TaxTMI 
TaxTMI 
2001 (3) TMI 322
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.... $ 2654490 within a period of five years from the date of the licence. The licence also mandated that before clearance of the first consignment but not later than six months from the date of issue of the licence, the Applicant would execute a Legal Undertaking and Bank Guarantee in the manner indicated in para 102 of the Handbook of Procedures as amended from time to time, with the concerned Export Obligation Cell of the DGFT. 3. The Applicant imported the capital goods, viz. stream equipment for foamed PVC sheets and availed exemption under the Notification No. 160/92-Cus., dated 20-4-1992 as amended, which extended concessional customs duty of 15% to such capital goods imported under the EPCG Scheme subject to condition specified therein. The capital goods were imported and cleared in three consignments as under : No. Bill of Entry Details Assessable Value (Rs.) Duty paid at concessional rate 15% (Rs.) Duty saved Rs. 1. 9309, dated 27-1-1994 (Thoka No. 20/2 dated 12-1-1994) 1,28,66,358/- 19,29,954/- 27,73,271/- 2. 2844, dated 7-4-1994 83,879/- 2,582/- 69,619/- 3. 8905, dated 22-4-1994 84,16,469/- 12,62,470/- 1....
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....y paid at the time of importation. 6. The Office of the Commissioner of Customs (Export Promotion), New Customs House, Ballard Estate, Mumbai-400 038 issued a Duty Demand Notice No. 5/40-SPL-121/94 IIA, dated 20-8-1998 to the Applicant asking them to show cause why an amount of Rs. 25,73,271/- being the duty foregone on the goods cleared by them against the Bill of Entry 20/2, dated 12-1-1994 at concessional rate of duty of 15% under exemption Notification No. 160/92-Cus. as amended, should not be demanded from the applicant, plus interest @ 24% per annum from the date of clearance till the date of payment of the duty in as much as the applicant has not submitted any valid proof/evidence of having fulfilled the export obligation as undertaken by them and having not complied with the terms and conditions of the said exemption notification. 7. It is in connection with the above proceedings initiated under the Customs Act, 1962, that the Applicant has filed an application to the Settlement Commission on 20-6-2000, to have the case settled. 8. The said office of the Commissioner of Customs (Export Promotion) have subsequently issued on 4-11-2000, a demand notice....
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.... a new product, the company has been incurring losses. (2) that the company made a mandatory reference under Sick Industrial Companies Act (SICA) and was declared sick unit by BIFR Under Section 19 of SICA at its hearing on 5-12-1997, the BIFR appointed ICICI as the Operating Agency (OA) to formulate a scheme for rehabilitation of the company. (3) that meanwhile the company received a Duty Demand Notice from the Asst. Commissioner of Customs (EPCG) Group, demanding Rs. 25,73,271/- dated 20-8-1998. (4) that the applicant's company is being taken over by M/s. Rajshri Production, which is a limited company and is not a subsidiary of Rajshri Plastiwood and that they are not inter-linked in any manner. (5) that the applicant had executed a bank guarantee on 7th February, 1994 with the Bank of Rajasthan to DGFT for Rs. 22,00,000/- for a period of 5 years, but on receipt of notice of payment in terms of the said bond, the Bank has intimated that the guarantee has since expired and that a copy of the said letter written to DGFT has been endorsed to the applicant. (6) &n....
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....rnished within 21 days from the receipt of the Order. 15. The case was posted for further hearing on 11th January, 2001 at 11.30 a.m. 16. The applicant complied with the Orders of the Commission w.r.t. payment of admitted liability. They deposited Rs. 2,64,066/- on 28-9-2000 by way of pay order and also submitted the Bank Guarantee for a sum of Rs. 21,00,000/- valid for one year i.e. from 31-10-2000 to 31-10-2001 to the Jurisdictional Commissioner. 17. In the reports dated 24-7-2000 and 5-1-2001, the Office of the Commissioner of Customs (Export Promotion), submitted, inter alia, various facts related to the importation/clearance of the said capital goods by the applicant, the Demand Notices issued to them and arguments against admitting the application, payment of duty in instalments and waiver of interest. It was also conveyed by the Jurisdictional Commissioner that as the Applicant had not submitted shipping bills endorsed with the said EPCG Licence number, Chartered Accountant's and Bank Realisation Certificates and other documents prescribed in Appendix 10C of the Exim policy, in support of their having fulfilled export obligation to the extent of 8.13%....
