2020 (3) TMI 424 - AT - Customs

Appellant's Duty Rate Confirmed, Interest Exemption Granted

The Tribunal confirmed the appellant's liability to pay duty at the debonding rate, not the import rate, as per relevant notifications and the Customs ... Date of determination of rate of duty under Section 15 of the Customs Act - payment of duty at the rate in force on the date of debonding - treatment of imported capital goods removed from warehouse under section 68 - treatment of indigenously procured capital goods on debonding - positive Net Foreign Exchange (NFE) criteria and debonding - exemption from interest under Notification No. 132/2004-CusDate of determination of rate of duty under Section 15 of the Customs Act - payment of duty at the rate in force on the date of debonding - treatment of imported capital goods removed from warehouse under section 68 - Appellant's liability to pay customs duty on imported capital goods is to be determined at the rate prevailing on the date of debonding. - HELD THAT: - The Tribunal applied Section 15(1)(b) of the Customs Act which fixes the applicable rate of duty for goods cleared from a warehouse under section 68 as the rate in force on the date when the goods are actually removed from the warehouse. The appellant, being a 100% EOU which failed to achieve positive NFE and which filed bills of entry at the time of demanding debonding, is therefore liable to pay duty at the rate prevailing on the date of debonding. This conclusion is consistent with the relevant clauses of Notification No. 52/2003-Cus (and related provisions) which contemplate payment of duty at the rate in force on the date of debonding where positive NFE is not achieved; the Revenue was directed to compute duty accordingly. [Paras 12, 15]Imported capital goods: duty payable at the rate prevailing on the date of debonding; duty to be calculated by Revenue.Payment of duty at the rate in force on the date of debonding - treatment of indigenously procured capital goods on debonding - positive Net Foreign Exchange (NFE) criteria and debonding - Appellant's liability to pay duty on indigenously procured capital goods is to be determined at the rate prevailing on the date of debonding. - HELD THAT: - Clause 8(i) of Notification No. 22/2003-CE (as extracted) expressly provides that clearance or debonding of capital goods may be allowed on payment of excise duty on the depreciated value at the rate in force on the date of debonding where positive NFE criteria are relevant. Applying that provision, the Tribunal held that differential duty claimed by Revenue in respect of indigenously procured capital goods must be computed using the rate in force on the date of debonding, and directed that duty be calculated accordingly. [Paras 13, 15]Indigenously procured capital goods: duty payable at the rate prevailing on the date of debonding; duty to be calculated by Revenue.Exemption from interest under Notification No. 132/2004-Cus - payment of duty at the rate in force on the date of debonding - No interest is payable by the appellant on the duty demanded. - HELD THAT: - The Tribunal relied on Notification No. 132/2004-Cus which exempts interest accrued on customs duties payable by an export oriented undertaking in specified circumstances, and on earlier decisions of the Bench (including the cited appellate precedents) which held that interest is not leviable where the statutory provisions and notifications so provide and where debonding/delay aspects have been considered. Applying that principle, the Tribunal held that the appellant is not liable to pay interest on the duties determined and recorded the same in the operative order. [Paras 14, 15]No interest payable by the appellant.Final Conclusion: Appeal allowed in part: for both imported and indigenously procured capital goods the duty shall be calculated at the rate prevailing on the date of debonding; no interest is payable; Revenue to compute any amount payable and collect it within one month. Issues:1) Liability to pay duty at the rate of import or debonding2) Liability to pay interest for the intervening periodIssue No.1:The appellant contested the demand for differential duty based on Notification No. 52/2003-Cus and Notification No. 22/2003-CE, arguing that duty should be paid at the rate prevailing at the time of debonding, not import. The Tribunal analyzed the notifications and Section 15 of the Customs Act, determining that duty is payable at the debonding rate. For imported capital goods, duty was to be paid at the debonding rate, and for indigenously procured capital goods, duty was also to be calculated at the debonding rate. The appellant's liability was confirmed based on the prevailing duty rate at the time of debonding.Issue No.2:Regarding the liability for interest, the Tribunal referred to Notification No. 132/2004-Cus exempting interest on customs duties for export-oriented units. Citing a previous case, the Tribunal ruled that the appellant was not liable to pay interest for the period when capital goods were warehoused. The decision specified that no interest was payable by the appellant, aligning with the exemption under the notification. The order directed the Revenue to calculate the duty at the debonding rate, with any payable amount to be settled within one month, thereby disposing of the appeal.This detailed analysis of the judgment from the Appellate Tribunal CESTAT Hyderabad highlights the interpretation of relevant notifications and legal provisions to determine the appellant's duty liability and interest obligations, providing a comprehensive overview of the issues involved and the Tribunal's decisions on each point.