Custom, Excise & Service Tax Tribunal
M/S. Sterlite Industries (India) Ltd vs Commissioner Of Customs, Trichy on 29 October, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
C/394/2008
(Arising out of Order-in-Appeal No. 13/2008 dated 7.10.2008 passed by the Commissioner of Customs and Central Excise (Appeals), Trichy)
For approval and signature:
Honble Shri P.K. Das, Judicial Member
Honble Shri Mathew John, Technical Member
1. Whether Press Reporters may be allowed to see 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 the Members wish to see the fair copy of the Order?
4. Whether order is to be circulated to the Departmental authorities?
M/s. Sterlite Industries (India) Ltd. Appellant
Vs.
Commissioner of Customs, Trichy Respondent
Appearance Shri Raghavan Ramabhadran, Advocate, for the Appellant Shri P. Arul, Superintendent (AR) for the Respondent CORAM Honble Shri P.K. Das, Judicial Member Honble Shri Mathew John, Technical Member Date of Hearing: 29.10.2013 Date of Decision: 29.10.2013 Final Order No. ____________ Per P.K. Das The appellants imported copper concentrate under seven Bills of Entry during the period April 2005 to February 2006 which are assessed provisionally under Section 18 of the Customs Act, 1962. By the impugned adjudication order, the adjudicating authority finalized the assessment and directed to pay interest. The appellant paid the duty upon finalization of the Bills of Entry. They filed an appeal before the Commissioner (Appeals) against the levy of interest which was rejected. The demand of interest was quantified under Section 18(3) of the Customs Act, 1962.
2. The learned counsel on behalf of the applicant submits that sub-section (3) of Section 18 of the Customs Act was inserted with effect from 13.7.2006 by Section 21 of the Taxation Laws (Amendment) Act, 2006 which will be applicable prospectively. He also submits that the Tribunal in the appellants own case as reported in 2008 (223) ELT 633 held that demand of interest cannot be levied under Section 18(3) prior to 13.7.2006. He relied upon the following decisions of the Tribunal:-
(a) Raj Petroleum Products Ltd. Vs. CC 2013 (292) ELT 125
(b) Chemsilk Commerce (P) Ltd. Vs. CC 2009 (233) ELT 113
(c) SAH Petroleums Ltd. Vs. CC 2009 (246) ELT 716
3. The learned AR for Revenue reiterates the findings of the Commissioner (Appeals). He further submits that the Honble Supreme Court in series of cases held that interest is compensatory character and therefore even if there is no provision, they are liable to pay interest. He relied upon the decision of the Honble Supreme Court in the case of Pratibha Processors Vs. Union of India 1996 (88) ELT 12 (SC), CCE, Pune Vs. SKF India Ltd. 2009 (239) ELT 385 (SC) and CCE Vs. International Auto Ltd. 2010 (250) ELT 3 (SC). He also relied upon the affidavit dated 19.1.2009 filed by the Assistant Commissioner of Customs. He further submits that the assessment was finalized after introduction of sub-section (3) to Section 18 and therefore they are liable to pay interest.
4. After hearing both sides and on perusal of the records, we find that prior to introduction of sub-section (3) of Section 18 of Customs Act, 1962, there was no provision for payment of interest on provisional assessment of duty. It is seen that with effect from 13.7.2006 by Section 21 of the Taxation Laws (Amendment) Act, 2006 (29 of 2006), sub-section (3) was inserted under Section 18 of the Customs Act, 1962, which is reproduced below:-
The importer or exporter shall be liable to pay interest, on any amount payable to the Central Government, consequent to the final assessment order under sub-section 92), at the rate fixed by the Central Government under section 28AB from the first day of the month in which the duty is provisionally assessed till the date of payment thereof.
5. On a plain reading of Section 18(3), it is clear that interest is payable on the provisional assessment of duty from the first day of the month in which duty is provisionally assessed till the date of payment. In the present case, duty was provisionally assessed during the period from April 2005 to February 2006 when there was no provision for payment of interest under Section 18 of the Customs Act. We find that the Tribunal in the appellants own case as reported in 2008 (223) ELT 633 held that as provisional assessment was prior to 13.7.2006, interest would not be levied by invoking Section 18(3) of the said Act. In the case of Raj Petroleum Products Ltd. (supra), it has been held as under:-
Considered the submissions made by both sides. Prior to 13.7.2006 there were no provision for demand of interest on differential duty on finalization of provisionally assessed Bill of Entry. The provision came in force with effect from 13-7-2006 and the same is applicant on the imports made after 13-7-2006. Admittedly, in this case, imports have been made during the period 1999-2003; therefore, the provision of Section 18(3) of the Customs Act, 1962 for demand of interest is not applicable in this case. Accordingly, the demand of interest is waived and the appeals are allowed.
6. In the case of Chemsilk Commerce (supra), it has been held as under:-
4.?After hearing both sides and considering the facts of this case, we find that the valuation declared by the appellants has not been accepted by the Department but on the basis of a thorough enquiry and study of comparable goods imported by others, the higher valuation has been adopted. At the same time, we find that no incriminating evidence have been found nor any duplicate invoices or suppression of invoices etc. are involved in this case. Therefore, while confirming the differential duty demand which has been made on the basis of comparable prices, we waive confiscation of the imported goods, imposition of redemption fine and penalty in this case. As regards the order of the Adjudicating Commissioner, in page 14 that differential duty along with interest should be adjusted from the bank guarantee, we find that the goods were initially assessed provisionally at the declared valuation on execution of bond and bank guarantee and since as pointed out by Shri Mehta there was no provision under Section 18 of the Customs Act, 1962 at the material time for demand of interest in respect of provisional assessment cases, we hold that the Adjudicating Commissioner is not justified in ordering demand of interest on the differential duty payable.
7. After considering the above decisions and the facts of the present case, we find that demand of interest under Section 18(3) is not sustainable prior to 13.7.2006. The learned AR relied on various decisions of the Honble Supreme Court but none of the cases relate to the demand of interest in the context of Section 18(3) of the Customs Act. In the case of SKF India (supra), the demand of interest is on price revision on the supplementary invoice under Section 11AB of the Central Excise Act. In the case of International Auto (supra), earlier decision of SKF India (supra) was followed on the same issue. In the case of Pratibha Processors (supra), the Honble Supreme Court considered the demand of interest on warehoused goods.
8. In view of the above discussions, we set aside the impugned order and allow the appeal with consequential relief, if any.
(Dictated and pronounced in open court)
(Mathew John) (P.K. Das)
Technical Member Judicial Member
Rex
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