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.... of the licence. (8) That it is presumed that Settlement Commission will deliberate on matters arising out of adjudication by Customs authorities and not on payment of dues to the Govt. due to breach of conditions/agreement entered by the Applicant with the Govt. (DGFT/Customs authorities). 19. In the hearing held on 11-1-2001 the Applicant, represented by, learned Advocate Shri A.K. Chatterjee, made the following submissions; (1) that they have admitted the duty liability of Rs. 23,64,066/- as against the Demand Notice of Rs. 25,73,271/-. (2) that they have paid Rs. 2,64,066/- and for the balance of Rs.21 lakhs they have executed Bank Guarantee to the Commissioner of Customs (Export). (3) that for the proof of export fulfilment they could produce only a fax copy of AR4, that they could not readily trace out the shipping Bill as a proof of export fulfilment hence agree to make the differential duty payment; without any installment facility within 30 days. (4) that hey have executed a Bond for differential duty at the time of importing the go....
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....mission. The gist of the said written submissions of the Revenue dated 17-1-2001 and of the applicant dated 20-1-2001 are summarized herein below. 21. The applicant has maintained that interest liability does not accrue to them for the reasons, inter alia : (1) that the Notification No. 160/92, dated 28-4-1992 in terms of which the clearance was allowed is a self contained Notification but which did not empower the department to demand interest on the duty liability in case of a default in export performance. (2) the levy of interest is a part of collection of tax and therefore it is covered by the second limb of Article 265 of the Constitution of India and should be an authority of law. Notification 160/92 is an subordinate legislation and the notification is statutory in nature. The authorities under the Act are bound to act on this notification and there is no dispute that the notification does not provide for claiming interest. (3) DGFT could not lay down a law in the matter of taxation and levy of import duties including interest which partakes the character of duty. In any case of conflic....
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.... supported by a bank guarantee wherever necessary for fulfillment of the export obligation. The details in this regard are specified in the Handbook of Procedures." The Export and Import Policy is a legal document issued under Section 5 of Foreign Trade (Development and Regulation) Act, 1992. (iv) The Handbook of Procedure, which is again a legal document issued under paragraph 16 of Export and Import Policy, 1992-97 AM at page 29 under paragraph 102 (I)(a) prescribes that the importer shall execute a legal undertaking before clearance of goods through customs. The legal undertaking would be for an amount equal to the value of export obligation imposed plus the value of duty saved plus the interest at the rate of 24% per annum for the export obligation period plus six months. The form of Legal Agreement - undertaking in clause (h) and (x) binds the applicant irrevocably to pay interest @ 24% per annum on the amount of customs duty saved from the date of import of the first consignment. The applicant has followed the procedure laid down statutorily in the policy and Handbook of Procedures. (v) It emerges from the above discussion....
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....revenue. FINDINGS/CONCLUSIONS 23. The Commission has gone through the case records, submission made by the Applicant and his Advocate and the submission made by the Revenue from time to time. The admitted position of facts is that the Applicant had imported capital goods for manufacture of PVC sheets etc and availed the benefits under Custom Notification No. 160/92-Cus., dated 20-4-1992 as amended. The Applicant had a valid EPCG licence as mentioned elsewhere. The Applicant had imported goods under 3 bills of entries but the application for settlement is relating to only one bill of entry. At the time of importation the Applicant had saved duty of customs of Rs. 25,73,271/-. The Applicant has also accepted in full the said duty liability as payable by them for settling the case. 24. The Applicant has made the following prayer : (i) Immunity from payment of any further duty of Customs/Excise in respect of the consignment in question; (ii) Immunity from payment of interest @ 24% from the date of clearance to the date of payment of the duty demanded; (iii) Immunity from payment of any fine and penalty under the Customs Ac....
