EPCG duty foregone interest payable after licence cancellation, but interest must be recalculated from the consent date for bank guarantee encashment.

Customs duty foregone under EPCG licences became recoverable after cancellation of the licences, and the governing notifications required the importer to pay the duty along with applicable interest when the notification conditions were not fulfilled. Interest waiver was therefore unavailable. However, the interest computation had to be recalculated from the legally relevant date of consent for encashment of the bank guarantee, since the record showed that recovery through encashment was requested on 02/01/2014 and that date governed delay for interest purposes. The liability to pay interest was upheld, but the adjudicating authority was directed to re-quantify interest by treating 03/01/2014 as the realization date.

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Issues: Whether interest was payable on the customs duty foregone under the EPCG licences after their cancellation, and whether the interest amount required recalculation by taking the date of consent for encashment of the bank guarantee as the relevant date.

Analysis: The EPCG licences were issued in 2007 and cancelled in 2013. Under Notification No. 97/2004-Cus and Notification No. 64/2008-Cus, read with para 2(5), where the conditions of the notifications are not fulfilled, the importer remains liable to discharge the customs duty foregone along with applicable interest. On that basis, waiver of interest was not available. At the same time, the record showed that the appellant had requested recovery through encashment of the bank guarantee on 02/01/2014, while the guarantee was actually encashed later. The date of consent for encashment therefore governed the computation of delay for interest purposes.

Conclusion: Interest on the customs duty foregone was payable and the prayer for waiver was rejected. The adjudicating authority was directed to re-calculate and re-quantify the interest by treating 03/01/2014 as the realization date, and the appellant was liable to pay the revised interest within the stipulated period.

Final Conclusion: The appeal succeeded only to the limited extent of correction of the interest computation, while the liability to pay interest itself was upheld.

Ratio Decidendi: Where customs duty foregone under EPCG notifications becomes payable after cancellation of the licence, interest under the governing notification cannot be waived, but it must be computed from the legally relevant date of realization or consent for encashment.

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