Getting a Show Cause Notice can be an extremely serious issue legally and financially for the importer or the exporter or any other party involved.
The Customs notice may involve allegations of payment/donation of short/duty or incorrect valuation, classification disputes, exemption issues, misdeclaration, confiscation, penalties, or other alleged Customs Act, 1962, breaches.
Before hiring a customs advocate in India, businesses should think of something other than online reputation ratings and “top customs lawyer” taglines. A more effective strategy is to look at the lawyer’s experience regarding the relevant Customs matter, hearing, documents, departmental inquiries, and appeals that the case might entail.
p>Customs authorities may notify persons or agencies on behalf of duties that were not levied, short-levied, or erroneously refunded, as per Sections 28 and 90 of the Customs Act, 1962, provided that certain statutory conditions and time limits are fulfilled.
Section 42 of the Customs Act discusses the interest payment of delayed payment separately.
Customs Show Cause Notice & Hiring a Lawyer Fast FAQs
What is a Customs Show Cause Notice?
A Customs Show Cause Notice is the legal way for customs officials to inform a taxpayer that they are considering some actions against the taxpayer, which may or may not involve payment of duty or other consequences.
Is it necessary to have a customs lawyer after getting an SCN?
Not all notices are the same, and neither do they require a similar amount of professional help. However, businesses should get expert help on the notice promptly if a large duty demand, allegations of misdeclaration or concealment, confiscation, penalties, investigation, or complicated classification or valuation are involved.
Can a customs advocate assist me with a Show Cause case?
A customs lawyer can help in different ways, such as reviewing the contents of the notice, checking supporting documents, identifying issues that need to be raised factually or legally, drafting a reply letter, attending an adjudication and personal hearing on behalf of the noticee, researching applicable regulations and related case law, and finally advising on making a further appeal if necessary.
How long do I have to respond to Show Cause Notice?
The time you have to submit a reply varies as per the provisions of the law and the kind of notice you have received. Look at the notice itself carefully to find out the stipulated period for reply. Be it a Customs SCN, the deadline is not the same for all.
Can a customs lawyer argue against allegations in an SCN?
A lawyer can assist the noticee to raise the arguments against the allegations by producing relevant facts, evidence, and legal grounds. The response should, by the way, focus on the particular allegations and proposed action referred to in the notice.
What type of customs issues are common in showing cause notices?
Disputes over classification, valuation, exemption notifications, import/export declarations, liability to duty, input documents, misdeclaration, seizure, and penalties are quite common. The Customs Act itself has certain specific provisions regarding the valuation and recovery of duty.
9 Points to Check Before Hiring a Customs Lawyer in India
1. Inquire About Customs SCNs Experience
This is really your first question:
“Have you dealt with Customs Show Cause Notices cases like mine?”
Customs problems are quite different from each other. The type of lawyer who mainly handles GST-related cases may not be able to offer the same level of advice and expertise on issues of customs adjudication. So, you should get to the bottom of your dispute.
They may ask about your dispute involving customs duties:
- Import and export disagreements
- Classification
- Customs valuation
- Exemption notifications
- Allegations of misdeclaration
- Confiscation proceedings
- Nature of the allegation penalty proceeds
- DRI probes
- Adjudication by customs
- Customs appeals
Your lawyer’s experience must coincide with your particular case.
2. Get Information about the Allegation against You
Choosing a lawyer based only on the fact that they call themselves a “customs specialist” is not a good idea.
Study SCN carefully and spot the main claim in it. It can be something like
For example, the notice might include one of the following allegations.
The goods are being imported at an incorrect classification, which means an import is being classified wrongly.
Alternatively, a notice could highlight that:
The goods are declared at an undervaluation of their true worth, which is a case of underdeclaring the valuation.
Another example is if the notice states:
This is the wrong availment of an exemption notification. A situation where a company wrongfully takes an exemption that is supposed to be available to them only under certain conditions that are not met by them.
Different types of such cases have to be handled under different sets of facts and laws. A detailed analysis of both factual aspects and legal issues is required for every such case.
3. Make Certain About the Lawyer’s Customs Valuation Knowledge
Different aspects may be involved in valuation disagreement, which can get quite intricate.
Section 14 provides the framework on the valuation of imported goods and exported goods. In the case of importing, normally, the starting point is the purchase price, but, of course, this purchase price has to meet certain conditions, and there are several valuation techniques under the law that a customs department can use.
A layman is usually able to understand the basic valuation matter, but legal aspects get quite complicated and are dealt with under law; hence, it is better to rely on a qualified professional in matters that involve the law relating to valuation. The lawyer is expected to have a reasonable grasp over issues relating to:
- The amount payable as per the invoice
- Nature of transactions
- Licenses and Royalties
- Costs of commission
- Cost of freight
- Cost of insurance
- Other relevant items
4. Evaluate Their Background in Classification Issues
If there is one thing that can affect the customs duty and other import consequences the most, that will be the right or wrong classification of products.
A dispute regarding customs classification may necessitate the lawyer looking into the following aspects:
- Product specifications
- Technical publications
- Product ingredients
- Subheadings of tariff
- Section Notes
- Chapter Notes
5. Find Out if They Handle Personal Hearings and Adjudication
Responding to SCN is not the only job.
In certain cases, besides just being a written response, the person who gets the notice can face an official investigation and personal hearing.
As per Customs’ publicly issued citizen charter, orders in original/appeal at the level of CBIC where necessary documents are filed are generally made within 30 days after the personal hearing concludes.
Ask the lawyer:
- Who will prepare the response?
- Who will go for the personal hearing?
- Who will make the argument?
- Who will file the supplementary papers?
