2015 (8) TMI 243 - SC - Customs

Appellant not liable for Anti-dumping Duty in customs case, penalty overturned

The appellant was held liable to pay Anti-dumping Duty (ADD) at a specified rate, with interest on customs duties deemed not chargeable due to the absence ... Levy of Anti-dumping Duty - failure to fulfill its export obligation – goods were imported against advance licenses without payment - Appellant duly paid entire duty payable towards BCD, SAD and SCD after considering partial exports already made however did not make any payment towards ADD – Appellant disputed that Anti-dumping duty was exempt under Notification No.69 of 2000 and no interest was chargeable on any of four duties inasmuch as bond furnished did not stipulate payable of interest in case of default Held that:- Interest was only liable to be paid if at time of clearance of imported materials importer executes bond in which such interest was stated to be payable – As bonds were executed therefore no interest was payable on any of customs duties that were due from appellant – Also section 18(3) for levy of interest was added with effect from 2006 whereas provisional assessment were made in 1998 and final assessment in 2004, as both dates being prior to 2006 no interest was chargeable. Whether Anti-dumping duty can be included in calculating special customs duty and special additional duty. - Held that:- It was clear that no exception was carved out before 19.5.2000 in favour of Blast Furnace Manufacturers either when provisional Anti-dumping duty was first imposed or when final Notification was issued – Therefore Notification of 2000 creating exception in favour of persons like appellant had no reference to earlier proceedings and was obviously intended to apply only prospectively – Additional duty and special additional duty as per Customs tariff act, was only surcharge or additional duty of customs whereas Anti-dumping duty apart from being levied separately from levy of customs duty was also levied in completely different manner from that of customs duty – After 2002, provision relating to additional duty and special additional duty have been amended so as to expressly not include Anti-dumping duty– Impugned judgment of CESTAT set aside – Appeal allowed – Decided in favour of assessee. Levy of penalty - Held that:- the appellant has not diverted goods meant for export to the domestic tariff area. We are satisfied that market considerations made it difficult, if not impossible, for the appellant to fulfill its export obligations and are, therefore, of the view that the penalty imposed in the present case ought to be set aside. - Decided in favor of assessee. Issues Involved:1. Liability to pay Anti-dumping Duty (ADD)2. Liability to pay interest on customs duties3. Inclusion of ADD in calculating Special Customs Duty (SCD) and Special Additional Duty (SAD)4. Imposition of penaltyDetailed Analysis:1. Liability to pay Anti-dumping Duty (ADD):The appellant imported Low Ash Metallurgical (LAM) Coke under various notifications exempting them from duties, including ADD. However, the appellant failed to fulfill its export obligations, leading to a demand for duties, including ADD. The appellant argued that ADD was not payable under Notification No.69 of 2000, which exempted manufacturers of pig iron or steel using a blast furnace from ADD. The court examined the relevant notifications and concluded that the exemption under Notification No.69 of 2000 was prospective and did not apply to the period in question. However, the court agreed that the appellant should pay ADD at the lower rate specified in Notification No.81/98 dated 27.10.1998, as the revenue had not appealed against the Commissioner's order.2. Liability to pay interest on customs duties:The appellant contended that no interest was chargeable on the customs duties as the bond furnished did not stipulate interest payment. The court examined Notification No.30 of 1997, which required interest payment if specified in the bond. As the bond did not mention interest, the court ruled that no interest was payable. Additionally, the court noted that the Customs Act did not provide for interest on provisional assessments until an amendment in 2006, which was prospective.3. Inclusion of ADD in calculating Special Customs Duty (SCD) and Special Additional Duty (SAD):The court analyzed whether ADD should be included in the calculation of SCD and SAD. It referred to the relevant provisions and concluded that ADD, being a separate levy, should not be included in the calculation of SCD and SAD. The court noted that the amendments in 2002 explicitly excluded ADD from such calculations, reinforcing its conclusion.4. Imposition of penalty:The appellant argued that no penalty should be imposed as the failure to fulfill export obligations was due to bona fide commercial impossibility. The court agreed, noting that the appellant had not diverted goods to the domestic market and had used the imports for manufacturing pig iron. The court found that the penalty was unwarranted and set it aside.Judgment:The appeal was allowed in the following terms:- The appellant was liable to pay ADD at the rate specified in Notification No.81/98 dated 27.10.1998.- No interest was chargeable on the customs duties.- ADD should not be included in the calculation of SCD and SAD.- The penalty imposed was set aside.The judgment of CESTAT was set aside accordingly.