TaxTMI 
TaxTMI 
2006 (3) TMI 790
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....terest on the delayed payment of duty under Section 28AA of the Customs Act, 1962 from 26th August, 1995 (immediately after three months of coming into force of Section 28AA) or from 14th November, 2001 (on expiry of three months from the date of decision of the Supreme Court dated 14th August, 2001) ? two) Is the interest in the sum of ₹ 4,67,02,251/- as demanded by the respondent No.4 from M.J. Exports (the petitioner) vide communication dated 25th August, 2001 proper ? Re : Question (one) 3. M.J. Exports Pvt. Ltd. (hereinafter referred to as 'M.J. Exports' or 'the petitioner') imported 53 numbers of Haemodialysis Machines and accessories and spares under an Open General License (OGL). They claimed exemption under Exemption Notification No.208/81-cus for the import of the said machines. Admittedly the said machines after the import were exported by M.J. Exports to the erstwhile USSR. 4. The Customs Department issued a show cause notice dated 25th March, 1989 to M.J. Exports for exporting the machines outside the country without carrying out any process. On 6th April, 1993 another show-cause notice was issued to them under Section 124 of the Customs Act, 1962 for c....
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....ts challenged the order dated 26th October, 1994 before the Delhi High Court. By an ad-interim order dated 25th January, 1995, the Division Bench of the Delhi High Court ordered that on depositing an amount of ₹ 50,00,000/- within 12 weeks from the date of receipt of the order of the CEGAT, the appeal filed by the petitioner shall not be dismissed. M.J. Exports challenged the said order before the Supreme Court. By its order dated 31st March, 1995, the Supreme Court dismissed the Special Leave Petition but extended the time for depositing the sum of ₹ 50,00,000/- upto 30th April, 1995. The petitioner, accordingly, deposited a sum of ₹ 50,00,000/- with the Customs authorities on 22nd April, 1995. When the matter further came up before the Delhi High Court after the notice was served on the Customs department, by its order dated 12th May, 1995, the Delhi High Court disposed of the writ petition and modified the order of the CEGAT dated 26th October, 1994 by directing that in addition to the deposit of ₹ 50,00,000/-, the petitioner shall also furnish bank guarantee in the sum of ₹ 50,00,000/-. In other words, the conditional pre-deposit order passed by th....
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.... Bill, 2001 receives the assent of the President." 10. The petitioner has set up diverse grounds challenging the legality of levy of interest under Section 28AA. However, during the course of hearing Mr.Vikram Nankani, the learned counsel for the petitioner confined his argument to one aspect. His submission is : on the date Section 28AA came into force (26th May, 1995) and three months from such date, the liability to pay duty vide the order of the Collector of Customs stood suspended because of the pendency of the appeal before CEGAT and the interim order operating at that time; that CEGAT ultimately allowed the appeal and, therefore, there was no liability upon the petitioner to pay the duty until the order came to be passed by the Supreme Court on 14th August, 2001. The counsel would submit that there was no failure to pay the duty within three months from the date Section 28AA came into force and, in these circumstances, the interest cannot be levied upon the petitioner under Section 28AA from 26th August, 1995. According to him, if at all it is leviable, it could only be from the expiry of three months of the order of the Supreme Court passed on 14th August, 2001. 11....
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....eason for not paying the duty may be many and varied. The reason is not material nor the intention. What is important is the factum of nonpayment of duty determined under sub-section 2 of Section 28 within three months from the date Section 28AA came into force. The fact that the petitioner did not pay duty (for whatever reason; may be because interim order of the Delhi High Court dated 26th October, 1994 was operating in petitioner's favour) within concessional period would render the petitioner liable to interest as ultimately the order of Collector of Customs was restored. The law-makers while enacting Section 28AA by providing interest on delayed payment for the first time gave an opportunity to a person chargeable of duty under sub-section 2 of Section 28 to discharge their liability of payment of duty within three months from the date of coming into force of Section 28AA. The proviso to Section 28AA is by way of concession to the defaulter to save payment of interest if the duty was paid within three months from the date the said provision came into force. If the defaulter failed to take advantage of such statutory concession and sought to wait until outcome of pending litiga....