Custom, Excise & Service Tax Tribunal
Jain Exports Pvt. Ltd vs Commissioner Of Customs, Mumbai on 3 June, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. C/1126/07 (Arising out of Order-in-Appeal No. 450/2007/MCH/DC/Recov.Cell/07 dated 20.9.2007 passed by Commissioner of Customs (Appeals), Mumbai) For approval and signature: Hon'ble Mr. P.G. Chacko, Member (Judicial) and Hon'ble Mr. S.K. Gaule, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Jain Exports Pvt. Ltd. Appellant Vs. Commissioner of Customs, Mumbai Respondent Appearance: Shri G.L. Rawal, Senior Advocate, for appellant Shri R.K. Mahajan, Authorised Representative (JCDR), for respondent CORAM: Hon'ble Mr. P.G. Chacko, Member (Judicial) and Hon'ble Mr. S.K. Gaule, Member (Technical) Date of Hearing: 3.6.2010 Date of Decision: 3.6.2010 ORDER NO................................. Per: P.G. Chacko, Member (J),
This appeal filed by the assessee is directed against the appellate Commissioner's order holding the appellant liable to pay interest under Section 28AA of the Customs Act on the amount of duty belatedly paid by them. The appellant had imported a consignment of caustic soda in 1979, on which duty was leviable @ 92.5% as per the Customs Tariff. The appellant contested the assessment by claiming that they should be allowed to pay duty @ 10%, at which rate another party was allowed to pay duty on identical goods on the strength of a Special Exemption Order of the Government. The appellant, for this relief, filed a writ petition before the Hon'ble Bombay High Court and obtained an interim order dated 10.1.1989 for paying duty @ 10% in cash and securing the balance (82.5%) through bank guarantee. In respect of similar imports by the appellant at Delhi, the claim of concessional rate of duty was denied by the department and, therefore, a similar writ petition was filed before the Hon'ble Delhi High Court. That writ petition was dismissed. The appellant then filed Civil Appeal No.884 of 1980 for payment of duty @ 10% in cash and securing the balance through bank guarantee. While so, on 1.2.1983, the Bombay High Court dismissed the assessee's writ petition, in the wake of which the department issued a demand letter dated 18.4.1984 asking the party to pay differential duty of Rs.1,38,94,564.94. Since the assessee did not honour this demand, a detention order dated 21.5.1985 was issued. While the department was taking follow-up action, the Hon'ble Supreme Court allowed Civil Appeal No.884/1980 as per judgment dated 1.5.1991, consequent to which the assessee became entitled to the benefit of concessional rate of duty (10% ad valorem) on caustic soda. Provisional assessment was finalised on this basis and the bond executed by the assessee was cancelled and the bank guarantee furnished by them was returned. This happened in 1992. While so, the department had filed a review petition against the Supreme Court's judgment dated 1.5.1991. In due course, this review petition was allowed by the apex court and consequently, the civil appeal of the assessee came to be dismissed. This development led to a spate of correspondence between the department and the assessee, the department demanding differential duty and the assessee resisting the demand of interest. Eventually, the Deputy Commissioner of Customs (Import), Recovery Cell, issued a letter dated 30.10.2006 to the appellant, reminding them of the instalment facility granted by the Commissioner of Customs (Import) and directing them to pay up the dues in terms of the Commissioner's directive. The Commissioner's direction was to pay up the outstanding dues of duty and interest in equal instalments of Rs.20 lakhs each, Rs.15 lakhs towards principal and Rs.5 lakhs towards interest. In the said letter dated 30.10.2006, the Deputy Commissioner noted that no payment had been received from the assessee after the instalment facility was granted by the Commissioner. The Deputy Commissioner further noted that the liability to pay interest on duty was a natural corollary and further that the interest-liability had already been accepted by the assessee in one of their earlier letters. Apparently, the Deputy Commissioner was dealing with the assessee's plea for waiver of interest. Aggrieved by the stand taken in the Deputy Commissioner's letter dated 30.10.2006, the assessee preferred an appeal to the Commissioner (Appeals) and the latter, while rejecting the appeal, upheld the Deputy Commissioner's view and also chose to go further to hold that the assessee had a liability to pay interest under Section 28AA on the amount of duty which was outstanding on the date of finalisation of provisional assessment. In the present appeal, the demand of interest under Section 28AA is under challenge on a few grounds.