6. Check If They Are Familiar With DRI Issues and Investigation
Some customs issues result from DRI or any other customs authority investigation.
In these situations, it is expected to have a lot of paperwork with allegations ranging to:
- Undervaluation
- Fake misdeclaration
- Faux-related party imports
- Wrong import restrictions
- Basketball is being wrongly classified
7. Ask About How They Plan to Gather Supporting Documents
<p>Customs cases are generally paperwork.</
<p>According to the kind of case, the papers involved can be:</
- Bills of Entry
- Commercial invoices
- Packing lists
- Purchase orders
- Bills of Lading / Airway Bills
- Import agreements
- Bank records
- Technical literature
- Product catalogs
- Correspondence
- Customs examination reports
- Valuation documents
- Previous assessments
- Import / export records
The lawyer has to show through these papers that your case can be defended.
Practical tip
The first detailed consultation will be shorter time-wise if you have made a chronology and document index before you come.
8. Evaluate Lawyers’ Understanding of Customs Appeals
Contact a lawyer and ask what happens if the adjudication order is against you, i.e., The outcome doesn’t go in your favor.
The appeals process might start with a commissioner (appeals), then a CESTAT, and in some cases an upper court.
An example will show that the appellate forum will not only depend on the nature of dispute but also on laws.
Here the dispute lifecycle is outlined:
Investigation → SCN → Reply → Personal Hearing → Adjudication Order → Appeal → Judicial Remedy
What the forum exactly would be can only be ascertained after knowing the order, statutory provisions, etc.
9. Know About Fees and What Work Lawyers Will Do
Negotiating about lawyer fees is a matter for both parties. So, not just the final fee for a lawyer should be the only issue to be discussed.
It would also be a wise idea to know the services that will be covered in the payment, for instance, whether it includes an initial meeting or not.
Typically, the following areas fall under the fees:
- Conduct an initial interview
- Reviewing a copy of the notice given by Customs (“SCN”)
- Preparation of the reply
- Examination and review of relevant documents
- Carrying out a search in law books
- Attend a personal hearing
Local Example: Delhi-based Importer Gets a Customs Notice (SCN)
We present the case of an importer of electronic goods based in Delhi and importing goods via Indian ports.
Customs raised a show cause notice (“SCN”) and accused the importer of wrongly classifying the goods and not paying the duty as it should have been the case.
Now the company has to collect all the following pieces of evidence:
- Bills of Entry: Commercial invoices Product specifications: Technical catalogues Import contracts and custody assessments previously conducted by Customs Pictures of the shipment as delivered Import documentation, etc., relevant parts of tariffs
The lawyer should compare the importer classification with the customs authorities’ proposed classification and then submit a suitable reply that is founded on the product’s real attributes plus other legal aspects.
Local Example: Mumbai-Based Importer Getting Valued at Wrong Rate
Imagine a supplier in Mumbai receiving an SCN claiming that the supplier undervalued their cargo.
In case the matter does have any connection with the supplier and the supplier’s goods, then the lawyer might want some details such as:
- Buyer-seller’s relationship
- Invoiced price
- The records of payments
- Royalty/license terms
- Freight & Insurance
- Same-nature import
What Documents Should be E-mailed to a Custom Lawyer in Advance of the First Meeting?
It is best for the meeting to have the lawyer study documents beforehand, so send:
Fundamentals and core files
- The whole Show Cause Notice
- Annexes
- Interactions from the investigation
- Summons/statements, where required
- Beds
- Flyers
- Customs/import/export records
- Duty paid
- Letters from the custom authority
Danger Signs When Hiring a Lawyer for Custom Dispute
Beware of anyone who:
- Tells you the end result beforehand.
- Gives you a price without looking into the case beforehand.
- Is unable to say what you accused him of.
- Never handled similar cases with customs.
- Gives general answers without checking documents.
- Does not reveal the extent of the job.
- Does not make clear who will show up on your behalf.
- Cites only the old custom rules or the older case laws.
- Says every customs dispute relates to the only matter of paying dues.
A proper lawyer will not swear that a dispute involving the collection agency is going to end a certain way.
Reason to Consult a Lawyer Soon
Do not treat a customs SCN lightly.
The Customs Act under Section 28 prescribes duties concerning a situation when there is a duty levy omission, under-levy, or the erroneous refund and includes certain notice provisions and timelines.
Losing a customs dispute might not be just a matter about your duty. It could be that the customs authority, with a basis and according to some provisions of the law, decides to impose penalties or confiscate your goods in addition to charging interest.
Keeping this in view, it is usually wise to first of all find out:
Final List: Selecting a Customs Lawyer in India
Following are 9 key criteria to check before hiring a customs lawyer for an SCN:
1. Customs SCN familiarity Has the lawyer been involved in similar matters?
2. Issue-level specialization Are they capable of dealing with your classification, valuation, exemption, or other issue?
3. Customs valuation insight Does he or she have enough know-how of the valuation methodologies to be able to interpret the customs valuation?
4. Classification understanding Ability to link up the technical product information to the tariff provisions?
5. Adjudication experience Do they deal with replies and appearances in a hearing?
6. Investigation background Are they able to read a DRI/Customs investigation file?
7. Evidence organization Will the documents and relied records be handled in a proper, structured way?
8. Appeal stage representation Ability to advise if the result is adverse or the lawyer can help at the appellate stage?
9. Fee and scope transparency It is clearly stated what work and hearings are included.
Conclusion
You can’t get the best customs lawyer for all situations. This choice depends on the type of your allegations, the value involved, the type and volume of evidence, the stage of the proceedings, and the lawyer’s relevant customs experience.