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of <h1>High Court Upholds Customs Duty Interest on Export Obligation Non-Fulfillment</h1> <h3>DHWANI FASHIONS Versus DEPUTY COMMISSIONER OF CUS., ICD, BANGALORE</h3> DHWANI FASHIONS Versus DEPUTY COMMISSIONER OF CUS., ICD, BANGALORE - 2010 (251) E.L.T. 173 (Kar.) Issues:Appeal under Section 130A of the Customs Act, 1962 challenging the order passed by CESTAT confirming duty demand and interest for non-fulfillment of export obligation. Questions of law framed by High Court regarding the delay in issuing Notification, exemption Notification under Customs Act, and applicability of Notifications.Analysis:The appellant imported machinery under the Export Promotion Capital Goods Scheme, claiming concessional Customs Duty. Due to non-fulfillment of export obligation, a show cause notice was issued, and duty demand with interest was confirmed in the Order in Original. The appeal before the Commissioner of Customs and Central Excise was dismissed, leading to an appeal before CESTAT, which also resulted in dismissal, prompting the appellant to approach the High Court.The High Court framed questions of law, including delay in issuing Notification affecting concession availing, impact of retrospective exemption Notification, and applicability of Notifications during an interregnum period. The appellant argued that interest should not have been levied as only duty was agreed upon in the bond. The respondent justified invoking Notification No. 110/95 based on the license terms and highlighted the appellant's failure to question interest earlier.The Court noted that the appellant had not challenged interest before lower authorities and raised the issue only on Notification applicability. Section 28AA on interest payment was cited, and the Court upheld the automatic levy of interest for non-payment of Customs Duty. Rejecting the appellant's contentions, the Court held that Notification No. 110/95 was applicable, emphasizing the failure to fulfill export obligations.Regarding the questions of law, the Court focused on the issue of interest levy as it was the main contention raised during arguments. As the issue of interest was not previously raised, the Court dismissed the appeal, with parties bearing costs. The judgment reaffirmed the automatic nature of interest levy and the importance of fulfilling export obligations under the scheme.In conclusion, the High Court dismissed the appeal, emphasizing the automatic levy of interest for non-payment of Customs Duty and the significance of fulfilling export obligations under the scheme. The judgment highlighted the appellant's failure to challenge interest earlier and upheld the applicability of Notification No. 110/95 based on the license terms.
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