2. The learned senior counsel for the appellant, apart from reiterating the grounds of this appeal, submits that there was no determination of duty in this case under Section 28(2) of the Customs Act and, therefore, the provisions of Section 28AA are not applicable. Without prejudice to this submission, the learned senior counsel submits, in any case, Section 28AA cannot be enforced retrospectively for recovery of interest on any amount of duty paid by the assessee. In this connection, he has also relied on case law. Adverting to the facts of the case, the learned counsel submits that it cannot be said that the provisional assessments were finalised. According to him, the Hon'ble Supreme Court's judgment in Civil Appeal No.884/1980 had the effect of reverting the case to the pre-1991 status of assessment, thereby meaning that, in the wake of the Supreme Court's judgment dated 14.8.1996, the department should have taken up the provisional assessment for finalisation. According to the learned counsel, there was no evidence of such finalisation of provisional assessment in this case. It has also been argued that, even if it be assumed that the assessments were finalised as claimed by the department, there can be no recovery of interest under Section 28AA on any amount of duty in the absence of determination of duty under Section 28(2) of the Act.
3. The learned JCDR has filed a report from the Commissionerate of Customs (Import), Mumbai zone-I, in response to our directives contained in order No. M/89/10/CSTB/C-II dated 22.4.2010. We had, by the said order, directed the respondent to furnish the following particulars:-
(a) Date of finalisation of provisional assessment;
(b) Total amount of duty quantified for the purpose of recovery;
(c) Amount of duty recovered, with dates of recovery;
(d) Amount of interest, if any, recovered, with date of recovery. In answer to the above queries, the respondent has filed the following statement through JCDR:
"(a) Date of finalization of provisional assessment: As mentioned at Para 5 above, after receiving the Supreme Court's order dated 01.05.1991 deciding the matter in favour of the importer, all the assessments were made final and Bond/Bank Guarantees were cancelled and returned to the Importer in 1992. This final assessment was apparently at the concessional rate of duty @ 10% ad valorem. Copies of all the Bills of Entry and Bonds/BGs are not readily available in the records. However a copy of Bill of Entry No.23274/9 dated 03.04.1980 with the 'Final Assessment' remarks along with copy of corresponding duly cancelled Bond/BG is enclosed. However, in light of the Hon'ble Supreme Court's order dated 14.08.1996 reversing their earlier order dated 01.05.1991; the issue of applicability of 92.5% duty and final assessment of provisionally assessed Bills has attained finality.
(b) Total amount of duty quantified for recovery: Total amount of duty was quantified to Rs.1,38,94,565.94 in 1984 itself. A letter dated 18.04.84 was apparently issued to the importer. Consequently a Detention Order was issued 21.05.1985 (copy enclosed) as party failed to pay the duty amount of Rs.1,38,94,565.94. Similar Detention Order was also issued on 18.03.1997 i.e. after the verdict of Hon'ble Supreme Court in favour of the Department (Copy enclosed).
(c) & (d) Amount of duty and Interest recovered, with dates of recovery: No separate records are available regarding recovery of duty and interest. However as per the available records, the following amounts are recovered: [Amount to be recovered Duty Rs.1,38,94,566 + Interest Rs.2,74,68,226 (as on 31.03.2007) = Rs.4,13,62,792]
i) Amount paid by the party on 19.12.99 Rs. 10,00,000/-
ii) Amount recovered by way of attachment
of Bank Accounts of party Rs. 3,60,558/-
iii) Amount recovered by way of sale of share
(Credited in to RBI Account Commissioner
of Customs from the account of commissioner
of Customs with ICICI Bank) Rs.3,99,11,478/-
Amount recovered Total Rs.4,12,72,036/-
Amount outstanding as on 31.03.2007
(Interest) Rs. 90,756/-"
The learned JCDR has also categorically submitted that the provisional assessment was finalised during 1991-92, but, in the light of the Hon'ble Supreme Court's judgment dated 14.8.1996 reversing its earlier judgment dated 1.5.1991 in Civil Appeal No.884/1980, the assessee's liability pay duty @ 92.5% on the goods attained finality. The learned JCDR has also submitted that, during the course of correspondence between the assessee and the department, the latter had unambiguously informed the former about their liability to pay interest under Section 28AA of the Act on belated payments of duty. It is submitted that, at no point of time, the assessee contested the stand taken by the department. The learned JCDR has also contended that the Deputy Commissioner's letter dated 30.10.2006, being one issued in his administrative capacity, was not appealable and, for that matter, the present appeal of the assessee also should be rejected as not maintainable. With reference to the applicability of Section 28AA of the Act, it is submitted that the Hon'ble Supreme Court's judgment of 1996 should be deemed to be a determination of duty for purposes of Section 28(2) of the Act and accordingly, the assessee should be directed to pay interest from the date of expiry of a period of three months from the date of the judgment.
