2021 (5) TMI 504 - AT - Customs

Tribunal rejects interest demand by Revenue as duty liability not determined

Commissioner of Customs, Ludhiana Versus M/s. Overseas Warehousing Pvt. Ltd.

The Tribunal concluded that the demand for interest from the respondent was not maintainable as the duty liability had not been determined. The duty was ... Levy of Interest - legality of demanding and recovering of interest from the respondent before determining liability of customs duty - mis-declaration of description and value of the goods - HELD THAT:- The facts of the case are in dispute are that the duty has been received by the appellant from the importer way back in 2013 by the importer and with the Revenue. It is also the fact on record that on 31.3.2018 out of charge was given to the department to the respondent for the delivery of the goods to the importer. However, it is also fact on record that the goods have already been cleared for home consumption by way of auction by the respondent. In that circumstance, the dispute arose whether the Hon’ble High Court has directed to the appellant vide order dated 21.11.2019 [2020 (1) TMI 1181 - PUNJAB AND HARYANA HIGH COURT] to consider the refund of duty paid and quantum of duty on declared seized goods way back in 2013. Thereafter the department woke up and quantum of recovery of duty from the appellant and till date no order has been issued or no show cause notice has been issued for recovery of duty on the subject goods. Admittedly, it is fact on record that the duty of the said goods already been recovered by the appellant in 2013 itself and it is in the knowledge of the department. The appellant never received duty from the importer. The Revenue is taking shelter of the Final Order No.60358/2020 dated 4.3.2020 [2020 (4) TMI 422 - CESTAT CHANDIGARH]. According to the spirit of the order of this Tribunal, there was no goods in question were in the custody of the custodian in terms of section 47 of the Act then the duty is payable by the custodian but no such notice has been issued to the respondent by the appellant to determine the liability on the respondent. Moreover, it is fact on record that the appellant has enjoyed duty paid way back in 2013 on the goods in question. Therefore, the question mark on the person who has received duty, who can duty, who is liable to pay interest thereon and duty has been enjoyed by the appellant themselves how can demand interest from the respondent without determine liability. Appeal dismissed - decided against Revenue. Issues Involved:1. Legality of demanding and recovering interest from the respondent before determining the liability of customs duty.2. The applicability of Section 45 and 48 of the Customs Act, 1962, and Regulation 6(1)(l) of Handling of Cargo in Customs Area Regulations, 2009.3. The procedural correctness and adherence to the High Court's directions regarding the refund of duty and interest.4. The legitimacy of the respondent's sale of goods and the resulting financial obligations.Detailed Analysis:1. Legality of Demanding and Recovering Interest:The primary issue is whether it is legal to demand and recover interest from the respondent before determining the liability of customs duty. The respondent argued that the goods were detained and later seized due to mis-declaration, and despite paying customs duty in August 2013, the importer did not take delivery. The prolonged litigation ended with the High Court's order dated 26.2.2018, clearing the goods for home consumption on 21.3.2018. The respondent contended that the interest demand was premature as the duty liability was not yet determined.2. Applicability of Section 45 and 48 of the Customs Act, 1962, and Regulation 6(1)(l) of Handling of Cargo in Customs Area Regulations, 2009:The respondent argued that sections 45 and 48 of the Customs Act, 1962, applied only to imported goods as defined in section 25. Since the goods were cleared under section 47 on 21.3.2018, they ceased to be imported goods, making the invocation of these sections incorrect. The respondent claimed that the department's stance changed only during contempt proceedings, aiming to scapegoat the respondent.3. Procedural Correctness and Adherence to High Court's Directions:The High Court's order dated 21.11.2019 directed the customs authorities to consider the refund of duty paid along with interest. The respondent argued that the appeal was not maintainable as the High Court had already directed the customs authorities to refund the duty with interest. The High Court's interim order dated 10.1.2020 directed the competent authority to determine the admissibility of interest and its rate after adjudicating the duty recovery dispute.4. Legitimacy of the Respondent's Sale of Goods and Resulting Financial Obligations:The respondent sold the goods on 12.10.2018 after repeated attempts to urge the importer to take delivery or risk sale for warehouse dues recovery. The High Court's order dated 21.11.2019 directed the customs authorities to consider the refund of duty paid in 2013. The respondent contended that the department's change in stance during contempt proceedings was an attempt to escape contempt by shifting the blame to the respondent.Conclusion:The Tribunal concluded that the demand for interest from the respondent was not maintainable as the duty liability had not been determined. The duty was paid by the importer in 2013 and enjoyed by the department. The Tribunal found no infirmity in the Commissioner (Appeals) order, which set aside the adjudication order demanding interest from the respondent. The appeal filed by the Revenue was dismissed, and the cross-objections were disposed of accordingly.