TaxTMI 
TaxTMI 
2024 (1) TMI 902
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....t @ 6% ad valorem at the time of import, while the impugned goods during the material time, were statutorily leviable to 12% ad valorem rate of Additional Duty of Customs. 1.1. The issue concerns imports made under cover of thirty five self assessed Bills of Entry by the appellant. Duty so short paid, for an amount of Rs. 3,86,63,232/-, was sought to be recovered vide Show Cause Notice No. DRI-F 718(II)02/Seize/PRU13-14 dated 23/05/13, in terms of Section 28(1) of the Customs Act, 1962 (The Act.) Interest leviable on the short paid, duty amount was also demanded from the appellants under Section 28AA of the Customs Act. The Departments' case being, that the self-assessed duty, payable in terms of Section 17(1) of the Act was not in accordance with law and as it was not in conformity with applicable rate of Additional Duty leviable under Section 3(1) of the Customs Tariff Act, 1975 (The Tariff Act.), therefore, interest as applicable under Section 28AA of the Customs Act, alongwith the short paid duty was payable. 2. The Department points out that the effective rate of Central Excise Duty on goods falling under CTH 8607 was revised to 12% ad valorem vide Notification 18/2012 C....
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.... Petition filed in the matter, for stay of recovery of duty and interest during pendency of appeal filed on 23rd April, 2015, the appellants were directed to deposit Rs. 3,86,63,232/-, within eight weeks, by way of pre-deposit under Section 129(E) of the Customs Act, whereupon balance dues adjudged would stand waived and recovery thereof stayed during the pendency of the appeal. 4.1. While the appellant at the time of filing of the appeal, contested both the demand for duty as well as interest leviable thereto; at the time of hearing on 26.09.2023, they pointed out that they were not contesting the payment of differential duty any longer, and would render pleadings only for the leviability of interest (confirmed on the short levied Additional Duty of Customs/CVD), under Section 28AA of the Customs Act. It is so also specifically stated, at more than one place in the written submissions filed by the appellant at the time of hearing of the appeal. Relevant part of their submissions reads as under: "Written Notes on Arguments xxxxxxx 6. Issue Involved: The issue involved in the instant appeal is whether the learned Commissioner was right in confi....
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.... to be levied under the Customs Act, as specified in the First or the Second Schedule, of the Tariff Act. The appellant, submits that Section 12 of the Customs Act, carries no reference to any specific provision of the Tariff Act, 1975, while Additional Duty/Special Additional Duty are leviable under section 3/section 3A of the Customs Tariff Act respectively, and therefore this duty is not relatable to the First or the Second Schedule of the CTA, as the rate of duty is prescribed in the said section itself. Sri Pulak Shah, the learned CA, drew similar analogy with reference to section 90 of the Finance Act 2000 levying surcharge of Customs. The appellant therefore, submitted that charging section for CVD/SAD/surcharge was not section 12 of the Customs Act, but the appropriate sections of Tariff Act. Reliance in support of the aforesaid proposition in law was also drawn by the appellant to the Hon'ble Supreme Court's decision in the case of Hyderabad Industries Limited Vs. Union of India (1999 (5) TMI 29 SC.), wherein the Hon'ble Apex Court had held that additional duty (CVD) which is levied under Section 3(1) of the Tariff Act is independent of the Customs duty which is levied und....
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.... such article under sub-section (2) of that section, as the case may be; and (ii) Any duty of customs chargeable on that article under section 12 of the Customs Act, 1962 (52 of 1962), and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs, but does not include - (a) .............................................. (b) ................................................... (c) ...................................................... (d) ..................................................... Provided......................................... (a)................ (b)................ Explanation. - Where on any imported article........................... (3) If the Central Government is satisfied that it is necessary in the public interest to levy on any imported article [whether on such article duty is leviable under sub-section (1) or not] such additional duty as would counter-balance the excise duty leviable on any raw materials, components and ingredients of the same nature as, or similar to those, used in the pro....
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....n this section as the special additional duty), which shall be levied at a rate to be specified by the Central Government, by notification in the Official Gazette, having regard to the maximum sales tax, local tax or any other charges for the time being leviable on a like article on its sale or purchase in India. Provided that until such rate is specified by the Central Government, the special additional duty shall be levied and collected at the rate of eight per cent of the value of the article imported into India. Explanation.-................................. (2) For the purpose of calculating under this section the special additional duty on any imported article shall, notwithstanding anything contained in Section 14 of the Customs Act, 1962 or Section 3 of this Act, be the aggregate of- (i) the value of the imported article determined under subsection (1) of Section 14 of the Customs Act, 1962 (52 of 1962) or the tariff value of such article fixed under subsection (2) of that section, as the case may be; (ii) any duty of customs chargeable on that article under Section 12 of the Customs Act, 1962 (52 of 1962), and any sum chargeable....
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....f the Customs Tariff Act, and therefore no interest can be levied on the demand pertaining to Additional Duty of Customs (in the nature of Countervailing Duty), leviable in terms of Section 3 of the Customs Tariff Act. Accordingly this is to imply that in terms of Section 28AA of the Customs Act, interest on delayed payment of duty is applicable only for Customs Duty leviable under Section 12 of the Customs Act, as Section 3 of the Customs Tariff Act pertaining to levy of Additional Duty of Customs did not borrow the provisions of the Customs Act, relating to interest. In support of their proposition, the learned Chartered Accountant, placed reliance on the decision of the Hon'ble Supreme Court in the case of Khemka and Company (Agencies.) Pvt. Ltd. Vs. State of Maharashtra (1975 (2) SCC 22), wherein the appellant contends that the Hon'ble Apex Court in the context of Central Sales Tax Act 1956, had held that penalty or interest is a statutory liability and is in addition to tax. There must therefore be a charging section, to create a liability. The liability has to be created first, thereafter the act needs to provide for assessment, followed by the enforcement provisions of the t....
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....the jurisdiction of the Central Excise authorities under that act and whether it was permissible to resort to penalty proceedings or forfeiture of goods for non-payment of Additional Duty in terms of Additional Duties of Excise (Goods of Special Importance) Act, 1957, by taking recourse to the provisions of the Central Excise Act and Rules made thereunder, it was argued that the breach of the provisions of the act, not being penal in nature and the penalty imposed by way of an additional tax, the constitutional mandate requires a clear authority of law for its imposition in terms of Article 265 of the Constitution. 10. Learned CA for the appellant, inviting reference to the Hon'ble Gujarat High Court's decision in Collector of Central Excise Surat-I Vs. Ukai Pradesh Khand Udyog Mandali Ltd (2011 (271) ELT 32 GUJ), stated that the Hon'ble Court while dealing with the provisions of the Central Excise Act read with Sugar Export Promotion Act, 1958, had held that interest can be levied and charged on delayed payment of tax only if the statute that levies the tax makes a substantive provision in this behalf. Submitting that sub-Section 4 of Section 7 of Sugar Export Promotion Act, 19....
