2016 (8) TMI 875 - AT - Customs

Interest on Finalized vs. Provisional Assessment: Pre-2006 Rule Prevails

The Tribunal dismissed the Revenue's appeal regarding the levying of interest on finalization of provisional assessment before 13.07.2006. Citing previous ... Levy of interest – provisional assessment – subsequent finalization – interest brought into force w.e.f. 13/07/2006 subsequent to which finalization done - Ministry of Finance vide Circular No. 20/2006-Cus dated 21 July 2006 clarified that interest should be levied from the date of provisional assessment – Held that:- it was held in the case Commissioner of Customs (Preventive) vs. Goyal Traders 2011 (8) TMI 720 Gujarat High Court that prior to introduction of sub-section (3) of Section 18 of the Act in the present form, there was no liability to pay interest on difference between finally assessed duty and provisionally assessed duty upon payment of which the assessee may have cleared the goods. It was only with effect from 13-7-2006 that such charging provision was introduced in the statute. Upon introduction therefore such provision created interest liability for the first time w.e.f. 13-7-2006. In absence of any indication in the statute itself either specifically or by necessary implication giving retrospective effect to such a statutory provision, we are of the opinion that the same cannot be applied to cases of provisional assessment which took place prior to the said date. Any such application would in our view amount to retrospective operation of the law – interest not levied - appeal not maintainable – decided against Revenue. Issues:Whether interest can be levied on subsequent finalization of provisional assessment done prior to 13.07.2006, considering the provisions brought into effect from 13.07.2006Rs.Analysis:The appeal was filed by Revenue against the Order-in-Appeal of Commissioner (Appeals) concerning the issue of levying interest on finalization of provisional assessment before 13.07.2006. The Revenue argued that interest should be charged based on a Ministry of Finance Circular and a Tribunal decision. On the contrary, the Respondent's counsel cited settled decisions by the Hon'ble Gujarat High Court, advocating for dismissal of the appeal.The Tribunal examined the arguments and referred to the judgments of the Hon'ble Gujarat High Court in the cases of Commissioner of Customs vs. Goyal Traders and Reliance Industries Limited vs. UOI. The High Court decisions emphasized that interest liability on the difference between finally assessed and provisionally assessed duty arose only from 13.07.2006. The court held that applying this provision retrospectively to cases before this date would be impermissible, constituting a retrospective operation of the law.Given the clear legal position established by the High Court judgments, the Tribunal concluded that the issue was no longer res-integra. Consequently, the Tribunal dismissed the Revenue's appeal, aligning with the settled legal interpretation provided by the Hon'ble Gujarat High Court.