2024 (9) TMI 940 - AT - Customs

Recovery of IGST customs duty interest and penalty unsustainable without statutory authority under sections 3(7) and 3(12)

Chiripal Poly Films Ltd. Versus Commissioner of Customs-Customs Ahmedabad

Chiripal Poly Films Ltd. Versus Commissioner of Customs-Customs Ahmedabad - TMI Issues Involved:1. Whether customs duty (in nature of Integrated Tax) was recoverable from the appellant, considering the time-bar demands under the extended period.2. Whether interest is chargeable, whether goods are liable to confiscation entailing imposition of redemption fine, and whether penalty is imposable.3. Whether the liabilities of interest, confiscation/redemption fine, and penalty imposed are without jurisdiction and untenable due to the absence of statutory provisions.4. Whether the amount deposited towards interest is liable to be refunded, and whether liabilities of penalty and confiscation/redemption fine are liable to be set aside.Issue-wise Detailed Analysis:1. Recovery of Customs Duty (Integrated Tax):The appellant paid the IGST as per the Supreme Court's directions and CBIC Circular No. 16/2023-Cus dated 07-06-2023. The situation was revenue-neutral, as the appellant was allowed to take credit of the entire amount of tax paid. Despite the duty being potentially unsustainable on other grounds, the appellant did not seriously object to the demands of IGST deposited after 07-06-2023. The Tribunal refrained from passing a detailed order on the confirmation of duty, which was allowed as credit by the Revenue.2. Interest, Confiscation, Redemption Fine, and Penalty:The appellant contested the imposition of interest, redemption fine, and penalty on the grounds that there is no statutory provision under Section 3 (7) or 3 (12) of the Customs Tariff Act, 1975 for such recoveries. The Tribunal agreed, noting that interest, fine, and penalty are separate financial levies requiring specific charging provisions in the statute. The provisions of the Customs Act, 1962 for levying interest, penalty, and fine were not applicable to the IGST levied under Section 3 (7) of the Customs Tariff Act, 1975.3. Jurisdiction and Statutory Provisions:The Tribunal found no charging provision for interest, fine, and penalty under Section 3 (7) or Section 3 (12) of the Customs Tariff Act, 1975. The Tribunal cited various judgments, including those of the Supreme Court and High Courts, which established that additional levies like interest and penalty cannot be imposed without explicit statutory provisions. The Tribunal concluded that the orders for recovery of interest, fine, and penalty on late payment of IGST were without authority of law and unsustainable.4. Refund of Interest and Setting Aside Penalties and Fines:The Tribunal held that the appellant could contest the liability of interest, confiscation, redemption fine, and penalty even though the IGST was voluntarily paid. The Tribunal found that the orders for recovery of interest, fine, and penalty were not sustainable due to the absence of specific charging provisions in the Customs Tariff Act, 1975. The Tribunal also noted that the entire situation was revenue-neutral, and there was no evidence of intent to evade duty. Consequently, the Tribunal set aside the orders for confiscation of goods, imposition of redemption fine, and penalty, and allowed the appeals with consequential reliefs.Conclusion:The Tribunal allowed the appeals, set aside the orders for recovery of interest, confiscation of goods, imposition of redemption fine, and penalty, and ordered the refund of the interest recovered/collected from the appellant. The Tribunal's decision was based on the absence of statutory provisions for levying interest, fine, and penalty under the Customs Tariff Act, 1975, and the revenue-neutral nature of the situation.