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...., Mumbai, the Additional Director, General, DG CIE, Mumbai (2022 (10) TMI 212), with regard to the issue of leviability of interest and penalty in relation to amounts payable as duty other than Basic Customs Duty; wherein it was held that, no interest and penalty can be levied on the portion of payment pertaining to surcharge, CVD and SAD. "26. Sub-section (6) of Section 3 and sub-Section (4) of Section 3A of the Customs Tariff Act, 1976 does not provide for any interest or penalty. Neither Section 90 of the Finance Act, 2000 provides for the same. Therefore, no interest and Bombay High Court penalty can be levied on the portion of payment pertaining to surcharge, CVD and SAD. We must also note that sub-section (8) of Section 9A of the Customs Tariff Act, 1975, prior to the 2004 amendment, did not include interest and penalties. By Section 76 of Finance (No.2) Act, 2004, the words in sub- Section (8) of Section 9 of the Customs Tariff Act, 1975 "relating to non-levy, short levy, refunds and appeals" were replaced with "relating to, the date for determination of rate of duty, non-levy, short levy, refunds, interest, appeals, offences and penalties". No such amendment to inc....
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....lty is provided for concealment of income. Penalty is in addition to the amount of income-tax. This Court in Jain Brothers & Ors. V. Union of India said that penalty is not a continuation of assessment proceedings and that penalty partakes of the character of additional tax. 26. The Federal Court in Chatturam & Ors. v. Commissioner of Income-tax, Bihar said that liability does not depend on assessment. There must be a charging section to create liability. There must be, first a liability created by the Act. Second, the Act must provide for assessment. Third, the Act must provide for enforcement of the taxing provisions. The mere fact that there is machinery for assessment, collection and enforcement of tax and penalty in the State Act does not mean that the provision for penalty in the State Act is treated as penalty under the Central Act. The meaning of penalty under the Central Act cannot be enlarged by the provisions of machinery of the State Act incorporated for working out the Central Act. 27. This Court in State of Tamil Nadu v. K.A. Ramudu Chettiar & Co. said that the power to enhance assessment which was contained in the Madras Act of 1959 though such powe....
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....ies of Excise (Goods of Special Importance) Act, 1957 was similar to the provisions of sub-section (6) of Section 3 and sub-section (4) of Section 3A of the Customs Tariff Act, 1975. While interpreting the provisions, the Court held that it is no longer res integra that when the breach of the provision of the act is penal in nature or a penalty is imposed by way of additional tax, the constitutional mandate requires a clear authority of law for imposition for the same. Article 265 of the Constitution provides that no tax shall be levied or collected except by authority of law. The authority has to be specific, explicit and expressly provided. Paragraphs 5, 6, 7 and 8 of Orient Fabrics Pvt. Ltd. (Supra) read as under: 5. In order to appreciate the issue, it is relevant to set out the sub-section (3) of Section 3 of the Act, as applicable in this matter and which runs as under: "SECTION 3: Levy and collection of additional duties: (1)........................... (2)............................... (3) The provisions of Central Excise and Salt Act, 1944 and the rules made thereunder including those relating to refund and exemptions from duty ....
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.... relied upon by Mr. Sridharan, while dealing with similar provisions under the Central Excise and Salt Act, 1944 and the Rules made thereunder read with Additional Duties of Excise (Goods of Special Importance) Act, 1957, held that Act shall have specific provisions which creates a charge in the nature of penalty. The Court held that when penalty is additional tax, constitutional mandate requires a clear authority of law for imposition thereof. Paragraphs 32, 36, 37 and 39 of Pioneer Silk Mills Pvt. Ltd. (Supra) read as under: 32. Considering the ratio of the decisions aforesaid we are of the opinion that there is no provision in the Additional Duties Act which creates a charge in the nature of penalty. We further find that the term "levy and collection" in Section 3(3) of the Additional Duties Act has a restricted meaning in view of the use of the words "including those relating to refund and exemptions from duty". Otherwise these words were rather unnecessary. In Orissa Cement V. State of Orissa, the question before the Supreme Court was whether rebate provided in section 13 (8) of the Orissa Sales Tax Act was available to dealers if they paid the tax under the CST Act b....
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....ic and explicit. Xxxxxxxxxxxxxxxxx 39. We have given our considerable thought to various arguments raised by the parties. We find there is no mandate in the Additional Duties Act for levy of penalty and the Central Excise Act and the Rules made there under cannot be imported in the Additional Duties Act for the purpose of levy of penalty. We have spent anxious moments as the interpretation we have put has grave consequences for the revenue as similar terminology as used in section 3(3) of the Additional Duties Act has been used in various Finance Acts and other enactments, but then Article 265 of the Constitution mandates that no tax shall be levied and collected except by authority of law. There being no such authority of law to levy penalty, we have to hold so. (Emphasis Supplied) This judgment, we are informed, was confirmed by the Apex Court. Therefore, when penalty is additional tax, constitutional mandate requires a clear authority of law for imposition thereof. Where the Act has to be explained by referential legislation or legislation by incorporation levies penalty or not, it is better for the Court to lean in favour of the taxpayer. The....
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....d to the maximum sales tax, local tax or any other charges for the time being leviable on a like article on its sale or purchase in India: Provided that until such rate is specified by the Central Government, the special additional duty shall be levied and collected at the rate of eight per cent of the value of the article imported into India. Explanation...................... (1)......................... (2)......................... (3) The duty chargeable under this section shall be in addition to any other duty imposed under this Act or under any other law for the time being in force. (4) The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder, including those relating to refunds and exemptions from duties shall, so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act. xxxxxxx (Emphasis Supplied) (iii) Section 9A of the Customs Tariff Act: (For Anti-dumping duty on dumped articles-): (1) Where any article is exported from any country or territory (hereinafter in this....
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....as), are enumerated below: The CUSTOMS ACT- Statutory Provisions (i) Section 12.- Dutiable goods (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of Customs shall be levied at such rates as may be specified under [the Customs Tariff Act, 1975 (51 of 1975)], or any other law for the time being in force, on goods imported into, or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government. (ii) Section 28 (Prior to its substitution by Finance Act, 2011 (Act No. 8 of 2011) dated 08.04.2011.).- Notice for payment of duties, interest, etc.- (1) When any duty has not been levied or has been short-levied or erroneously refunded, or when any interest payable has not been paid, part paid or erroneously refunded, the proper officer may,- (a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year; (b) in any other case, within six months, fr....
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....sed under section 18, the date of adjustment of duty after the final assessment thereof; (c) in a case where duty or interest has been erroneously refunded date of refund; (d) in any other case, the date of payment of duty or interest. (iii) Section 28AA- Interest on delayed payment of duty "28AA. Interest on delayed payment of duty (1) Notwithstanding anything contained in any judgment, decree, order or direction of any court, Appellate Tribunal or any authority or in any other provision of this Act or the rules made thereunder, the person, who is liable to pay duty in accordance with the provisions of Section 28, shall, in addition to such duty, be liable to pay interest, if any, at the rate fixed under sub-section (2), whether such payment is made voluntarily or after determination of the duty under that section. (2) Interest, at such rate not below ten per cent. and not exceeding thirty-six per cent. per annum, as the Central Government may, by notification in the Official Gazette, fix, shall be paid by the person liable to pay duty in terms of Section 28 and such interest shall be calculated from the first day of the month succeedin....
