Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation
Date: 06.07.2026
Calcutta HC Sets Aside Customs Demand: Jurisdictional Error and Breach of Natural Justice in Provisional Assessment under the Customs Act
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
Jaju Petro Chemical Pvt. Ltd. imported certain materials into India and applied for provisional assessment of customs duty under Section 18(1) of the Customs Act, 1962. The company sought a final assessment under Section 18(2), but the Customs Authorities had not completed this process. Despite this, the authorities issued a show-cause-cum-demand notice under Section 28 read with Section 124 of the Act, alleging non-payment or short payment of customs duty.
Legal Dispute
The petitioner argued that:
- No Final Assessment: The final assessment of duty under Section 18(2) was pending, so there was no basis for invoking Section 28, which applies only when duty has been short-paid, not paid, or erroneously refunded.
- Breach of Natural Justice: After adjourning the hearing sine die on April 17, 2014, the authorities passed the impugned order on February 27, 2015, without giving the petitioner a further opportunity to be heard.
- Consistency with Other Cases: In similar cases involving other importers, the authorities had held that Section 28 could not be invoked before final assessment. The petitioner, being similarly situated, should not be treated differently.
Court’s Analysis
Justice Debangsu Basak of the Calcutta High Court examined the facts and legal arguments:
- Jurisdictional Error: The court found that the Customs Authorities acted without jurisdiction by issuing a show-cause notice and passing a final order under Section 28 before completing the final assessment under Section 18(2).
- Violation of Natural Justice: The authorities failed to notify the petitioner of the resumed proceedings after the case was adjourned sine die, denying them a fair hearing.
- Precedent and Consistency: The court noted that in similar cases, such as Wright Minerals Pvt. Ltd., the show-cause notices were set aside for the same reasons.
Judgment
The High Court set aside the impugned order, holding that:
- The Customs Authorities must first complete the assessment proceedings in accordance with law.
- Only after a final assessment can further action be taken if any infraction is found.
- The writ petition was maintainable despite the existence of an alternative statutory remedy, as the order was issued without jurisdiction and in breach of natural justice.
Key Takeaways
- Final Assessment is Crucial: Customs authorities cannot invoke recovery provisions under Section 28 before completing the final assessment under Section 18(2).
- Natural Justice Must Be Upheld: Parties must be given a fair opportunity to be heard before any adverse order is passed.
- Consistency in Administrative Action: Authorities must treat similarly situated parties equally and follow established precedents.
This judgment reinforces the importance of due process and proper jurisdiction in customs proceedings, ensuring that importers are not subjected to premature or unfair demands.
Connected Matter
Source: Calcutta High Court
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