importer till date. *** Liquid

14.1 From investigations as detailed above, it appears that the importer has misclassified the goods viz. Crystal Module, Microphone, Speaker, Front Cover, Back Cover, Keypad, Paper Sticker, Adhesive Tape, Adhesive Type Foam, Advertising Paper, Antenna, Camera Protective Lens, Conductive Fabric, Speaker Frame, Earphone, Keypad Dome, LCM Protectiveness, Light Emitting Diode (LED), Loaded Printed Circuit Board, Motor, PE bag, Protective Lens, Screw, Tape MYLAR etc.", imported vide Bills of Entry as mentioned in Annexure - A to D resulting in short-payment of duty. Therefore, it appears that the importer has wrongly impugned Bills of Entry under Section 17(1) of the Customs Act, 1962. The Impugned goods do not correspond in respect of classification being a complete mobile set, which merit classification CTH 85171400/85171219/85171210, with respect to the declaration given in the Bills of Entry as manufacturing parts of mobile phones. Further, under provisions of Section 46(4A) of the Act, ibid, it is the responsibility of the importer to ascertain the accuracy of the information given in the Bill of Entry. self-assessed

14.2 In view of the above and submission by the importer, it appears that the goods/mobile parts imported vide Bills of Entry, as detailed in Annexure-A components the mobile phone manufacture of which merit classification under Tariff Item 85171400/85171219185171210 instead of under different tariff item of to D, have all required Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12

17. On perusal of the aforementioned Investigation Report, it is observed importer has wrongly classified said goods by suppressing the said goods are the fact complete mobile in CKD condition. It was because of the timely intervention of investigation agency the said fact came to light which proves that the importer had intentionally suppressed the facts and evaded applicable customs duty which resulted in short payment of duty of Rs. Rs.5,30,87,373/-, as detailed in Annexure-A & B, and the same is recoverable under Section 28(1) of the Customs Act, 1962 along with interest under Section 28AA of the act ibid. mobile parts as declared by importer in impugned bill of entry. ***

16. On perusal of the aforementioned Investigation Report, it is observed importer has wrongly classified suppressing the fact that the said goods are complete mobile sets in CKD condition. It was because of the timely intervention of the investigation agency that the said fact came to light, which proves that the importer had intentionally suppressed the facts and evaded applicable customs duty which resulted in short payment of duty of Rs. 1,11,21,12,551/-,as detailed Annexure-A to D, and the same is recoverable under Section 28(4) of the Customs Act, 1962, along with interest under Section 28AA of the Act ibid.

17.1 The importer by their aforesaid act of omission and commission has contravened the provisions of Section 46(4) and 46(4A) of the Customs Act,1962 in as much they have failed to furnish correct particulars with description respect classification of the said goods. Section 111(m) of the Customs Act, 1962 provides that any goods which do not correspond in respect of value or in any other particular with the entry made under this Act, are liable to confiscation. As the importer had mis- declared the value of the goods with an intention to evade proper Customs Duties against the goods imported vide impugned Bills of Entry, as detailed in Annexure-A & B, the same are liable to confiscation under Section 111(m) of the Customs Act, 1962.

16.1 The importer by their aforesaid act of omission and commission has contravened the provisions of Section 46(4) and 46(4A) of the Customs Act, 1962 in as much as they have failed to furnish correct particulars with respect to the description and classification of the said goods. Section 111(m) of the Customs Act, 1962, provides that any goods which do not correspond in respect of value or in any other particular with the entry made under this Act, are liable to confiscation. As the importer had mis-declared the value of the goods with an intention to evade proper customs duties against the goods imported vide impugned Bills of Entry, as detailed Annexure-A to D, the same are liable to confiscation under Section 111(m) of the Customs Act, 1962. Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 dutiable

17.2 Section 112(a)(ii) of the Customs Act, 1962 provides that any person, who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, shall be liable, in the case goods, prohibited goods, subject provisions of section 114A, to a penalty under this Section. In the present case. the importer has mis- declared description of the impugned goods and evaded applicable Customs the Bills of Entry, as Duties elaborated in above, and thus, the importer is liable to penalty under Section 112(a)(ii) of the Customs Act, 1962.

16.2 SECTION 114A of the Customs Act, 1962 inter alia provides that where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been partly paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis- statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (8) of Section 28, shall also be liable to pay a penalty. In importer has wilfully suppressed vital facts with respect to the description of the impugned goods in the Bills of Entry, as elaborated above, and thus, the importer is liable to penalty under Section 114A of the Customs Act, 1962, with respect to the said bills of Entry. the present case, here-in-above

18. Now, therefore, on the basis of the discussion investigations into the matter, M/s. Ismartu India Pvt Ltd, D-197, 198, 199, Sector- 63, Noida, Gautam Budh Nagar, Uttar Pradesh, 201301 (IEC: 0516984080), is hereby called upon to the Principal Show Cause Commissioner of Customs, Import Commissionerate, Inland Container Depot, Tughlakabad, Delhi - 110 020, in writing within 30 days of receipt of this notice as to why:- hereinabove

