TaxTMI 
TaxTMI 
2017 (7) TMI 9
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....ilure to fulfill export obligation could not to be enforced under the provisions of Customs Act, 1962 (in short, 'the Customs Act'). 2.1. Furthermore, it is the assessee's submission that, since, the bond was furnished to the licensing authority, i.e., the Director General of Foreign Trade (in short, 'the DGFT'), the Customs Authorities cannot enforce the bond. 3. In order to adjudicate upon these issues, the following broad facts are required to be noticed: 3.1. The assessee, who was in the business of export of cotton garments, had, at the relevant time, imported polyurethane Spandex Yarn/Lycra Spandex Yarn, under two (2) advanced licences issued to it under the DEEC scheme, albeit, without payment of duty. The benefit of exemption from payment of duty was extended to the assessee under notification 204/92, dated 19.5.1992 (in short, 'the 1992 notification'). This notification has been issued under Section 25(1) of the Customs Act. The record shows that there is no dispute about the fact that, the assessee failed to fulfill his export obligation and, consequently, the adjudicating authority vide order, dated 31.7.2000 confirmed the demand qua duty, ....
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....evy interest qua duty "not paid" or "short levied". The provision in that behalf, according to the learned counsel, was inserted only on 20.08.1996 via Section 62 of Finance (No.2) Act, 1996 (33 of 1996). (ii) The liability to pay interest got foisted on the assessee, by virtue of the bond, which was furnished to the licensing authority i.e., the DGFT and not to the Customs authorities. There was, in that sense, according to the learned counsel, no privity of contract between the assessee and the customs authorities. (iii) The customs authorities, could therefore, not enforce the bond, in order to recover the interest, under the 1962 Act, as it obtained at the relevant point of time. (iv) The Judgments relied upon by the Tribunal, both the Bombay High Court and the Supreme Court, to which we have made a reference above, have no applicability, in the facts and circumstances of the case. 4.1. In support of his submissions, learned counsel also relied upon the Judgment of the Tribunal in the matter of: VARALAKSHMI EXPORTS VS. COMMISSIONER OF CUSTOMS (SEAPORT EXPORT), CHENNAI [2014 (314) E.L.T.257 (TRI.-CHENNAI). 5. As against this, Dr.Ms.Seethalakshmi, who appears for th....
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....he insertion of Section 28AB. The record shows that, goods were imported by the assessee under two (2) advance licenses on 08.02.1995, which is the date, clearly, prior to the insertion of Section 28AB. Therefore, quite clearly, in our view, the provisions of Section 28AB, would not be applicable. For the sake of convenience the relevant portion of Section 28AB is extracted hereunder: "28AB. Interest on delayed payment of duty in special cases. -(1) Where any duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who is liable to pay the duty as determined under sub- (2), or has paid the duty under sub- (2B), of 28, shall, in addition to the duty, be liable to pay interest at such rate not below ten per cent. and not exceeding thirty-six per cent. per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, from the first day of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub- (2), or sub- (2B), of 28, till the date of payment of such duty....
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.... The next question, which arises for consideration, which is connected with the aspect referred to above is: as to whether the Supreme Court in REXNORD ELECTRONICS AND CONTROLS LTD has stated anything to the contrary. 10.1. According to us, the Tribunal has misread the ratio of the Judgment rendered by the Supreme Court in: REXNORD ELECTRONICS AND CONTROLS LTD. 11. This was a case, where the appellant had failed to fulfill the export obligations and, therefore, was called upon to pay duty along with interest under a bond executed by it, before the DGFT. 11.1. Accordingly, the demand was raised on the appellant with regard to duty as also interest. The appellant in that case filed applications before the Settlement Commission. The Settlement Commission passed an order settling the dispute between the parties. However, the order required the assessee to pay certain amount of duty along with interest. The appellant was, in addition, granted immunity from prosecution and penalty. 11.2. The appellant, being aggrieved by the directions of the Settlement Commission, which required him to pay interest at the rate of 15% per annum, filed Writ Petitions before the Bombay High Court....
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.... of a contractual bargain and the authority, which can enforce the bond, if at all, would be the licensing authority i.e. DGFT. The other Judgment, which has been cited, on behalf of the Revenue, is the Judgment in the case of PRATHIBHA SYNTEXT LTD. 12.1. A perusal of the said Judgment would show that, this was also the matter, which arose out of an order passed by the Settlement Commission. Since, PRATHIBHA SYNTEXT LTD judgment was cited in REXNORD ELECTRONICS AND CONTROLS LTD case, by the counsel for appellant, we do not think that it is necessary to elaborate on the same. What we have said with respect to our understanding of the ratio of the Judgment of the Supreme Court in REXNORD ELECTRONICS AND CONTROLS LTD, would apply to the Judgment rendered in: PRATHIBHA SYNTEXT LTD case, as well. 12.2. This brings us to the other Judgment cited on behalf of the Revenue, which is a judgment, rendered by the learned Single Judge of this Court in: FAL INDUSTRIES LIMITED VS. DIRECTORATE GENERAL OF FOREIGN TRADE, 2014 (306) E.L.T.58. 12.3. A perusal of the said Judgment would show that the respondent, in that matter, was DGFT. The bond was being enforced by the DGFT, and not by the custom....