Importer not liable for Section 28AA interest on short-paid duty when shortfall not due to their fault

CESTAT Kolkata held that interest under Section 28AA of the Customs Act cannot be levied on short-paid duty when the shortfall was not attributable to the importer's fault. The appellant promptly paid differential duty upon receiving the show cause notice without dispute. The court noted that duty was properly paid per the Customs EDI System at clearance time, with no willful misstatement or suppression. Following precedent from a similar case involving rate changes between assessment and entry, the tribunal ruled that where differential duty is paid timely upon notice and Section 47 requirements were met at clearance, interest levy is unwarranted and unduly harsh. Appeal allowed.

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Issues Involved:
1. Short payment of Countervailing Duty (CVD) on imported goods classified under CTH 8607.
2. Appeal against confirmation of interest amount by the Ld. Commissioner.

Summary of the judgment:

Issue 1: The Appellant imported goods falling under CTH 8607 and self-assessed the duty based on the EDI system calculations. However, the duty rate was enacted as 12% instead of the proposed 6% at the time of import. This resulted in a short payment of CVD by 6%. The Department issued a Show Cause Notice confirming the demand for short levied CVD and interest under section 28AA of the Customs Act. The Appellant contested the interest amount, claiming that the duty paid was not challenged by the Department and there was no omission or commission on their part. They argued that the short payment was due to an error in the EDI system, and there was no willful misstatement. The Tribunal noted that the Appellant promptly paid the differential duty upon receiving the notice, and there was no delay in payment. Referring to a similar case, the Tribunal held that no interest was payable as the duty was paid without delay and the goods were cleared for home consumption without any fault on the importer's part.

Issue 2: The Appellant appealed against the confirmation of the interest amount by the Ld. Commissioner. The Department argued that the duty was not paid at the appropriate rate of 12% and hence interest was applicable. However, the Tribunal found that the Appellant had complied with Section 47 of the Customs Act by paying the assessed duty within the specified time frame. As there was no delay in payment and the duty was discharged as required by law, the Tribunal set aside the demand for interest. The appeal was allowed, and the demand for interest was rejected.

In conclusion, the Tribunal ruled in favor of the Appellant, setting aside the demand for interest on the short paid duty amount.

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