Custom, Excise & Service Tax Tribunal
M/S. Ion Exchange (India) Ltd vs Commissioner Of ... on 23 May, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. C/104/05 [Arising out of Order-in- Appeal No. 140/2004/CAC/CC/RJM dated 1/11/2004 passed by the Commissioner of Customs, Mumbai] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) Honble Mr. C.J. Mathew, 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 :
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?
=======================================================
M/s. Ion Exchange (India) Ltd.
:
Appellants
VS
Commissioner of Customs(Adjudication), Mumbai
:
Respondent
Appearance
Shri. Ratan Jain, Advocate for the Appellants
Shri. Ahibaran, Addl. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr Ramesh Nair, Member(Judicial)
Honble Mr. C.J. Mathew, Member(Technical)
Date of hearing: 23/5/2016
Date of decision: 23/5/2016
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in- Appeal No. 140/2004/CAC/CC/RJM dated 1/11/2004 passed by the Commissioner of Customs(Adjudication), Mumbai, New Custom House, Mumbai, whereby Ld. Commissioner, apart from the confirmation of Custom duty demand of Rs. 55,39,657/- and appropriation of an amount of Rs. 9,08,729/- and Rs. 46,30,926/- already paid in cash or by enforcing the bank guarantee, Ld. Commissioner also ordered for recovery of appropriate amount of interest under the terms of condition of the Bond executed by the importer.
2. The fact of the case is that the appellant imported and cleared duty free import of various components, parts & machinery etc. for the manufacture of condensate polishing unit and equipment for supply to Chandrapur Thermal Power Unit No. 7 of M/s. Maharashtra State Electricity Board which was financed by World Bank(IBRD). The intelligence gathered, indicated that the World Bank was not financing the said project at the time of the issue of the Special Imprest Licence (SIL) as World Bank loan was already suspended on 22/10/1996 and ultimately closed and discontinued from 30/6/1998. The appellant cleared the said imported goods under the notification No. 36/97-Cus dated 11/4/1997.
3. Shri. Ratan Jain, Ld. Counsel for the appellant submits that appellant had paid the entire custom duty before issuance of show cause notice. He submits that appellant is not contesting the demand of custom duty as well as appropriation thereof. They only contest the recovery of interest demanded by the Ld. Commissioner as per the terms of the bond executed. He submits that bond was executed only in respect of the duty and not for interest on such duty. He submits that since the Ld. Commissioner has categorically ordered for recovery of interest in terms of the condition for the bond and since there is no condition mentioned in the bond regarding the interest, the order by Ld. Commissioner for recovery of interest is illegal and incorrect. He submits that on absolutely identical facts and the issue involved, Honble Supreme Court in case of Jayaswal Neco Ltd Vs. CC[2005(322) ELT 561(SC)], held that when the bond does not contain the terms of payment of interest, recovery of interest cannot be made, despite there is a condition of executing the bond not only for the duty but also for the interest, in terms of notification.
4. Shri. Ahibaran, Addl. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that even though there is no provision of charging interest but if it is condition of the notification, interest is recoverable as held in the decision of Sanghi Industries Ltd Vs. Commr. of Cus.(Export Promotion), Mumbai[2012(277) ELT 365(Tri. Mumbai)].
5. We have carefully considered the submissions made by both sides.
6. We find that the fact of the case is that though the appellant was required to execute the bond in respect of duty and interest thereon. However the appellant executed the bond only in respect of duty and there is no mention about interest in the said bond. Even the bond accepting authority has not raised any objection at the time of execution of the bond. Ld. Commissioner in the order has explicitly mentioned that recovery of interest as per the terms of the bond, but fact remains there is no mention about interest in the bond therefore by enforcing the bond interest cannot be recovered. The identical issue has been decided by the Honble Apex Court in case of Jayaswal Neco Ltd(supra) wherein Honble Apex Court held as under:
19.?It was argued by Shri Lakshmikumaran that the appellant was not liable to pay interest on any of the customs duties for which it was held liable by the Commissioners order. He referred us to Notification No. 30 of 1997, the relevant part of which reads as follows :
In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts materials imported into India, against an Advance Licence with Actual User Condition in terms of para 7.4 of the Export & Import Policy 1997-2002 notified by the Government of India in the Ministry of Commerce vide Notification No. 1/1997-2002, dated the 31st March, 1997 (hereinafter referred to as the said licence), from the whole of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and from the whole of the additional duty leviable thereon under Section 3 of the said Customs Tariff Act, subject to the following conditions namely :-
(i) xxx xxx
(ii) That the importer at the time of clearance of the imported materials executes a bond with such surety or security and in such form and for such sum as may be specified by the Assistant Commissioner of Customs binding himself to pay on demand an amount equal to the duty leviable, but for the exemption, on the imported materials in respect of which the conditions specified in this notification have not been complied with, together with interest at the rate of twenty-four percent per annum from the date of clearance of the said materials.
20.?A reading of this Notification makes it clear that interest at the rate of 24% per annum is only liable to be paid if at the time of clearance of the imported materials the importer executes a bond in which such interest is stated to be payable. We have been shown the bond executed in the present case. It says nothing about any interest that is payable in case the conditions of the Notification No. 30 of 1997 are not met. On this short ground alone, it is clear that no interest is payable on any of the customs duties that are due from the appellant.
From the above judgment of the Honble Apex Court, it can be seen that the clause (ii) of the Notification No. 30/97-Cus involved in that case is identically worded in the notification No. 36/97-Cus which is relevant in the present case. In the Honble Apex Court judgment also there was no terms of demand of interest was mentioned in the bond, therefore the fact of the present case and the judgment of the Honble Supreme Court are absolutely identical. As regard the decision cited by the Ld. A.R., firstly it is of 2012 and passed by the this Tribunal. Secondly, interest was demanded in terms of bond executed before the custom authority. Therefore on both counts the decision relied upon by the Ld. A.R. is clearly distinguishable, hence distinguished.
7. In view of the above discussion and the issue of the present case being identical to the Honble Supreme Court judgment in case of Jayaswal Nico Ltd(supra), we hereby drop the demand of interest. The confirmation of demand and appropriation of amount of duty paid by the appellant are maintained. Appeal is disposed of in the above terms.
(Dictated in court) C.J. Mathew Member (Technical) Ramesh Nair Member (Judicial) sk 6 C/104/05