Tribunal rectifies mistake in duty demand, deems interest recovery inappropriate. Appeal allowed.

The Tribunal allowed the rectification of mistake application by M/s. Plastrulon Processors Ltd. regarding the demand of interest on duty liability. The Tribunal found that the demand of duty was set aside, and as the interest mentioned in the original order did not pertain to interest on duty but on other charges, the recovery of interest was deemed inappropriate. Consequently, the Tribunal modified the relevant paragraphs of the order, stating that since the demand of duty was set aside, there was no basis for the recovery of interest, and allowed the appeal.

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Issues: Rectification of mistake application regarding demand of interest on duty liability.

The judgment pertains to a rectification of mistake application filed by M/s. Plastrulon Processors Ltd. concerning an order dated 4.11.2016. The applicant had relinquished the title to goods with Customs under Section 60 of the Customs Act, 1962. The demand of duty was set aside based on a decision of the Hon'ble High Court of Karnataka. However, the demand of interest was upheld in the original order, citing a decision of the Hon'ble Apex Court in the case of Kesoram Rayon Vs. Commissioner of Customs, Calcutta. The Ld. Counsel argued that the reliance on this judgment was misplaced as the term 'interest' in the said decision did not pertain to interest on duty liability. The Circular No.42/2003-Cus. was referred to, clarifying that upon relinquishment of goods, the importer is not liable to pay duty, but there was confusion regarding interest accrued on duty till relinquishment date.

The Ld. Counsel contended that the confusion arose from the text of the proviso in the Customs Act amendment of 2003, emphasizing that interest mentioned in the proviso did not relate to interest accrued on duty. The Tribunal considered the arguments and found that the term 'interest' in the judgment of the Hon'ble Apex Court did not refer to interest on duty but on other charges. As the demand of duty was set aside, the recovery of interest was deemed inappropriate. Consequently, the Tribunal rectified the mistake in the order by substituting the relevant paragraphs. Para 5.3 was modified to state that since the demand of duty was set aside, there was no basis for the recovery of interest. Para 6 was amended to allow the appeal. The rectification of mistake application was allowed based on the above terms, and the judgment was pronounced on 31/08/2017.

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