17. Now, therefore, on the basis of the discussion investigations into the matter, M/s. Ismartu India Pvt. Ltd., D-197, 198, 199, Sector-63, Noida, Gautam Budh Nagar, Uttar Pradesh, 201301 (IEC: 0516984080), is hereby called upon to the Principal Show Cause Commissioner of Customs, Import Commissionerate, Inland Container Depot, Tughlakabad, Delhi - 110020, in writing within 30 days of receipt of this notice as to why: i. The Bill of Entry No.2432709 dated 14.09.2022, should not be finalized by changing the classification to CTH 85171400 under Section 18(2) of the Customs Act, 1962; ii. Total differential duty amounting to Rs.60,632/- (Rupees Sixty Thousand i. The classification of the goods, imported vide Bills of Entry as detailed in Annexure-A to D, should not be rejected and the same should under CTH 85171219/85171210/85171400 mentioned in the respective annexures; classified Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 Lakh, ii. The goods having an assessable value of Rs. 5,83,12,84,286/- (Rupees Five Hundred Eighty-Three Crore, Twelve Eighty-Four Thousand, Two Hundred and Eighty-Six only), imported vide Bills of Entry as detailed in Annexure-A to D, should not be held confiscation under Section 111(m) of the Customs Act, 1962; liable iii. Total differential duty amounting to Rs. 1,11,21,12,550/- (Rupees One Hundred Eleven Crore, Twenty- One Lakh, Twelve Thousand, Five Hundred and Fifty only), as detailed in Annexure-A to D, should not be demanded and recovered from the importer under Section 28(4) of the Customs Act, 1962, along with interest under Section applicable 28AA of the Act ibid; and Penalty Section iv. 114A/112(a)(ii) of the Customs Act, 1962, should not be imposed on the importer for improper importation of goods and evasion of customs duty.‖ Six Hundred and Thirty Two only), in respect of Bill of Entry No. 2432709 dated 14.09.2022, should not be demanded and recovered from the importer under Section 28(1) of the Customs Act. 1962 along with applicable interest under Section 28AA of the Act ibid; an iii. Penalty under Section 112(a)(ii) of Customs Act, 1962 of the Customs Act, 1962, should not be imposed on the importer for improper importation of goods imported vide Bill of Entry No.2432709 dated 14.09.2022 and evasion of Customs duty thereof. The Bank Guarantee iv. Rs.37,26,502/- and Rs.3,00,000/-, should not be appropriated towards Fine and Penalty imposed upon the importer in respect of Bill of Entry No.2432709 dated 14.09.2022 v. The classification of the goods, imported vide Bills of Entry as detailed in Annexure-A & Annexure- B, should not be rejected and the same should not be classified under CTH 85171400; vi. The goods having re-determined assessable Rs.1,46,83,51,738/-, imported vide Bills of Entry as detailed in Annexure- A and Annexure-B, should not be held liable to confiscation under Section 111(m) of the Customs Act, 1962; vii. Total differential duty amounting to Rs.5,30,87,373/- (Rupees Five Crore Thirty Lakh Eighty Seven Thousand Three Hundred and Seventy Three only), as detailed in Annexure - A & Annexure-B. should not be demanded and recovered from the Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 importer under Section 28(1) of the Customs Act, 1962 along with interest under Section applicable 28AA of the Act ibid; and viii. Penalty under Section 112a (ii) of Customs Act, 1962 of the Customs Act, 1962, should not be imposed on the importer for improper importation of goods and evasion of Customs duty, in respect of Bills of Entry other than Bill of Entry No. 2432709 dated 14.09.2022;‖

19. This show cause notice is being issued without prejudice to any other action that may be taken in respect of impugned goods and/or persons/company etc., mentioned in the notice, under the provisions of the Customs Act. 1962 and/or any other law for the time being in force.

18. This show cause notice is being issued without prejudice to any other action that may be taken in respect of impugned goods and/or persons/company etc., mentioned in the notice, under the provisions of the Customs Act. 1962 and/or any other law for the time being in force.

20. The aforesaid noticee are to submit their written reply within the stipulated time. In their reply, they should clearly state whether they wish to be heard in person or not. In case, they do not reply or no such requests is made in their reply or they do not appear before the adjudicating authority on the date and time fixed, without any sufficient cause, the case will be decided ex-parte on the basis of available records without any further reference to them.

19. The aforesaid noticee are to submit their written reply within the stipulated time. In their reply, they should clearly state whether they wish to be heard in person or not. In case, they do not reply or no such requests is made in their reply or they do not appear before the adjudicating authority on the date and time fixed, without any sufficient cause, the case will be decided ex-parte on the basis of available records without any further reference to them.

21. The Department reserves its right to add, amend, modify, etc. this notice based on any fresh facts or evidence which may come to the notice of the Department after the issue of this to adjudication notice but prior thereof.

20. The Department reserves its right to add, amend, modify, etc. this notice based on any fresh facts or evidence which may come to the notice of the Department after the issue of this to adjudication notice but prior thereof.