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....th on behalf of the appellant, essentially is that when a statute levies a tax, it does so by inserting a charging section by which a liability is created and then it provides the machinery to make the liability effective. The statute therefore, provides the machinery for the assessment of the liability fixed by the charging section, and then provides the mode for the recovery and collection of tax, including penal provisions meant to deal with defaults. Provision is also made for charging of interest on delayed payments, etc. while the charging section which fixes the liability needs to be strictly construed the said rule is not extendable to the machinery provisions. Further, any provision for charging or levying of interest on delayed payment of tax have to be construed as substantive law and not adjectival law, as so held by the apex court in J.K Synthetics Ltd. Vs. Commercial Taxes Officer (1994 SCC (4) 276.). 17. The appellant made particular reference to the Hon'ble Bombay High Court's decision in the case of Mahindra and Mahindra (Automotive Sector) Vs. UOI & Ors, and laid emphasis on the following paras of the said judgement. As the context herein demands, some of the s....
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....question that the Court had to answer was whether the assessees under the Central States Tax Act, 1956 could be made liable for penalty under the provisions of the State Sales Tax Act. There petitioner contended that there is no provision in the Central Act for imposition of penalty for delay or default in payment of tax and, therefore, imposition of penalty under the provisions of the State Sales Tax Act for delay or default in payment of tax is illegal. The rival contention on behalf of the Revenue was that the provision for penalty for default in payment of tax as enacted in the State Sales Tax Act was applicable to the payment and collection of the tax under the Central Sales Tax Act and is incidental to and part of the process of such payment and collection. The Apex Court held that a penalty is a statutory liability and is in addition to tax and a liability under the Act. There must be a charging section to create liability. There must be, firstly a liability created by the Act, secondly, the Act must provide for assessment and thirdly, the Act must provide for enforcement of the taxing provisions. The Court held that there must be specific provision to create liability..........
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.... (a) Jain Brothers & Ors Vs. UOI Ors. (1969 (11) TMI-1 SC) (b) Chatturam & Ors Vs. Commissioner of Income Tax.(1947 (4) TMI 8 Federal Court) (c) State of Tamil Nadu Vs. KA Ramudu Chettiar & Co. (1973 (2) TMI-116 SC) (d) Pioneer Silk Mills Pvt. Ltd Vs. UOI (e) Orissa Cement Vs. State of Orissa (1970 (4) TMI 130 SC) (f) JK Synthetics Ltd. Vs. Commercial Taxes Officer (g) India Carbon Ltd. & Ors Vs. State of Assam 21. Since the appellants have essentially argued their case based on certain pronouncements of the superior courts, for a complete overarching appreciation of the issue at hand, each of these case laws need to be dwelt upon. We propose to do so later in our order, after having analysed the subject matter independent of the said enunciations. 22. At the foremost, it would be of interest to have a look at the evolution of Section 28AA of the Customs Act, as it has stood over period of time. Thus, the key portions as highlighted in bold are: (i) Customs Manual by R.K Jain (2007-2008) (35^th- Edition) "SECTION 28AA. Interest on delayed payment of duty.- (1) Subject to the provisions contained in....
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....ty or in any other provision of this Act or the rules made thereunder, the person who is liable to pay duty in accordance with the provisions of section 28, shall, in addition to such duty, be liable to pay interest, if any, at the rate fixed under sub-section (2), whether such payment is made voluntarily or after determination of the duty under the section. (2) Interest at such rate not below ten per cent. And not exceeding thirty-six per cent, Per annum, as the Central Government may, by notification in the Official Gazette, fix, shall be paid by the person liable to pay duty in terms of section 28 and such interest shall be calculated from the first day of the first day of the month succeeding the month in which the duty ought to have been paid or from the date of such erroneous refund, as the case may be, up to the late payment of such duty. (3) Notwithstanding anything contained in sub-section (1), no interest shall be payable where,- (a) the duty becomes payable consequent to the issue of an order, instruction or direction by the Board under section 151A; and (b) such amount of duty is voluntarily paid in full, within forty-five days from t....
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.... falls short of the amount actually payable in the manner specified under that sub-section and the period of one year shall be computed from the date of receipt of information under sub-section (2). (4) Where any duty has not been levied or has been short-levied or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of,- (a) Collusion; or (b) Any willful mis-statement; or (c) Suppression of facts, by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been so levied or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice. (5) Where any duty has not been levied or has been shortlevied or the interest has not been charged or has been partpaid or the duty or interest has been erroneously refunded by reason of collusion or any willful mis-statement or suppression of facts by the importer or the ....
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....n respect of cases falling under clause (a) of sub-section (1); (b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under sub-section (4). (10) Where an order determining the duty is passed by the proper officer under this section, the person liable to pay the said duty shall pay the amount so determined along with the interest due on such amount whether or not the amount or interest is specified separately. (11) Notwithstanding anything to the contrary contained in any judgment, decree or order of any court of law, tribunal or other authority, all persons appointed as officers of Customs under sub-section (1) of section 4 before the 6th day of July, 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section." Explanation 1.- For the purposes of this section, "relevant date" means,- (a) in a case where duty is not levied, or interest is not charged, the date on which the proper officer makes an order for the clearance of goods; (b) in a case where ....
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.... for the time being in force, duties of Customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all goods belonging to government as they apply in respect of goods not belonging to Government." 27. This subtle difference between the words "duty" and "duties" is quite pronounced and noticeable when discussed in the context of the other provisions of the statute. Further, for a better understanding of the law some of the other relevant provision of the Customs Act are being analyzed in this backdrop, hereunder- thus for instance: (i) Section 15(1), of the Customs Act, concerned with relevant date for determination of the rate of duty and tariff valuation of imported goods, considers the word "duty" and does not use the term "duties" as can be seen from below: (1) "(1) The rate of duty and tariff valuation if any applicable to imported gods shall be the rate and valuation in force........... (a).............. (b).............. ....
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.... Duty under Section 8B (Safeguard Duty) or 8C (Product specific safeguard duty) or Section 9 (Countervailing Duty on subsidised articles) or 9A (Anti-dumping Duty) of the Customs Tariff Act are concerned there is no such mention of the words "exemption" in sub-section (9) of Section 8B, sub-section (5A) of Section 8C, sub-section (7A) of Section 9 as well as sub-section (8) of Section 9A of the Customs Tariff Act as the provisions relating to Safeguard Duty, Countervailing Duty or Anti-dumping Duty can in themselves be considered to be in the nature of complete code, providing for their regulatory mechanism within the framework of the Customs Tariff Act itself like assessment, appeals, offences etc. 29. An important aspect for consideration from leviability of duty standpoint is with regard to the refund of such duty wherever as may be applicable. Thus, it could be argued that Section 26 or Section 26A or Section 27 of the Customs Act deal with merely the duty imposed under the Customs Act Section 12. With regard to refund of other duties as leviable under the Customs Tariff Act say Section 3 (Additional Duty of Customs), Section 8B (Safeguard Duty) or Section 9A (Anti-dumping D....
