2012 (5) TMI 37 - HC - Customs

Court condones appeal delay under Customs Act, upholds interest levy for delayed payment.

The High Court condoned the delay in filing an appeal under Section 130 of the Customs Act, considering it unintentional due to confusion over ... Levy and demand of interest under Section 28AB (now Section 28AA) r.w.s 28(2) for belated payment of customs duty for the goods imported through the Cochin Customs – Held that:- Decided in ICI INDIA LIMITED VS. COMMISSIONER OF CUSTOMS PORT (2004 (9) TMI 127 - HIGH COURT AT CALCUTTA) that interest is sustained as assessee also produced forged DEPB credit and the fraud perpetuated in a transaction of this type should automatically lead to demand of duty and interest – the mistake committed by the Customs on not verifying the genuineness of the Telegraphic Release Advice produced on the DEPB credit cannot be encased by the appellant by avoiding statutory interest which is mandatory and payable at the prescribed rate for delay in payment of customs duty – against assessee. Issues:1. Delay condonation in filing appeal under Section 130 of the Customs Act.2. Dispute over levy and demand of interest under Section 28AB (now Section 28AA) of the Customs Act for belated payment of customs duty.3. Interpretation of liability for interest on delayed payment of customs duty due to fraud.Issue 1: Delay CondonationThe appeal was filed under Section 130 of the Customs Act against the order of the Customs, Excise and Service Tax Appellate Tribunal with a delay of 705 days. The delay was due to confusion regarding jurisdiction, as the appeal was initially filed before the Karnataka High Court instead of the appropriate court. Despite opposition, the High Court decided to condone the delay based on the application of provisions of the Civil Procedure Code (CPC) to appeals under the Customs Act. The Court found that the delay was not intentional and proceeded to consider the appeal on its merits.Issue 2: Dispute over Interest LevyThe dispute centered on the levy and demand of interest under Section 28AB (now Section 28AA) of the Customs Act for belated payment of customs duty. The appellant had imported goods through Cochin Customs and used a forged Telegraphic Release Advice (TRA) to set off duty credit against the customs duty payable. Upon discovering the fraud, the Commissioner demanded the evaded duty, interest, and penalty. The Tribunal waived the penalty but upheld the interest demand, leading to the appeal. The appellant argued that since duty was paid promptly upon demand, interest should not apply, while the respondent contended that the delay in payment due to fraud justified the interest levy.Issue 3: Interpretation of Liability for InterestThe High Court analyzed various legal precedents cited by both parties to determine the liability for interest on delayed payment of customs duty. The Court agreed with a decision of the Calcutta High Court that in cases of fraud leading to duty evasion, interest is justified. It emphasized that the mistake made by the Customs Department in allowing the duty credit adjustment did not absolve the appellant from the statutory interest obligation. The Court noted that interest is compensatory and mandatory for delayed payment, regardless of the fraud's origin. As the liability for customs duty was admitted and the delay was a result of fraud, the Court dismissed the appeal, finding no merit in challenging the interest levy.This comprehensive analysis of the judgment highlights the key issues addressed by the High Court in the case, providing a detailed overview of the legal reasoning and conclusions reached by the Court.