Contractual import bond interest falls outside Settlement Commission waiver powers; pre-insertion Section 28AB cannot defeat the liability.

Interest payable under an import bond was treated as contractual and not as statutory interest chargeable under the Customs Act, 1962, so the Settlement Commission's power under Section 127H did not extend to waiving or interfering with that obligation. Section 28AB, inserted on 20.08.1996, could not be applied to imports made in February 1994 to displace the interest liability. The Madras HC therefore found no jurisdictional error in the Commission's order levying interest, and the writ challenge failed with the levy upheld.

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Issues: Whether interest at 15% could be sustained in respect of imports made before insertion of Section 28AB of the Customs Act, 1962, and whether the Settlement Commission lacked jurisdiction to interfere with interest payable under the bond.

Analysis: Section 28AB of the Customs Act, 1962, which provides for interest in special cases, was inserted only on 20.08.1996, whereas the imports in question were made in February 1994. The Court distinguished the decision relied upon by the petitioner and followed the principle that the Settlement Commission's power under Section 127H of the Customs Act, 1962 is confined to waiver of interest chargeable under the Act. Interest payable under the bond is contractual in nature and is not the same as interest payable under the statute. On that footing, the Commission's order levying interest could not be said to suffer from jurisdictional error.

Conclusion: The challenge failed. The levy of interest was upheld and the writ petition was dismissed.

Final Conclusion: The decision affirms that statutory waiver powers do not extend to interest arising purely from a bond, and that pre-insertion transactions cannot invoke Section 28AB to defeat a contractual interest obligation.

Ratio Decidendi: Interest payable under a bond is contractual and falls outside the Settlement Commission's statutory power to waive or reduce interest chargeable under the Customs Act, 1962.

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