4. At the outset, we have to overrule two preliminary objections raised by the learned JCDR. He argued that the appeal itself is not maintainable under Section 129A of the Customs Act. The impugned order was passed by the Commissioner (Appeals) under Section 128 of the Customs Act and, therefore, the present appeal is maintainable before this Tribunal in terms of Section 129A of the Act. It was also pointed out that, in the absence of a pre-deposit under Section 129E of the Act, this appeal is not maintainable. A pre-deposit is required in an appeal where the appeal is against a quantified demand. The lower appellate authority did not quantify any amount of duty or interest to be paid by the assessee and, therefore, there was no room for pre-deposit of any amount by the appellant under Section 129E of the Act.
5. We have given careful consideration to the submissions. It appears from the records that, with the judgment passed by the Hon'ble Supreme Court on 14.8.1996 reversing its earlier judgment dated 1.5.1991, the assessee became liable to pay duty on the subject-goods @ 92.5% ad valorem. By dismissing the civil appeal filed by the assessee, the Hon'ble Supreme Court was affirming the judgment passed by the Hon'ble Delhi High Court in a writ petition filed by the party, whereby the assessee was disentitled from claiming the benefit of concessional rate of duty. It appears, the results of the writ petition filed by the assessee before the Hon'ble Bombay High Court were also adverse to them. It appears from the records that the judgment of the Bombay High Court was also taken in appeal to the Supreme Court (Civil Appeal No.683/85) by the assessee, but no copy of any final order/judgment of the apex court in such appeal is available on record. Neither side has been able to give any valuable input to enable us to consider the substantive issue in the light of any final decision of the apex court in relation to the import made by the assessee through Mumbai port. We are constrained to take the judgment of the Hon'ble Bombay High Court as the final verdict in the matter. That was a judgment rendered by the Hon'ble High Court in writ jurisdiction. In our considered view, the Hon'ble High Court's judgment rejecting the assessee's plea for the benefit of exemption on par with another importer will have no bearing on the status of the assessment on the bills of entry filed by the assessee. These bills of entry were, admittedly, provisionally assessed and, as consistently maintained by the Revenue, these provisional assessments were finalised in 1991-92 in the light of the Hon'ble Supreme Court's first judgment dated 1.5.1991 in Civil Appeal No.884/1980. The provisional assessments made under sub-section (1) of Section 18 were finalised under sub-section (2). What was done was done. There was no challenge to final assessments and consequently, they attained finality, with the result that the assessee became liable to pay duty as finally assessed.
6. Finalisation of provisional assessment under Section 18 of the Customs Act is not comparable to determination of duty under Section 28 of the Act. Section 28AA of the Act is a provision for levy of interest on duty determined under Section 28(2) of the Act, and that too, with effect from the date on which Section 28AA came into force. It is not a provision authorising levy of interest on duty paid by an assessee following finalisation of provisional assessment under Section 18 of the Act. As rightly submitted by the learned senior counsel, in the absence of determination of duty under sub-section (2) of Section 28 of the Act, there can be no levy of interest under Section 28AA of the Act. For determination of duty under sub-section (2) of Section 28, there should be a show-cause notice issued under sub-section (1), followed by a reply thereto by the noticee, followed by adjudication of the dispute. These mandatory elements are conspicuously missing in this case. Therefore, we hold that no amount of interest can be levied under Section 28AA of the Act on any part of the duty paid by the appellant in respect of the subject-goods. The contra view taken by the lower appellate authority is not sustainable in law.
7. The view taken by us in this case, however, would not stand in the way of the assessee honouring any previous commitment to pay interest on duty, nor would it stand in the way of the department resorting to any civil remedy for enforcement of any such commitment. We have only held that the Revenue shall not levy interest under Section 28AA of the Act on any amount of duty paid by the appellant on the subject-goods.
8. In the result, the appeal gets disposed of.
(Pronounced in Court) (S.K. Gaule) Member (Technical) (P.G. Chacko) Member (Judicial) tvu 1 11