2001 (5) TMI 919 - Commission - Customs

Commission rules for recovery of interest on duty foregone, rejects Modvat credit request, grants immunity

IN RE: E-WHA FOAM (INDIA) LTD.

IN RE: E-WHA FOAM (INDIA) LTD. - 2007 (219) E.L.T. 801 (Sett. Comm.) Issues Involved:1. Recovery of interest on duty foregone.2. Eligibility for Modvat credit on CVD.3. Justification for action under Sections 111(o) and 112(a) of the Customs Act, 1962.Issue-wise Detailed Analysis:1. Recovery of Interest on Duty Foregone:The applicant contested the recovery of interest, arguing that there was no provision for such recovery in Notification No. 160/92-CUS. or the import policy. They also pointed out that Section 28AB of the Customs Act, which allows for interest recovery, was only effective from 28-9-96, whereas the goods were imported in 1994. The Commission agreed with the applicant, noting that the show cause notice was silent on the provision under which interest was chargeable. The Commission found that Section 47 of the Customs Act, cited by the Revenue, did not apply as it pertains to interest on assessed duty, not duty foregone. Furthermore, Notification No. 160/92-CUS. did not contain any provision for charging interest. Therefore, the Commission concluded that interest was not recoverable in this case.2. Eligibility for Modvat Credit on CVD:The applicant sought to adjust Rs. 18,11,600/- against Rs. 36,55,479/- of CVD due to financial hardship, claiming they would have availed Modvat credit if the goods were imported normally. The Commission rejected this request, stating that the applicant was not eligible for Modvat credit on the CVD portion of the duty liability as per the rules in force at the time of import. The Commission further noted that the recent substitution of Modvat rules with Cenvat rules did not provide for such credit for goods received before 1-3-2001.3. Justification for Action under Sections 111(o) and 112(a) of the Customs Act, 1962:The applicant argued that no action under Sections 111(o) and 112(a) was justified as they had faced unforeseen circumstances like industrial disputes and a major fire, which hindered their ability to fulfill the export obligation. The Commission found the applicant's explanations credible and noted their cooperation and full disclosure of duty liability. The Commission also considered the rejection of the applicant's requests for extension of the export obligation period by the DGFT. Given these factors, the Commission granted immunity from any fine, penalty, and prosecution under the Customs Act, 1962, the Indian Penal Code, and the Foreign Trade (Development and Regulation) Act, 1992.Terms of Settlement:1. The duty liability was determined to be Rs. 65,79,862/-, with Rs. 29,24,383/- already paid. The balance of Rs. 36,55,479/- was to be paid in six installments with interest at 18% per annum.2. The Commission waived the payment of interest on the duty foregone.3. Immunity from fines and penalties under the Customs Act, 1962, was granted.4. Immunity from prosecution under the Customs Act, 1962, the Indian Penal Code, and the Foreign Trade (Development and Regulation) Act, 1992, was granted.The Commission emphasized that this settlement order was limited to the specific case under settlement and would be void if obtained by fraud or misrepresentation of facts.