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.... (3) Notwithstanding anything contained in sub-Section (1), no interest shall be payable where,- (a) the duty becomes payable consequent to the issue of an order, instruction or direction by the Board under Section 151A; and (b) such amount of duty is voluntarily paid in full, within forty-five days from the date of issue of such order, instruction or direction, without reserving any right to appeal against the said payment at any subsequent stage of such payment." 31. It is imperative to note that Section 28AA of the Customs Act is one of those uncommon provisions of law, that starts with a non-obstante clause, thereby giving primacy, prevalence and supreme importance to the provisions contained in the said section, so as to hold them as a determinant and a predominant provision in law. Exhuming the legislative intent therefrom would safely lead to the conclusion of the imperative nature of the levy of interest, in the given circumstances. Thus, sub-Section (1) of Section 28AA (whereunder the demand for interest in the present matter has been made out) makes the imposition of interest as automatic or as an appendage to a case where a duty liability has been....
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.... Section 12 of the Act and Section 2 of the Tariff Act would indicate that the rate at which "duties of customs", are to be levied could be at such rates as are specified in the Tariff Act be it the two schedules thereof or the various provisions of the act in themselves per se like Section 3 (Additional Duty of Customs) or Section 9A (Anti-Dumping Duty). It is not mandatory that it has to singularly be the schedules of the Tariff Act, that alone could prescribe the leviable rate of duty. The provisions of the Act (Section 12) are of such a wide amplitude that they provide for any other law also to so state and specify the leviable rate of Customs Duty imposed. Further, a narrow reading of the Tariff Act restricting rates of leviable duty as prescribed in the two schedules of the Tariff Act is completely uncalled for and does not flow from the plain words of law. It would be appropriate to state that disregarding Section 12 of the Act, Section 2 of the Tariff Act would fail to derive a complete wholesome meaning. 33. Section 3 of the Tariff Act to that extent is completely independent both of Section 2 of the Tariff Act as well as Section 12 of the Act. The only bearing that Sec....
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....#10003; ✓ 9. Appeals x ✓ ✓ ✓ ✓ 10 Offences and penalties x ✓ ✓ ✓ ✓ A question that also begs answer is the fact of incorporation of exclusive and separate provisions in the Tariff Act, pertaining to refund of anti-dumping duty (Section 9AA), simultaneous non-levy of both countervailing duty and anti-dumping duty (Section 9B) (this could have otherwise been done by way of incorporation of separate subsections to the effect) and appeals (Section 9C) (in the context of anti-dumping duty specifying the authority and related aspects). Despite the usage of the three realms of tax action viz. refunds, simultaneous non-levy and appeals, at least generically in the main sub-sections as referred to in the table supra and their being adopted in the Tariff Act, as it were in the Customs Act, goes in to establish the ex abundanti cautela incorporation of the said specific facets of the tax aspects into the different provisions and may not be understandable as in a limiting sense of the term. Further, the fact of non-specific, mention or inclusion of the term "assessment" in Section 3 o....
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....cks, refunds and exemption from duties and with no scope of assigning any other meaning to the said expression, as would flow from the limited usage of the words. Therefore, the word includes (including) (present participle), when used would enlarge the meaning of the expression defined, so as to comprehend not only such things as they signify according to their natural import but also those things which the clause declares that they shall include. 39. The Hon'ble Apex Court in the case of South Gujarat Roofing Tiles Manufacturers Association and Another Vs. State of Gujarat and Another (1976 (4) SCC 601) quoted the landmark observation of Lord Watson in Dilworth Vs. Commissioner of Stamps viz.: ".............When the word "include" is used, in interpretation clauses to enlarge the meaning of words or phrases in the statute, "these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include." Thus where "includes" has an extending force, it adds to words or phrases a meaning, which may not naturally belong to it..............
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....e construing the term "Including Fruit Juice" (Purchase Tax Act 1963 (c.9), Sch.1, Pt1, Group 35 (a)) observed that these words were required to be construed in the context of the word preceding them- "manufactured beverages" (and so would not include non-manufactured fruit juice). Adopting this interpretational approach, it evidently flows that the usage of the term including in Section 3(8) of the Tariff Act clearly indicates the adoption of not only the three specific provisions of drawbacks, refunds and exemption from duties, but all such statutory provisions as could be required to deal with the aspect of the levy of the Customs Duty under Section 3 of the Tariff Act. 44. In the case of R. Vs. Kershaw, 26 L.J.M.C. 19; R. vs. Hermann. (4 Q.B.D. 284) The phrase "shall include" was considered by the Hon'ble Court as a phrase of extension and not of restrictive import. It may be noted that Section 3(8) of the Tariff Act makes use of both the words "shall" and "including". There is therefore no reason to not adopt a similar stance of giving extensive interpretation as held in the aforesaid case: 45. Further, in the case of Reynolds Vs. Income Tax Commissioner for Trinidad and....
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....at the other provisions of the Customs Act are not at a significant variance to Customs working, from that of drawbacks, refunds and exemptions from duties- which are equally material to the Customs enactment, we see no reason, not to consider the other aspects of Customs work like assessment, demand of duty, settlement, appeals, interest etc. to be also included therein with regard to levy of special additional duty under Section 3(3) of the Tariff Act. Some Interpretations of the term- "Including" 48. A closer look at the provisions of law in Section 3(8) of the Tariff Act would reveal that the subject matter is the applicability of the provisions of the Customs laws, as the said section reads "The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder including those relating to drawbacks, refunds and exemption from duties............" If the said phrase is broken down to its constituent subject and predicate, it could be stated as under: Subject Predicate The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder including those relating to drawbacks, refunds and exemption fr....
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.... Paragraph 5 contains special directions for the disposal of his interest in his firm's business and paras. 6 to 16 contain a number of pecuniary legacies and a residuary gift in favour of the appellants, who are also appointed executor and executrix. Among the pecuniary legacies were one of $5,000 to the respondent and to each of her children living at his death $500. The question arises with regard to the bequest of the personal effects contained in para 4 and in particular, as to the contents of the roll top desk. In the desk below the roll top there was a drawer. This is the drawer of which, as hereinbefore mentioned, the appellant Kenneth Joseph had a duplicate key. When the testator was taken ill in June 1930, there were in this drawer three pass books referring to his deposit accounts, two in the Bank of Montreal and one in the Dominion Bank for a total sum of $30,575'62, and nine promissory notes, all payable to order and not endorsed and all of apparently little or no value. Shortly after the removal of the testator to hospital appellant 1 in (as their Lordships believe) perfect good faith and as he thought, in the testator's interest arid on his behalf, removed t....
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....ively." 50. Viewed in the context of the aforesaid law laid down, it is amply clear that the subject- "the provisions of the Customs Act and the rules and regulations thereunder" is equally applicable to duty leviable under Section 3 of the Tariff Act, and the refence to drawbacks, refunds and exemption from duties therein is only by way of a special description making them ex abundanti cautela in the view of the legislators. 51. Further, a perusal of the Preamble or the Scope of Customs Tariff Act indicates the Tariff Act, to be "An act to consolidate and amend the laws relating to Customs Duties," and in view of our discussions foregoing, interest applicability is an adjunct of deferred short paid/unpaid duty amount and merely worded differently because of its compensatory character. We are of the view that even the preamble of the law enshrines the incorporation of the interest element, wherever the context calls for, and refers to the terms duty. It is obvious that under no situation can interest be dissociated and held to be nonadjunct to duty. We thus are of the view that the reference to the words "drawbacks, refunds and exemption from duties" are merely illustrative a....
