High Court quashes interest payment order under Customs Act citing no retrospective effect

The High Court quashed the order requiring payment of interest on differential duty under Section 18(3) of the Customs Act for provisional assessments made before 13.7.2006, citing the precedent that Section 18(3) cannot have retrospective effect. The court emphasized the binding nature of higher court decisions on subordinate authorities and entertained the writ petition due to the adjudicating authority's failure to follow judicial principles. The impugned order was found inconsistent with statutory provisions and judicial precedents, leading to the petition being allowed with no costs.

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Issues Involved:
1. Applicability of Section 18(3) of the Customs Act, 1962 for charging interest on differential duty for provisional assessments made prior to 13.7.2006.
2. Binding nature of High Court decisions on subordinate adjudicating authorities.
3. Maintainability of the writ petition in the presence of an alternative statutory remedy.

Detailed Analysis:

1. Applicability of Section 18(3) of the Customs Act, 1962:
- The petitioners challenged the order requiring them to pay interest on differential duty under Section 18(3) of the Customs Act for provisional assessments made between December 1999 and February 2005. The petitioners argued that Section 18(3), introduced on 13.7.2006, cannot be applied retrospectively to assessments made before this date.
- The petitioners relied on the High Court's decision in Commissioner of Customs (Preventive) v. Goyal Traders, which held that Section 18(3) cannot have retrospective effect. The adjudicating authority ignored this precedent and imposed interest and penalties under Section 114A of the Act.

2. Binding Nature of High Court Decisions:
- The petitioners argued that the adjudicating authority was bound by the High Court's decision in Goyal Traders and could not ignore it. They cited the Supreme Court's decision in Union of India v. Kamlakshi Finance Corporation Ltd., which emphasized that revenue officers must follow appellate authority decisions unreservedly.
- The court noted that the adjudicating authority's failure to consider the High Court's binding decision amounted to a wilful disregard of the law, potentially constituting civil contempt under Section 2(b) of the Contempt of Courts Act, 1971.

3. Maintainability of the Writ Petition:
- The respondent raised a preliminary objection regarding the maintainability of the petition, arguing that the petitioner had an alternative remedy of appeal to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
- The court acknowledged the general rule that writ petitions are not entertained when an alternative remedy exists. However, it also recognized exceptions, such as when the statutory authority acts in defiance of judicial principles or violates natural justice.
- The court found that the adjudicating authority had not acted in accordance with the Customs Act and had ignored binding judicial precedents. Given these exceptional circumstances, the court decided to entertain the writ petition.

Conclusion:
- The High Court quashed the impugned order dated 20.5.2015, passed by the Commissioner, Customs and Central Excise, Rajkot, finding it inconsistent with the statutory provisions and judicial precedents. The court emphasized the importance of judicial discipline and the binding nature of higher court decisions on subordinate authorities. The petition was allowed, and the rule was made absolute with no order as to costs.

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