Interest on SEZ to DTA customs duty is not leviable absent statutory authority where duty is paid on time after assessment.

Interest on customs duty for clearance of goods from an SEZ to the Domestic Tariff Area is not supported by Section 30 of the Special Economic Zones Act, 2005 or the SEZ Rules, 2006, which govern the rate and manner of duty on removal but do not create a standalone interest liability for the earlier duty-free import into the SEZ. Section 47 of the Customs Act, 1962 permits interest only where assessed duty on a bill of entry is not paid within the prescribed time after assessment. Where duty on SEZ-to-DTA clearance is paid within time after assessment, interest cannot be levied from the date of original import into the SEZ, and any amount collected under protest is refundable.

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Issues: Whether interest was leviable on customs duty paid on clearance of goods from a Special Economic Zone to the Domestic Tariff Area for the period between initial import into the SEZ and payment of duty on such clearance.

Analysis: Section 30 of the Special Economic Zones Act, 2005 governs domestic clearance of goods from an SEZ and provides for levy of customs duty at the rate applicable on the date of removal or, where that date is not ascertainable, on the date of payment. The SEZ Rules, 2006, including Rules 12(8), 25, 34 and 47(4), regulate removal, utilization and sale into the Domestic Tariff Area, but they do not contain any substantive provision authorising levy of interest merely because the goods were originally imported duty-free for SEZ use and later cleared to the Domestic Tariff Area. Section 47 of the Customs Act, 1962 permits interest only where duty assessed on a bill of entry is not paid within the prescribed time after assessment. In the present case, the duty on domestic clearance was paid within the permitted period after assessment, and there was no delay under Section 47 to trigger interest.

Conclusion: Interest was not leviable for the period from initial import into the SEZ to the date of clearance to the Domestic Tariff Area.

Final Conclusion: The demand of interest lacked statutory support and the assessee was entitled to refund of the amount paid under protest.

Ratio Decidendi: Interest on customs duty can be levied only when the governing statute contains a substantive provision authorising such levy, and where duty on SEZ-to-DTA clearance is paid within the time allowed after assessment, Section 47 of the Customs Act, 1962 does not permit interest from the date of original import into the SEZ.

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