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....15th ed: Page No. 143) 55. The Hon'ble Apex Court in the case of State of Bombay & others Vs. The Hospital Mazdoor Sabha, (1960 SCR (2) 866) while considering the scope of the definition of the term "industry" in Section 2(7) of the Industrial Disputes Act, 1947, dwelt into the object and scope of the act ibid, besides the various provisions thereof, and was of the view that the legislature deliberately used the terms of a wider import in its first clause and referring to several other industries in the second in an "inclusive" way, obviously denoting extension. It further held that in construing a definition it was inappropriate to apply the maxim noscitur a sociis, so as to restrict the meaning and flow thereof. It further said the maxim was helpful in construing terms of wider import with that of a narrower import. The obiter as flows from the said decision is certainly a guide to the issue at hand in the present matter. 56. In the case of Regional Director, Employees State Insurance Corporation Vs. High Land Coffee Works of PFX Saldanha and Sons and Another, (1991-SCR (3) 307) while upholding the observations of the High Court, the hon'ble apex court had held the amendmen....
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.... specified, then the consequences will follow with regard to interest." 58.1. The Hon'ble High Court not only quashed the relevant provision of the circular supra that sought to restrict and obliterate the claim of interest on belated refunds, granted in terms of notification 102/2007- Cus dated 14.09.2007. For sake of better appreciation the relevant clause 4.3 of the said circular, is reproduced hereunder: Circular No.6/2008-Cus dated 28.04.2008 "4. Time Limit 4.1. In the Notification No. 102/2007-Cus dated 14.09.2007, no specific time limit has been prescribed................. Taking into account various factors, it has been decided to permit importers to file claims under the above exemption upto a period of one year from the date of payment of duty. Necessary change in the notification is being made so as to incorporate a specific provision prescribing maximum time-limit........................ 4.2. xxxxxx 4.3. With the extension of time-limit and the requirement to file claims on a monthly basis, Board feels that the number of refund claims should be manageable for disposal within the normal period of three months. Further, in t....
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....AB of the Central Excise Act as was considered in the case of Ranbaxy Laboratories Vs. UOI - 2011(10) SCC 292 and relied upon by the petitioners in the present matter. 61. In the case of Micromax Informatics Ltd. Vs. UOI (2018 (361) E.L.T. 968 Del.) the Hon'ble Delhi High Court after elaborate analysis of the various provisions of law pertaining to levy of duty refund and interest and examining relevant notifications and circulars, was definitive about the fact that interest was leviable for delayed refund of SAD, in terms of Section 27A of the Act. This the Hon'ble Court held despite the arguments to the contrary and the stand of the revenue regarding non-applicability of interest. The following paras of the impugned judgment, extracted below, would be relevant for the purpose of present discussions: "11 ......... SAD leviable under sub-section (5) of Section 3 of the Customs Act, when imported into India for subsequent sale, subject to the conditions in paragraph 2 of notification being fulfilled. Paragraph 3 of the said notification states that jurisdictional customs officer shall sanction refund on being satisfied that conditions referred to in paragraph 2 are fulfi....
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....r.) 63. It is also not as if this was a one off case. The said stance has been consistently adopted by the courts. Thus in the case of Commissioner of Central Excise, Pune Vs. M/s. SKF India Ltd. (2009 (TIOL-82 SC)) the Hon'ble Court upheld the liability to pay interest, despite the fact that the liability to pay duty stemmed from the fact of issuance of supplementary invoices, raised on account of retrospective revision of prices. The apex court, reversing the stand of the High Court, noted the fact that the short payment of duty was "though indeed completely unintended and without any element of deceit etc." It observed that impliedly there was a short payment of duty at the time of clearance and therefore the liability to pay interest. 64. Thus, when and as held by various authorities interest provisions are held to apply automatically to cases of delayed refunds (despite non-inclusion of the term "interest" in Section 3(8) of the Tariff Act), it cannot be held otherwise for a case of delayed payment of dutywhat is good for the goose has to be good for the gander. 65. It is an established legal principle of interpretation that while considering a statute it is important....
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.... as applicable. 67. Going, by the principle of liberal construction as applicable to cases of no ambiguity and especially so in taxation matters, not an iota of doubt would remain about the applicability of the provisions of the Customs Act, Rules and Regulations, to that of Section 3 of the Tariff Act. That being the stated position, interest for delayed payment of duty under Section 28AA of Customs Act is certainly payable in the facts and circumstances of the present appeal. It may be relevant to point out to a well settled rule of construction, that to ascertain the legislative intent, all the constituent part of the legal provisions are "to be taken together and each word, phrase or sentence is to be considered in the light of the general purpose and object of the Act itself." (Ref - Popatlal Shah Vs. State of Madras (UOI & Ors.1953 (AIR) 274 SC)). It was also held therein that the title and the preamble, for whatever their value might be as aids to construction of a statute, undoubtedly throw light on the intention and design of the legislature and indicate the scope and purpose of the legislation. Viewed in this context, it is abundantly clear from the title and scope of ....
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....g" of Section 3(8) of the Tariff Act and Section 27 and Section 27A of the Act, thereby concluding as under: "20. In the context of the present case, Sections 27 and 27A of the Act form a statutory scheme for grant of refunds. Section 27A unambiguously states that where there is a delay in making the refund, interest would be payable on the amount of refund, in the manner stipulated under Section 27A of the Act. A collective reading of Section 3(8) of the CTA and Sections 27 and 27A of the Act leads to the conclusion that the provisions in the Act concerning refunds and interest on delayed refunds, would equally apply to refund of SAD leviable under Section 3 of the CTA." (Emphasis Supplied) 70. That being so, it can safely be concluded that interest provisions for short paid duty in terms of Section 28AA of the Customs Act, shall equally apply to a case of determination of duty under Section 28 of the Customs Act, be it duty levied under Section 12 of Customs Act or Section 3(3) of the Tariff Act or any other provision thereof or any other law for the time being in force. 71. The Hon'ble Bombay High Court in the case of UOI Vs. Valecha Engineering Limited, (2010 ....
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.... or description of articles to which the imported article belongs, and where such duty is leviable at different rates, highest duty. 3(6) The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder, including those relating to drawbacks, refunds and exemption from duties shall, so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act." The relevant provisions of Section 3A(4) reads as under :- "3A(4) The provisions of the Customs Act, 1962 (52 of 1962), and the Rules and Regulations made thereunder, including those relating to refunds and exemptions from duties shall, so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act." 29. The question, therefore, would be what is the meaning of the expression 'provisions of the Customs Act, 1962 and the Rules and Regulations made thereunder should as far as may be apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act'. Section 3 of the Customs Tariff Act, 1975 came t....
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....ates the State on failure to pay duty at the rate of interest as determined by the Board. Two constructions flow. One the rule of strict construction it being a taxing statute and the other not a strict construction if it be part of the machinery provisions. We may now refer to Section 28AA. Under Section 28AA interest becomes automatically payable on failure by the assesee to pay duty as assessed within the time as set out therein. Similarly, under Section 28AB on duty being ascertained as under Section 28 interest is payable by operation of law. In a case, therefore, where duty has been ascertained as due under the Customs Tariff Act, 1975 by the machinery under the provisions of the Customs Act if the provisions of Sections 3 and 3A are read in their proper context, then Section 28 would first be attracted. No interest will be payable under Section 28AB if the predicates of Section 28 are not satisfied. Therefore, in a case of nonpayment of duty of the payment or erroneous refund even under the provisions of the Customs Tariff Act, 1975, Section 28 would be attracted and once duty is ascertained under Section 28 interest becomes payable under Section 28AB as the machine....
