2021 PLP 1786 (PTD)

ABID AZIZ SHEIKH, J.

Through this constitutional petition, petitioner has challenged demand notices bearing Nos.234 and 235 dated 19.8.2015 issued under section 32(3) of the Customs Act, 1969 (Act).

2. Relevant facts are that petitioner is engaged in import of Betel Leaves under Free Trade Agreement (FTA) from Colombo, Sri Lanka. The petitioners imported goods were cleared by custom authorities after examination of documents and benefit of exemption under FTA was also allowed. After clearance of goods, respondent No.6 has issued impugned demand notices under section 32(3) of the Act for payment of Rs.44405/- and Rs.65858/- on the ground that exemption under FTA was not applicable. The petitioner being aggrieved has filed this constitutional petition.

3. Learned counsel for the petitioner argued that neither any show-cause notice was issued nor any assessment order was passed before issuing demand, notices by respondents. He further submits that unless amount is determined after show-cause notice, recovery cannot be made directly.

4. Learned counsel for the respondents submits that benefit of FTA was not applicable to the imports of the petitioner and said benefit of FTA was inadvertent extended. He submits that in the circumstances, demand notices for recovery of aforesaid amounts were lawfully issued under section 32(3) of the Act.

5. I have heard learned counsel for the parties and perused the record. It is admitted position on record that before issuing demand notices for recovery of Rs.44405/- and Rs.65858/-, no show-cause notice was issued to the petitioner nor amount was determined after hearing the petitioner. The relevant provision of sections 32(3) and (4) of the Act are reproduced hereunder:- "Section 32(3) Where, by reason of any inadvertence, error or misconstruction, any duty [, taxes] or charge has not been levied or has been short levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within [three years] of the relevant date requiring him to show-cause why he should not pay the amount specified in the notice" (4) The appropriate officer, after considering the representation, if any, of such persons as is referred to in subsection (2) or subsection (3) [or subsection (3A)] shall determined [any amount payable by him under this Act], which shall in no case exceed the amount specified in the notice, and such person shall pay the amount so determined". The plain reading of subsection (3) of section 32 of the Act shows that where by any inadvertence, error or misconstruction, any duty, taxes or charge has not been levied or has been short levied, the person liable to pay such amount shall be served with a notice within three years requiring him to show-cause that why he should not pay the amount specified in the notice. Under subsection (4) of section 32 of the Act, the appropriate officer after considering the representation, if any, of such persons as is referred to subsection (3) of section 32, shall determine amount payable which shall in no case exceed the amount specified in the notice. In the present case, admittedly neither any show-cause notice was issued to the petitioner nor any determination was made by appropriate officer before issuing impugned demand notices for recovery of aforesaid amount. The impugned denied notices on the face of it are in clear violation of sections 32(3) and 32(4) of the Act.

6. In view of above discussion, impugned demand notices are not sustainable which are accordingly set aside being illegal and of no legal effect. However, respondents will be at liberty to proceed in the matter afresh strictly in accordance with law and procedure prescribed under the Act and Rules. KMZ/N-18/L Petition allowe