'Demand Notices' are not substitute for 'show cause notices' - JN Custom House
"SOME cases of short payment of duty has been noticed where in spite of fact of short payment of duty was intimated by Audit / Directorate General of Valuation, no action was taken by Group for considerable period of time. It was noticed that if action would have been taken at the time of receipt of said letter from Audit / Directorate, revenue could have been protected within normal limitation period. However, after lapse of normal period of limitation "less charge cum demands notices"were issued proposing recovery of duty and interest by invoking Section 28 (duty) and Section 28A (interest) but without mentioning any ground for invoking extended period of limitation."
These are the observations of the Commissioner of Customs, NS-IV of Jawaharlal Nehru Custom House, Mumbai in a Standing Order.
The Commissioner continues,
Normally less charge cum demand notices are issued in cases (where there is no evidence / ingredient of deliberate mis-declaration, suppression or collusion etc), so that duty along with interest is recovered & case can be closed under section 28(2). However, if even after issue of less charge cum demand notice, duty and interest can't be recovered, a proper SCN is required to be issued so that case can be adjudicated on merits.
The Commissioner has instructed his officers that:
a. "Less charge / Less Charge cum Demand Notices"are persuasive demand notices, which can be issued to recover duty alongwith interest in cases of short payment or non payment of duty to seek voluntary compliance of person liable to pay such duty. However, such "Less charge / Less Charge cum Demand Notices" are not substitute for "show cause notices"required to be issued in terms of Section 28 read with Section 124 of Customs Act, 1962.
b. Deputy / Assistant Commissioners may issue such "Less charge / Less Charge cum Demand Notices" if they are of the view / opinion that duty short paid / not paid may be recovered by issue of such Notices. However, it should be noted that in cases where limitation period of "Two Years" or "Five Years", as the case may be (as provided under Section 28 of the Act) nearing / approaching, then demand should not be allowed to be barred by limitation of time by issuing such "Less charge / Less Charge cum Demand Notices". Instead, in such cases, proper Show Cause Notices should be issued at the earliest by incorporating all evidences and invoking all applicable provisions in terms of Monetary limit of adjudication as per Board Circular No. 24/2011-Customs, as amended.
c. Wherever "less charge notice"is issued and duty alongwith interest is not recovered within the time limit of 30days (as normally prescribed in such less notices), then within 15 days of expiry of said 30days period, proper Show Cause Notice should be issued in terms of Section 28 read with Section 124 of Customs Act, 1962.
d. Group should maintain the register containing details of all "less charge Notices"issued. Further details about recovery of duty & interest or issue of proper Demand Show Cause Notice should be mentioned against each entry.
e. Details of pending action against such "Less Charge Notices" should be part of "handing over/taking over note" prepared at the time of relieving/change of officers.