Bombay High Court
Commissioner Of Customs (Import vs M/S. Jain Exports Pvt. Ltd on 9 May, 2012
Author: M.S. Sanklecha
Bench: J. P. Devadhar, M.S. Sanklecha
ASN 1 CUAPP-61.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CUSTOMS APPEAL (L) NO. 61 OF 2010
Commissioner of Customs (Import).
Grade IIA, New Custom House,
Ballard Estate, Mumbai. ..Appellant.
V/s
M/s. Jain Exports Pvt. Ltd.
New Delhi-110001.
D-20, Connaught Place,
..Resondent No.1.
The CESTAT,
5th floor, Jai Centre,
P. D'Mello Road,
Poona Street, Masjid (E),
Mumbai 400 009. ..Respondent No.2.
Mr. A. M. Sethana with Kirankumar Phakade for Appellant.
Mr. Avinash Rana with Purnima Bhatia for Respondent No.1.
CORAM : J. P. DEVADHAR &
M.S. SANKLECHA, JJ.
O9 MAY 2012
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ASN 2 CUAPP-61.doc
JUDGMENT :( Per M.S. SANKLECHA, J.) This appeal by the Revenue under Section 130 of the Customs Act, 1962 (hereinafter referred to as the "said Act") arises out of the decision dated 3/6/2010 of Central Excise and Service Tax Appellate Tribunal (hereinafter referred to as the "said Tribunal"). The Respondent No.1 is the importer/assessee and Respondent No.2 is the Tribunal. 2 Following two questions of law have been sought to be raised as substantial questions of law in this appeal:
(a) Whether Tribunal was justifiable in dropping the demand of interest leviable under Section 28AA of Customs Act, 1962 for delay in payment of duty by Respondent No.1 in absence of Show Cause Notice for demand of interest? and
(b) Whether Tribunal was correct at Para 7 of the impugned Order in holding that Revenue shall not levy interest despite Respondent No. 1 before Commissioner (Appeals) (Page 4 of O
-in-A) assuring to pay interest?::: Downloaded on - 09/06/2013 18:35:38 :::
ASN 3 CUAPP-61.doc
3 Briefly stated the facts leading to the present appeal
are as under:
(a) Respondent No. 1 had imported a consignment of
Caustic Soda in 1979. At that time the duty payable on the imported Caustic Soda was 92.5% as per the Customs Tariff Act, 1975. At that time the Central Government had issued a special order under Section 25(2) of the said Act by which the State Chemicals and Pharmaceuticals Corporation of India Ltd.
were exempted from paying customs duty on the import of Caustic soda in excess of 10% ad-volaram. Consequent to the above order under Section 25(2) of the said Act, Respondent No.1 filed a Writ Petition bearing No.2460 of 1979 in this Court seeking that the relief granted to State Chemicals and Pharmaceuticals Corporation of India Ltd. be extended to them. This court, by an interim Order dated 10/1/1980 allowed the Respondent to clear the imported Caustic Soda on deposit of 10% of customs duty in cash and furnishing bank guarantee for the balance 82.5%. Consequent to the above order, the Respondent No.1 cleared its imported caustic soda under the orders of this Court pending disposal of its petition. In the mean time, Respondent No.1 also filed a Writ Petition in Delhi High ::: Downloaded on - 09/06/2013 18:35:38 ::: ASN 4 CUAPP-61.doc Court for identical relief. However, the Delhi High Court dismissed the writ petition of Respondent No.1. Being aggrieved the Respondent No.1 preferred an Special Leave Petition before the Apex Court. By an order dated 23/4/1980 the Apex Court by an interim arrangement allowed respondent No. 1 to clear its caustic soda on payment of duty at 10% and furnishing bank guarantee of the balance amount.
(b) On 1/12/1983 this court dismissed the Writ Petition No. 2460 of 1979 igfiled by Respondent No.1 in this Court.
Respondent No.1 preferred an appeal to the Division Bench of this Court. On 13/3/1984, the Division Bench of this Court dismissed the appeal filed by Respondent No.1.
(c ) Being aggrieved by the Order dated 13/3/1984 of the Division Bench of this Court, the Respondent No.1 filed an Special Leave Petition before the Supreme Court on 13/2/1985.
(d) Thereafter, it appears that on 9/9/1991 the Apex Court allowed the appeal filed by Respondent No.1 from the order of the Division Bench of this Court as well as the Delhi High Court. Though the Parties before us could only produce the decision rendered in the matter of an appeal from Delhi ::: Downloaded on - 09/06/2013 18:35:38 ::: ASN 5 CUAPP-61.doc High Court Order. Consequent to the aforesaid order of the Apex Court the bonds were cancelled and the bank guarantee returned to Respondent No.1 and the assessments were finalized claiming duty at 10% on the imported Caustic soda instead of 92.5% ad valorem as sought by the Appellant. Therefore the Assessments which were provisional were finalized consequent to the Order of the Apex Court dated 9/9/1991.
(e) On 14/8/1996, the Apex Court reviewed its earlier order dated 9/9/1991 and held that Respondent No.1 was liable to pay duty at 92.5% and the benefit of reduced duty granted to the State Chemicals and Pharmaceuticals Corporation of India Ltd. under Section 25(2) of the said Act could not be extended to the Appellant. Consequent thereto, Respondent No.1 has discharged its full liability of Customs duty. However, the department is seeking to recover interest under Section 28AA of the said Act from Respondent No.1 on account of delayed payment of duty.