22. The notices have the option to

21. The notices have the option to Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 make an application under Section 127(B) of the Customs Act, 1962 prior to adjudication of this notice, to the Settlement Commissioner to have the case settled, in such form and in such manner, as specified in the Rules. make an application under Section 127(B) of the Customs Act, 1962 prior to adjudication of this notice, to the Settlement Commissioner to have the case settled, in such form and in such manner, as specified in the Rules.

23. List of the documents relied upon in this notice (RUDs) enclosed with this show cause notice is an integral part of this show cause notice which is also being served through email of the noticee.

22. List of the documents relied upon in this notice (RUDs) enclosed with this show cause notice is an integral part of this show cause notice which is also being served through email of the noticee. ***** ***** TWO SEPARATE NOTICES UNDER SECTIONS 28(1) AND 28(4) IN SIMILAR CIRCUMSTANCES CANNOT BE ISSUED: 4. A bare perusal would show that the two SCNs are identical in almost every respect except for the differences as highlighted. Apart from the more obvious differences relating to the Notices being under Sections 28(1) and 28(4) and the corresponding penalty provisions being Sections 112 and 114A which are consequential upon the Section under which the notices are issued, some of the differences, inter alia, are the periods to which they pertain, the invoices and quantities of the goods therein. 5. Interestingly, both notices conclude that ―the importer has wrongly classified said goods by suppressing the fact that the said goods are complete mobile set in CKD condition. It was because of the timely intervention of the investigation agency that the said fact came to light which proves that the importer had intentionally suppressed the facts ......‖, but chooses to invoke Sections 28(1) and 28(4) of the Act, respectively in the two notices. 6. The SCNs also have identically worded paragraphs with Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 different numbers which further conclude as follows: importer by their aforesaid act of omission and ―The commission has contravened the provisions of Section 46(4) and 46(4A) of the Customs Act, 1962 in as much they have failed to furnish correct particulars with respect to description and classification of the said goods. Section 111(m) of the Customs Act, 1962 provides that any goods which do not correspond in respect of value or in any other particular with the entry made under this Act, are liable to confiscation As the importer had mis-declared the value of the goods with an intention to evade proper Customs Duties against the goods imported vide impugned Bills of Entry, as detailed in Annexure‖ _____, ―the same are liable to confiscation under Section 111 (m) of the Customs Act, 1962.‖

7. Section 28 of the Act, as relevant, reads as follows: “Section 28. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. (1) Where any duty has not been levied or not paid or has been short-levied or short-paid or erroneously refunded, or any interest payable has not been paid, part-paid or erroneously refunded, for any reason other than the reasons of collusion or any wilful mis-statement or suppression of facts, — (a). the proper officer shall, within two 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: Provided that before issuing notice, the proper officer the person shall hold pre-notice consultation with chargeable with duty or interest in such manner as may be prescribed; (b). the person chargeable with the duty or interest, may pay, before service of notice under clause (a), on the basis of— his own ascertainment of such duty; or (i) the duty ascertained by the proper officer, (ii) the amount of duty along with the interest payable thereon under section 28AA or the amount of interest which has not been so paid or part-paid: Provided that the proper officer shall not serve such show-cause notice, where the amount involved is less than rupees one hundred. (4) Where any duty has not been levied or not paid or has been *** Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 collusion; or any wilful mis-statement; or suppression of facts, short-levied or short-paid or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of— (a) (b) (c) by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five 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. in sub-section (4), *** (7A) Save as otherwise provided in clause (a) of sub-section (1) 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). …...‖ the proper officer may

8. Section 28 of the Act provides for two separate types of notices: - one under Section 28(1) for all notices to be issued where the elements of Section 28(4) of the Act are absent, namely, those of collusion, wilful mis-statement and suppression: meaning thereby that it is only in those circumstances where Section 28(4) of the Act is not attracted that a Notice under Section 28(1) of the Act is issued. The other is under Section 28(4) and such a notice may come to be issued provided it fulfils the requirements of the same. 9. Notices under Section 28(1) and Section 28(4) operate in different scenarios and even by an exaggerated stretch, cannot possibly be said to be interchangeably issued. 10. In the present case, a prior notice under Section 28(1) of the Act had already come to be issued, in respect of similar goods, with a similar alleged ―mis-declaration‖. Both notices have the benefit of the Signature Not Verified W.P.(C) 15199/2023 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:11.03.2025 10:20:12 reports dated 29 November 2022 and 05 January 2023 by the Chartered Engineer engaged by the Respondents. 11. Surely, two notices with (i) an almost identical factual matrix, (ii) relying upon the same reports by a Chartered Engineer and (iii) with almost identical conclusions cannot result in two different Notices under two different sub-sections, especially when one [Section 28(1)] can operate only in the absence of the conditions prescribed in the second [Section 28(4)]. 12. The issuance of the impugned Show Cause Notice, under the said facts and circumstances, is clearly unsustainable. CHANGE OF OPINION: 13. The fact that the same officer, within a span of just 6 weeks, presented with an almost identical set of facts, has chosen to issue the two notices under different Sections, would also, in our view taint the impugned SCN with the vice of a ―change of opinion‖ and for that State of U.P. v. Aryaverth Chawal Udyog, (2015) 17 SCC 324;

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