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.... of the accrual of the interest ordered to be paid. 74. The Hon'ble Gujarat High Court in a recent judgement concerning refund of Special Additional Duty, extensively dwelt upon the aspect of and examined the applicability of interest payable on delayed refund of Special Additional Duty leviable under Section 3 of the Tariff Act. Thus in the case of New Kamal Vs. UOI, (2020 (372) ELT 571 Guj.) the Hon'ble High Court, reading into the provisions of Section 27A ordered the revenue to "process the statutory interest as to be paid under Section 27A" of the Act and pay the same within four weeks. 75. In the case of Gateway Terminals India Pvt. Ltd. Vs. CC (Nhava Sheva-II), Mumbai (2019(369) ELT 1791 T) the Tribunal upheld the interest leviable upon the amount of duty adjudged as short paid/not paid, irrespective of the mode of payment of such duty i.e. whether (debit through scrip or any other mode). It therefore called for payment of interest on the amount of duty either paid in cash or by way of debit in the scrip. The Tribunal after elaborate discussions and reference to several case laws was of the view that once duty is ascertained, then by operation of law such person in add....
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....f duty. As has been of held by the courts that penalty is a statutory liability and is in addition to tax and a liability under the act, it is therefore understandably so that the courts have impressed upon the need for a specific creation of this liability by way of a specific inclusion like the generation of a charge for imposition of duty, as no tax can be collected without the authority of law. This nonetheless is not so, as far as interest is concerned. Also, interest has never been held by courts to be by way of an additional tax liability. 80. While it is too well known to reiterate, that penalty is an adjunct to tax assessed, it cannot be so stated for interest which is merely consequential to assessment under certain given circumstances. In fact penalty is in addition to tax and is a liability under the act, while such is not the case with interest which is characterized as compensatory in character. Indeed it has been held by Courts, that penalty is not a continuation of assessment proceedings and it partakes the character of additional tax (Jain Brothers Vs. UOI - 1969 (3) SCC-311) and for a liability to arise and be fastened upon it is imperative that there is a char....
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....gs and then interfacing the same to include "interest" as well, is imaginary and purely a creation of a thinking mind, professing his legal acumen and experience, but not as enshrined in law. Having taken the said stance, the appellant failed to show as to how they then go on to state that the machinery for assessment, collection and enforcement of tax, as in the Customs Act would double up for the Tariff Act as well, for even the basic words like assessment or non-levy are not mentioned in the relevant sub-section of Section 3 of the Tariff Act, unlike their inclusion in the relevant subsection of Section 9A of the Tariff Act. Thus, to analyse Section 3 of the Tariff Act, by drawing an analogy to Section 9A ibid is not only irrelevant but also repugnant to law and can therefore not be put to such a study, being improper and even odious. The provisions relating to anti-dumping duty on dumped articles by way of Section 9A of the Tariff Act are far more comprehensive and elaborate than those pertaining to additional duty of customs or other duties specified under the Tariff Act like countervailing duty (Section 9) or safeguard duty (Section 8B) and this would not go in to interpret i....
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.... Act, but for those relating to drawbacks, refunds or exemption from duty, as argued by them. Thus in the first place, if that were to be the case no demand for duty leviable under Section 3 of the Tariff Act, could even be contemplated. The Hon'ble Apex Court in the case of British Airways PLC Vs. UOI, (2002 (139) ELT 6 SC) had the following words by way of advice and caution to subordinate authorities: " 8. While interpreting a statute the court should try to sustain its validity and give such meaning to the provisions which advance the object sought to be achieved by the enactment. The court cannot approach the enactment with a view to pick holes or to search for defects of drafting which make its working impossible. It is a cardinal principle of construction of a statute that effort should be made in construing the different provisions so that each provision will have its play and in the event of any conflict a harmonious construction should be given. The well-known principle of harmonious construction is that effect shall be given to all the provisions and for that any provision of the statute should be construed with reference to the other provisions so as to make it....
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....inarily levied on an assessee for some contumacious conduct or for a deliberate violation of the provisions of the particular statute. Interest is compensatory in character and is imposed on an assessee who has withheld of any tax as and when it is due and payable. The levy of interest is geared to actual amount of tax withheld and the extent of the delay in paying the tax on the due date. Essentially, it is compensatory and different from penalty -- which is penal in character." (Emphasis Supplied) The Hon'ble Apex Court distinguishing the various concepts of tax interest and penalty observed that interest is chargeable for the delay in the clearance of the goods (as Pratibha Processors case was one concerning the case of warehouse goods, cleared subsequently) while it is often held that mens rea is one of the essential ingredients for invocation of penalty it certainly is not the least in the reckoning when concerned with the question of chargeability of interest and therefore to import the rulings of various Court's including that of the Apex Court delivered in the backdrop of considerations of penalty can certainly not be made reference point, when concerned with a case o....
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....ith assessment of goods, the said provision would be rendered as a partially meaningful and largely factual entity and therefore defeat the statutory intention itself. 90. To offset any argument concerning default in payment of duty, not on account and attributable to the appellant it would be appropriate to invite reference to the decision of the Hon'ble Apex Court in the case of Commissioner of Central Excise Vs. International Auto Ltd. (2019 (366) ELT 769 SC) wherein the Hon'ble Apex Court was pleased to hold that payment of duty made by the assessee, if with delay either by own ascertainment or as ascertained by the officer was not exempt from interest chargeable under Section 11AB of the Central Excise Act. It further held that interest was leviable for loss of revenue on any count. The Supreme Court went on to hold that payment of differential duty subsequently was indicative of the fact of interest being automatically leviable. 91. Further, the Apex Court in the case of Steel Authority India Ltd. Vs. Commissioner of Central Excise Raipur (2010 (250) ELT 3 SC) observed that being a case of short levy, Section 11A read with Section 11AB ibid would be attracted and intere....
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....sion was not having jurisdiction to direct refund of interest. It remanded the matter for directing interest either in terms of the bond or notification or Section 28AB of the Customs Act. To a specific question, as also raised at the time of hearing, as to whether the provisions of interest under the Customs Act were incorporated or not in the Tariff Act, the Hon'ble Court, in no uncertain terms held that the definition in the duty of the Customs Act indicates that the provisions of the Customs Act pertaining to duty are applicable to duty payable under the Tariff Act, and as interest provisions are compensatory and not penal, and are a re-compensation for the State on account of the failure to pay duty, interest under Section 28AB of the Act was payable when Section 28 was attracted and duty ascertain as due under the Tariff Act, by applying the machinery provision of the Customs Act. In short to state that once duty payable is ascertained, the relevant provisions of the Customs Act seeking payment of interest were applicable and therefore the Hon'ble Bombay High Court upheld the leviability of interest. It further went to state that the incorporation of Section 9(7A) of the Tari....