(f) On 30/10/2006, the Dy. Commissioner of Customs called upon Respondent No.1 to pay interest for the delayed payment of duty.
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(g) Being aggrieved, the Appellant preferred an appeal
to the Commissioner of Customs (Appeals). On 20/9/2007 the Commissioner of Customs (Appeals) upheld the order dated 30/10/2006 and held that consequent to the Apex Court order dated 9/9/1991 the assessments were finalized and the bond furnished by respondent No.1 were cancelled and the bank guarantee for the differential duty was also returned. Thereafter as the order of the Supreme Court was reviewed by an order dated 14/8/1996, Respondent No.1 became liable to pay differential customs duty at 92.5 % at-valoram. The Commissioner (Appeals) held that the Revenue had finalised the assessment in the year 1991 consequent to the order of the Apex Court dated 9/9/1991. However, as the Supreme Court order dated 9/9/1991 was subsequently reviewed by an order dated 14/8/1996, finalization of the assessment stood modified by virtue of the Supreme Court order in August 1996.
Consequently the Commissioner (Appeals) held that since Section 28AA of the said Act was brought into the statute book and was in existence at that time, Respondent No.1 was liable to pay interest there under.
::: Downloaded on - 09/06/2013 18:35:39 :::ASN 7 CUAPP-61.doc (h ) Being aggrieved by the Order dated 20/9/2007 the Respondent No.1 filed an appeal before the Tribunal against an order seeking to levy interest under Section 28AA of the said Act.
(i) Before the Tribunal the only issue was whether the Respondent No.1 was liable to pay interest under Section 28AA of the said Act on the outstanding amount of duty determined on finalization of the provisional assessment. During the hearing before the Tribunal the Appellant filed a statement clearly stating that the assessments were finalized in 1991 and the bonds were cancelled and the bank guarantee were returned to Respondent No.1 at that time. On the aforesaid admission the Tribunal concluded that finalisation of provisional assessments are governed by Section 18 of the said Act. Further Section 28AA of the said Act would have no application as no duty has been determined under Section 28(2) of the said Act. In the present case, no notice under Section 28(1) of the said Act to recover any short levy or non levy of duty was issued to Respondent No.1. Consequently no cause to recover any duty under sub section (2) of Section 28 would arise. Therefore Section 28AA of the said Act would have no application to the present facts.
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4. The Revenue being aggrieved by the Order dated 3/6/2010 of the Tribunal has approached this court on the ground that this case raises substantial questions of law as reproduced in paragraph 3 hereinabove. Before us also it is an admitted position between the parties that the provisional assessments were finalized in 1991-92. It was faintly contended that the assessments could be said to have been finalised in the year 1996 pursuant to the order passed by the Apex Court. The case of the Appellant before us is that when the provisional assessments were finalized, Section 28AA of the said Act was in the statute and therefore interest is recoverable under Section 28AA of the said Act in respect of the outstanding dues. This is clearly an erroneous reading of Section 28AA of the said Act.
The Tribunal correctly held that for Section 28AA to be applicable duty has to be first determined under Section 28(2) of the said Act. In the present case, no notice under Section 28(1) of the said Act to recover any short levy or non levy of duty was issued to Respondent No.1. Consequently, no cause to determine any duty under sub section (2) of Section 28 would arise. It is very clear that provisional assessments are governed by Section 18 of the said Act and at the relevant time i.e. when the assessments were finalized (even if we take 1996 as the date ::: Downloaded on - 09/06/2013 18:35:39 ::: ASN 9 CUAPP-61.doc of finalization) there was no provision for recovery of interest therein. It was only with effect from 13/7/2006 that sub section (3) was introduced providing that interest will be payable consequent to the final assessment, from the first day of the month in which the duty was provisionally assessed till the date of payment thereof. The aforesaid provision was advisedly not invoked by the Appellant either before the Tribunal or before us as the same would have no application for the period prior to 13/7/2006. The Supreme Court in the matter of India Carbon ltd. reported in 1997(106) Sales Tax Cases Pg. 460 has clearly held that provision for charging interest is a substantive provision and can be charged only if the statute makes a substantive provision in that regard. In view of the above, we find no error in the in the view taken by the Tribunal.
5. So far as Question (a) above is concerned the same does not arise from the order of the Tribunal as the appeal of Respondent No.1 was not allowed on the ground that no show cause notice for demand of interest was issued by the Appellant. So far as Question (b) above is concerned obligation to pay interest would have to find its source in one of the provisions of the said Act and any assurance made by Respondent No.1 would not estop them from later claiming that no interest is ::: Downloaded on - 09/06/2013 18:35:39 ::: ASN 10 CUAPP-61.doc payable under the statute. In any case the Tribunal has only held that interest is not recoverable under the provisions of the said Act but that would not stand in the Assessee/Respondent from honoring its commitment to pay interest on duty nor would prohibit the department/Appellant from resorting to any civil remedy for enforcement of any such commitment.
Consequently Question (b) above, also does not raise any substantial question of law.
6In view of the above, appeal filed by Revenue is dismissed with no order as to costs.
( M.S. SANKLECHA, J. ) ( J.P. DEVADHAR, J )
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