2011 (4) TMI 422 - AT - Customs

Tribunal rules against Revenue on interest charge in Customs Act case

The Tribunal ruled in favor of the importers, M/s. Shiv Breaking Company and M/s. Saumil Impex Pvt. Limited, in a dispute over the classification of fuel ... Demand of interest u/s 18(3) - Differential duty - provisional assessment - Held that:- there was no provisions u/s 80 of the Customs Act, 1962, at the material time for demand of interest in respect of provisional assessment - It is very significant that the provisions to levy interest under Section 18(3) on the differential amount paid by the importer was made only on 13.07.2006 - Thus, the provisional assessment of bills of entry was made on a date prior to the amendment which makes it clear that no interest can be charged on the differential duty - Decided in favour of assessee. Issues:1. Dispute over classification of fuel and oil in imported vessels.2. Provisional assessment of imported vessels due to lack of original documents.3. Challenge of interest demand under Section 18(3) of the Customs Act by the Revenue.Analysis:1. The appeals involved a dispute regarding the classification of fuel and oil in imported vessels. M/s. Shiv Breaking Company imported a ship DV CARANDAI, and M/s. Saumil Impex Pvt. Limited imported vessel MV PIONEER. The assessment for both cases was initially provisional due to disputes over classification and lack of original documents. Subsequently, final assessments were conducted, and differential duty was paid by the importers. The Revenue demanded interest under Section 18(3) of the Customs Act, which was contested by the respondents.2. The Commissioner (Appeal) allowed the appeal, prompting the Revenue to approach the Tribunal. The Commissioner relied on case laws, including Chemsilk Commerce Pvt. Limited vs. Commissioner of Customs (Port) Kolkata and Sterlite Industries (I) Limited vs. Commissioner of Customs, Tuticorin. These cases established that the levy incidental to finalization of provisional assessment would be governed by the law in force at the time of provisional assessment. The Tribunal emphasized that interest under Section 18(3) could not be charged on the differential duty paid, as the provision for such levy was introduced after the provisional assessments were made. The Tribunal also highlighted the compensatory nature of interest, distinct from penalty, as outlined by the Hon'ble Supreme Court in Pratibha Processors vs. UOI.3. The Tribunal noted that similar issues had been settled in a previous case involving Arya Ship Breaking Company Limited. The Tribunal criticized the Revenue for filing appeals on the same issues, which were likely to meet the same fate as earlier appeals. Such actions were deemed a gross non-observance of judicial discipline, as lower authorities had ignored detailed decisions, leading to judicial indiscipline. Consequently, the Tribunal rejected the appeals by the Revenue and upheld the orders of the Commissioner (Appeal) for both M/s. Shiv Ship Breaking Company and M/s. Saumil Impex Pvt. Limited, providing consequential relief if necessary.