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....on 28 interest becomes payable under Section 28AB as the machinery provisions of the Customs Act are incorporated into the Customs Tariff Act and the provision for interest is part of the machinery provisions though at the same time Section 28AB is a substantive provision for payment for interest under the Customs Act. The rule of strict construction must be rejected. Interest is compensatory for failure to pay duty on the date due and payable. Therefore, once duty is determined considering the expression, the provisions of the Customs Act shall as far as may apply Section 28AB would be applicable. The amendment of the 18th April, 2006 only clarifies the position. " (Emphasis Supplied) 97. As even though a liability to pay tax is created, left to itself it is inconsequential, till the tax payable is ascertained by the assessing authority and with no inclusion of "assessment" in sub-section 8 of Section 3, the entire charge creation is rendered as a futile exercise. This obviously is therefore not the intent of law. In effect no tax can be said to be levied upon mere creation of a charge but till it is actually assessed and arrived at, for till then it is a mere "liability to ....
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.... An exception to a normal provision in law, cannot be interpreted to frustrate the substantive provision and must be construed to so interpret that it does not obliterate the substantive enactment. The Hon'ble Apex Court in the case of Commissioner of Customs (Port), Chennai Vs. Toyota Kirloskar Motor P. Ltd. (2007 (213) ELT 4 (SC)), had the following to say: "30. The observations made by this Court in Essar Gujarat Limited (supra) in Paragraph 18 must be understood in the factual matrix involved therein. The ratio of a decision, as is well-known, must be culled out from the facts involved in a given case. A decision, as is well-known, is an authority for what it decides and not what can logically be deduced therefrom. Even in Essar Gujarat Limited (supra), a clear distinction has been made between ........................." 101. The Larger Bench of the Tribunal in the case of Commissioner of Central Excise, Bhopal Vs. Rama Wood Craft (P) Ltd. (2008 (225) ELT-348 T-LB), had also expressed similar sentiments: "P-3.............A judgment is an authority and can be regarded as a precedent only on point which was canvassed, debated and decided. Any observation or f....
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.... These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussion but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes................" (Emphasis Supplied) 104. Hon'ble Justice Ramaswamy in the case of UOI Vs. Dhanwanti Devi and Ors, (1996 (6) SCC 44) delivering the judgment had the following words to state on behalf of his brother judges Hon'ble J. Saphir Ahmad and Hon'ble J. Pattanaik. "7....................It is not everything said by a Judge who giving judgment that constitutes a precedent. The only thing in a Judge's decision binding a party is the principle upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendi. According to the well settled theory of precedents, every decision contain three basic postulates - [i] findings of materia....
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....raid of ascribing any support to the pleadings of the learned Representative for the appellant. 105. In case were the viewpoint as canvassed by the appellant is taken to be a fact flowing from the law, it is then obvious that there could be no other aspect pertaining to the levy of Additional Duty of Customs and related thereto, as could arise or be agitated or even considered other than that for drawbacks, refunds and exemption from duties. This is particularly so, as no other provision of law (the Customs Act) are included, by way of a specific mention, borrowed into Section 3 of the Tariff Act. Thus in the first place, in expansion of the plea of the appellants, no appeal under the Customs Act could lie with regard to any dispute or a question of interpretation that arises and could be even taken up for consideration in so far as Section 3 of the Tariff Act is concerned as no such legal provision has been said to be borrowed in law under Section 3 of the Tariff Act. Likewise plethora of other provisions of the statute, be it a case of short levy or evasion of duty would also not come up for consideration as no demand provisions are allegedly borrowed thereinto. Similarly aspe....
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....ly included in the relevant provisions of Section 3 would not only be foolhardy but downright illegal and moronic. Under the circumstances the provisions of law would be rendered self-defeatist and for that reason alone the standpoint of the appellant cannot be sustained as interest recovery is inextricably linked with the demand for payment of duty, given the language of Section 28AA(1) of the Act. As an aside 107. As an aside for academic purposes it need be pointed out that, it is commonly held by Courts that interest is compensatory in nature and can be taken to be a cost for the opportunity foregone. Therefore, a party that has enjoyed the benefit of funds- violative of the authority of law, then such funds would be required to be compensated alongwith interest, be it a case of recovery or refund. The High Court's under Article 226 and the Supreme Court under Article 136 of the Constitution have time and again exercised their powers to secure the ends of justice and awarded interest to either of the two sides to the lis. The Tribunal too under Rule 41 of the CESTAT Procedure Rules, 1982, can give such directions as may be necessary or expedient in relation to its orders ....
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....ay 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], on such duty till the date of payment of the said duty:- [Provided that the Central Government may, by notification in the official Gazette, specify the class or classes of importers who shall pay such duty electronically: Provided further that where the bill of entry is returned for payment of duty before the commencement of the Customs (Amendment) Act, 1991 and the importer has not paid such duty before such commencement, the date of return of such bill of entry to him shall be deemed to be the date of such commencement for the purpose of this section:] [Provided also that] if the Board is satisfied that it is necessary in the public interest so to do, it may, by order for reasons to be recorded, waive the whole or part of any interest payable under this section.]" (Source:- The Customs Act-bare act 2013-14) Further, this being a legal stipulation the applicability of this legal premise and concept laid out in Section 47 of the Act, now is not open ....
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....ing of a duty which is independent of the customs duty leviable under the Customs Act." (Emphasis Supplied) 110. Nonetheless, even though the aforesaid observation of the Hon'ble Court was by way of an obiter from the Apex Court, since there is no compunction with the provision of leviability of the Additional Duty under Section 3(1) of the Tariff Act, nothing much remains to be analyzed and discussed in this regard. (ii) Khemka and Company (Agencies) Pvt. Ltd. Vs. State of Maharashtra & State of Mysore Vs. Guldas Narasappa Thimmaiah Oil Mills4. 111. In this case, the constitution bench of the apex court was concerned with the question of imposition of penalty under the provisions of State Sales Tax Act on an assessee under the Central Sales Tax Act. It may be at the outset for records indicated that the verdict in the said case was not a unanimous one but was a 3-2 split verdict. The Hon'ble Apex Court in the said case was concerned with the imposition of penalty- a statutory liability which is punitive in nature for an omission or a commission as stated in law. The Hon'ble Chief Justice inter alia held as below (which forms part of the majority opinion): ....
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....Central act only. I would, with great respect, prefer of the view adopted by the learned Chief Justice on the principle that the assessee must get the benefit of such uncertainty. It, however, seems to me, on a careful consideration of the two possible views, that reasons for accepting the contentions on behalf of the assessee are quite compelling and decisive. I, therefore, proceed to state these shortly." 113. There being no akinness in the impugned decision, vis-à-vis the issue at hand, it would not be appropriate to consider the obiter (also when considering the aspects of penalty) as a determinant for the decision in the present appeal, examining the question of leviability of interest on short paid additional duty of Customs. It need also to be clarified that while the learned CA for the appellant in his pleadings sought to draw support and incorporate the term interest while referring to the case of Khemka and Company, the question of interest was not the least under consideration in the said case of Khemka & Co. Penalty in effect is a sanction for non-payment (as also held by Hon'ble Chief Justice Ray in the Khemka & Co. case) and unlike interest is not compensato....