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....cribed for any particular block of two years for two consecutive blocks, be liable to pay forthwith the whole of the duties of customs leviable on the goods imported but for the exemption contained in this notification together with interest at the rate of 24% per annum from the date of clearance of the goods." 26. In the Notification No. 160/92-Cus. there is no provision to the extent as indicated supra. On the contrary conditions (ii) and (iii) of the Notification read as below : (ii)  "The importer, at the time of clearance, shall produce to the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] a certificate from the licensing authority for having executed a bond under paragraph 45 of the Policy; and (iii)  The importer at the time of clearance of the said capital goods shall make a declaration before the [Assistant Commissioner of Customs or Deputy Commissioner of Customs], in such form as he may specify, binding himself to pay on demand an amount equal to the duty leviable on such capital goods but for the exemption contained herein in respect of which the conditions specified in Column (2) of the Table have not been complied with." ....
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....ction of taxes and, therefore, it is covered by the second limb of Article 265 of the Constitution of India and it should be by an authority of law. It was held that interest cannot be charged or levied by way of formal instruction under Rule 233 of the Central Excise Rules, 1944. The Hon'ble Court had relied upon the following decisions : Whitney v. Commissioners of Inland Revenue - 1926 Appeal Cases 37 R. Constructions v. Dy. Commercial Tax Officer - AIR 1959 Madras 382 Asstt. Collector v. N.T. Co. of India - 1978 (2) E.L.T. (J416) (S.C.) Khazan Chand v. State of J & K - 1984 (56) S.T.C. 214 Ujagar Prints v. U.O.I. - 1989 (39) E.L.T. 493 (S.C.) Ashok Singh v. Asstt. Collector - AIR 1992 S.C. 1756 Ashapura Mineral Co. v. State of Gujarat - 1993 (89) S.T.C. 289 J.K. Synthetics Ltd. v. Commercial Tax Officer - 1993 (68) E.L.T. 246 (Tribunal) Venkata Subbarao v. State of A. P. - AIR 1965 S.C. 1773 H.L. Mehra v. State of Maharashtra - AIR 1971 S.C. 1130 M. Gangaraju & Sons v. State of A. P. - AIR 1965 A.P. 60 Ferro Alloys Corpn. Ltd. v. A. P. State Electricity Board - AIR 1993 S.C. 2005 Narinder Chand v. V.T. Him Pra - AIR 1971 S.C. 2399 B.C. ....
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....one of the provisions empower the imposition of interest for the delayed payment of tax." 30. In the case of Philips (India) Ltd v. Commissioner of Customs, Mumbai decided on 19-12-2000 by the Western Zonal bench at Mumbai, the brief facts of the case are that M/s. Philips (India) Ltd. had imported capital goods in December, 1992 by availing partial exemption provided by Notification No. 160/92-Cus. the importer could not fulfill the export obligation. The notice was issued by Customs for recovery of duty and interest. The Tribunal has held as below : "The notification itself does not provide for payment of interest by the importer. The undertaking by the importer referred to in condition (3) of the notification was only to "pay on demand an amount equal to the duty leviable on such capital goods but for the exemption." The provisions of the Customs Act, 1962 also do not justify demanding interest. Section 28AA of the Act only applies where the duty demanded under Section 28 is not paid within three months from the date of the confirmation of the duty. Section 28 AB will not be attracted in this case, the demand for duty not having arisen as a result of any of the factor....
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....t shows his positive approach and willingness to accept in the true spirit of settlement, even that portion of the duty liability for which he initially sought set off on account of exports made such action helps to settle the case expeditiously. We also note that the applicant had requested the DGFT for extension in the Export Obligation period against the EPCG Licence No. 2131015, dated 15-9-1993 vide their letter RFL MD : 99.2000, dated 27-11-1999 detailing therein, various force majeure reasons which were beyond their control on account of which they could not fulfil their export obligation; however the DGFT had rejected their request. 32. We further note the applicant's submission that they have been declared as a sick industrial company in terms of the provisions of Section 3(1) (o) of the Sick Industrial Company (Special Provisions) Act, 1985 and that the Board of Industrial and Financial Reconstruction has appointed ICICI as per operating agency for the purpose of preparing a revival scheme. On perusal of the Draft Rehabilitation Scheme dated 26-5-2000 of the ICICI, we find that one of the term of settlement proposals envisages waiver of interest and liquidated dama....