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Issues: (i) Whether the re-imported goods, originally exported under the Duty Entitlement Passbook Scheme, were entitled to the benefit of Notification No. 94/96-Cus. (ii) Whether interest could be levied on the amount demanded as excise duty in the circumstances of the re-import.
Issue (i): Whether the re-imported goods, originally exported under the Duty Entitlement Passbook Scheme, were entitled to the benefit of Notification No. 94/96-Cus.
Analysis: The goods had been exported under the DEPB Scheme and were later re-imported on recall. The applicable entry in Notification No. 94/96-Cus for goods imported under the DEPB Scheme covered the re-import situation and granted exemption from customs duties to the extent they exceeded the central excise duty leviable on the goods at the time and place of importation. The liability arising on re-import therefore had to be worked out with reference to the excise duty element payable on the exported goods.
Conclusion: The benefit of Notification No. 94/96-Cus was available, and the amount recoverable was only the balance of excise duty component, not full customs duty.
Issue (ii): Whether interest could be levied on the amount demanded as excise duty in the circumstances of the re-import.
Analysis: The demand for interest was not supported by any discernible charging provision in the order of adjudication. The provision relied upon in appellate proceedings, Section 47 of the Customs Act, 1962, authorises interest on customs duty and not on a demand which was, in substance, excise duty. In the absence of a provision under the Customs Act enabling levy of interest on such excise duty amount, the interest demand could not stand.
Conclusion: Interest was not leviable on the amount demanded as excise duty.
Final Conclusion: The demand was sustained only to the extent of the balance excise duty payable on re-import, while the levy of interest was set aside, and the order was modified accordingly.
Ratio Decidendi: On re-import of goods exported under the DEPB Scheme, the exemption notification governing such re-import applies to the customs component in excess of the excise duty element, and interest cannot be levied under the Customs Act on an amount that is in substance excise duty unless a specific charging provision so authorises.
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