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....n canvassed by the appellant to our humble understanding cannot be said to be the one intended. 116. Also it is pertinent to point out that amongst the primary reason as ascertained by the Hon'ble apex court in arriving at it's decision in the said matter, was the fact of the Central Act, being held to be a "selfcontained code" and the fact that the Central Act contained a specific provisions for penalty. Those being the only provisions for penalty against dealers under the Central Act, the Hon'ble Court had therefore held the inapplicability of the penal provisions of the State Act in respect of dealers under the Central Act. We are afraid that in the present matter no such situation arises. Therefore, the reliance on the Khemka & Co. case, placed by the appellant is not only misplaced but also misguided. (iii) CCE & C, Surat-I Vs. Ukai Pradesh Sahakarikhand Udyog Mandli Ltd.6 117. The Hon'ble Gujarat High Court was no doubt in this case concerned with the question of interest payments on delayed payment of sugar cess under the Sugar Export Promotion Act of 1958. It is of relevance to note here that the subject payment of duty was in the context of Section 7 of the ....
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....he facts of the present case, as noted hereinabove, Section 7 of the Sugar Export Promotion Act, 1958 does not make any provision for levy and charge of interest on the duty of excise payable under sub-section (1) thereof. In the circumstances there being no substantive provision in the Act for levy of interest on late payment of tax, no interest thereon could be so levied based on the application of sub-section (4) of Section 7 of the said Act. In the circumstances, the Tribunal was justified in holding that there being no provision for interest in the Act, there was no justification or warrant to confirm the interest, in the absence of any powers vested in the authorities under the Act." 118. The said order was pronounced in the context of the Tribunal's decision in the appellants (Shri Ukai Pradesh Sahkari Khand Udyog Mandli Ltd.) own case decided by the Tribunal in 2009 (247) ELT 184 Tribunal, which follows the decision of the apex court in the case of Star India Pvt. Ltd. 2006 (1) STR 73 SC. It be noted that the context of the judgment of the hon'ble Supreme Court in Star India Pvt. Ltd. was entirely different as ascertainable from the following paras of the Tribunal's orde....
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....(4) of Section 7 of the Sugar Export Promotion Act) vis-à-vis the present appeal (enabled by Section 3(8) the Tariff Act read with Section 28AA. Section 28AA not only starts with a non-obstante clause, creating a legal fiction as to the primacy of the provision levying interest, besides also stipulates the spontaneous and mechanical applicability of interest upon any duty required to be paid in terms of Section 28 of the Act. 121. For reasons as discussed, we are of the view that no benefit arises out of the Gujarat High Court's decision in favour of the appellant. (iv) Mahindra and Mahindra Ltd. (Auto Sector) Vs. UOI. The Settlement Commission (Additional Bench, Customs and Central Excise, Mumbai, the Additional Director, DG, CEI, Mumbai. 122. The impugned decision is particularly in the context of "Settlement" of a case, therefore foremost it cannot be considered to be laying out a legal principle applicable to usual and non-exceptional circumstances. The settlement of a case is a shift from the ordinary contextual application of law. The texture and flavour of legal application are vastly different in a settlement than in ordinary course of legal functionin....
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....• UNION OF INDIA Versus VALECHA ENGINEERING LIMITED- 2009 (8) TMI 451 -HIGH COURT OF BOMBAY. • MAHINDRA & MAHINDRA LTD. Versus UNION OF INDIA - 2008 (9) TMI 382- HIGH COURT OF JUDICATURE AT BOMBAY. • PIONEER SILK MILLS PVT. LTD. Versus UNION OF INDIA- 1991 (9) TMI 93- HIGH COURT OF DELHI. Moreover, despite holding "In the absence of specific provision relating to levy of interest in the respective legislative, interest cannot be recovered by taking recourse to machinery relating to recovery of duty.", the most interesting finding in the order is with reference to non-determination of duty under Section 28(2) of the Act and therefore the inapplicability of Section 28AB of the Customs Act. 125. This case following the earlier enunciation of the Apex Court and other judicial foras observed that when a statute levies tax it did so by inserting a charging section by which a liability is created and then proceeding to provide the machinery to make the liability effective. There is a machinery to realize the liability fixed, providing for collection of tax including penal provisions which meant for action in case of defaults. It pointed out that pr....
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....e ratio of law in the India Carbon Ltd. case in facilitating the determination of the question involved in the present appeal. (vi) Birla Cement Works & JK Synthetics Ltd., (1994 (5) TMI 233 SC) 129. As for the case of Birla Cement Works & JK Synthetics Ltd., (1994 (5) TMI 233 SC) Commercial Taxes Officer and State of Rajasthan, the said case, no doubt is concerned with payment of interest on the additional sales tax which was required to be paid for inclusion of freight amount in calculating the sales price, however the questions involved there were altogether different. The actual question concerned in the case besides payment of interest on the additional sales tax required to be paid, was whether in view of the unamended provisions of the law the appellant could be considered to owe a debt on the relevant date. The writ petition was however allowed but it was in the context of the peculiar and specific arguments, raised in the matter and so as not to make the relevant sections nugatory [clause (b) of Section 11B read with Section 11(2)]. (vii) Jain Brothers and others Vs. UOI, 130. As for the case of Jain Brothers and others Vs. UOI, the Hon'ble Court wa....
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....ve any application at all." 132. The Tribunal relying upon the decision in the case of Pioneer Silk Mills Pvt. Ltd. referred supra had held in the Orient Fabrics Pvt. Ltd. case, that the confiscation provisions cannot be applied thereto. It be noted that question herein, once again, was of a penal consequence- be it by way of forfeiture of goods or imposition of penalty- that would flow by way of non-payment or short payment of duty or any other infringement in law attracting punitive action and had no bearing with the leviability of interest on payment of Additional Duty of Customs leviable in terms of Section 3 of the Tariff Act. As discussed earlier at length, imposition of penalty and/or the levy of interest for short paid/not paid duty amount are two different aspects of matter and cannot be considered at the same threshold. 133. As the wide difference in aspects of "interest" and "penalty" have been extensively dwelt upon in earlier paras, there is no gainsaying reiterating the same in the context of the Orient Fabrics Pvt. Ltd. case, except to state that as the two connotations serve different objectives, the law concerning penalty cannot be equated and adopted to situ....
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....sion having been borrowed in a particular enactment, the appellants cited the judgments in the case of Khemka & Co. (supra) and Pioneer Silk Mills Pvt. Ltd. (supra). We are in agreement with this proposition and therefore we refrain from discussing the said judgments. The appellants also cited the judgement in the case of Supreme Woollen Mills Ltd. (supra), Silkone International (supra) and several others to advance the proposition that penalty provisions of Customs Act were not applicable to the cases of non-payment of anti-dumping duty and that the same principle is applicable with regard to leviability of interest [India Carbon Ltd. (supra) and V.V.S. Sugar (supra)]. We have perused these judgments. Many of them dealt with Anti-dumping duty/Special Additional Duty (SAD) leviable under various sections (but not Section 3) of Customs Tariff Act, 1975 and in those sections of the Customs Tariff Act, 1975 or in the said Act itself, during the relevant period, there was no provision to apply to the Antidumping duty/SAD the provisions of Customs Act, 1962 and the rules and regulations made thereunder including those relating to interest, penalty, confiscation. In the case of Pioneer S....