TaxTMI 
TaxTMI 
2024 (9) TMI 940
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....taken up for disposal. The duty, Interest, fine and penalty involved are as under :- SCN date Port of Import and O-I-O. dtd 18-04-2024 Duty paid & Confirmed by OIO -Rs. Interest paid by appellant-Rs. Penalty imposed u/s 114A-Rs. R/Fine imposed-Rs. 20.04.2021 Mundra-OIO-11 1,39,38,827 1,43,38,992 1,39,38,827 23,00,000 17.08.2021 JNCH-OIO-12 1,41,04,014 1,06,36,235 1,41,04,014 23,00,000 16.09.2022 A'bad--OIO-13 11,10,26,373 10,42,86,757 11,10,26,373 1,85,00,000 Total 13,90,69,214 12,92,61,984 13,90,69,214 2,31,00,000 2. Appellant is a manufacturer importer and exporting their manufactured goods like, 1. Bi-Axially Oriented Polypropylene (Bopp) Film, 2. Aluminum Metalized Bopp Film, 3. Polyester Metalized Film, 4. Polyester Film, 5. Polyester (Pet) Chips (High Pressure Moulding Grade/Bottle Grade) Other Polyethylene Terepthalate, etc. (Export Products) since January, 2009. For manufacturing goods for export, Appellant have imported inputs viz. Plastic granules, Additives etc. under Advance Authorization, availed exemption of Notification No. 18/2015-Cus dt. 1.4.2015 issued u/s 25 (1) of Customs A....
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....h SCA by Maxim Tubes Co. Pvt. Ltd. V/s. UOI 2019 (368) ELT 337 (Guj.). However, Union of India challenged judgment of the Hon'ble Gujarat High Court before the Hon'ble Apex Court, wherein orders dt. 04-02-2019 by Gujarat High Court are over ruled with directions in para 75 of decision dated 28-04-2023 by the Hon'ble Apex Court, as reported in UOI vs Cosmo Films Ltd-2023 (385) E.L.T. 66 (S.C.) / (2023) 5 Centax 286 (S.C.). Revenue was also directed to permit all importers to claim refund or input credit, whichever is applicable. Appellant computed details and quantified their liabilities in imports made during the period from 13-10-2017 to 09-01-2019 i.e. amount of IGST payable for such imports made in that period. 2.4 CBIC issued Circular No. 16/2023-Cus dated 07-06-2023 directing field officers to allow all such importers in India to make payments of duty (IGST), who had not satisfied the Pre-Import Condition during the such period from 13-10-2017 to 09-01-2019. Since Appellant had interim stay from the Hon'ble Gujarat High Court against payment of IGST till issue was finally decided by the Hon'ble Supreme Court on 28-04-2023, Appellant had not deposited the IGST during the per....
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....ntry has been availed by appellant as permitted/allowed. Accordingly, procedure provided by the Board under the above Circular is complied with by Appellant, and no further liability remained to be recovered/discharged. Appellant further submitted that amount deposited and recovered towards interest was without authority of the law, hence, unsustainable. There was no justification in facts of this case nor any authority in law for the assessment of interest during such Re-assessment and collection and recovery thereof from the Appellant. 2.7 The respondent Principal Commissioner has passed the adjudication orders in the Show Cause Notices, and while confirming the demand of duty (i.e. IGST) with interest, he has also held that the goods imported by the appellant were liable for confiscation and that the appellant is liable for paying redemption fine in lieu of confiscation under Section 125 of Customs Act 1962, Penalty under Section 114A of Customs Act 1962 and interest under Section 28AA of Customs Act 1962 and that the amount deposited towards duty [IGST] and interest are appropriated under the 3 impugned Orders-In-Original dated 18.04.2024 and quantification thereof are refle....
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....uestion and while making payment of such duty [IGST] in 2023. The Hon'ble Supreme Court has also allowed all the importers including appellant to pay tax and claim its credit and/or refund as the case may be. The appellant has been actually allowed credit of the entire amount of tax paid on reassessment of Bills of Entry, and such credit also stands completely utilized by the appellant within a month or two from date of allowing such credit. iii. The voluntary payment of duty [IGST] tax was made after 07-06-2023 as it was and it has been allowed as input credit of such tax if paid even at this stage. iv. The said demand of duty, though, may not be sustainable on other grounds, like availability of exemption, revenue neutral situation, demand being time barred etc, but, since Appellant has already been allowed to take credit of the duty paid, Appellant is not seriously objecting the demands of the duty [IGST] deposited after 7-6-2023 in this cases. 3.2 Submissions against Interest, Redemption Fine & Penalty imposed :- a) In facts of this case, Appellant is contesting Interest, Redemption Fine and Penalty imposed by the impugned Order-In-Originals dt. 18....
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....9A of the Customs Tariff Act, (for Anti-dumping Duty) specific words like "interest, penalties and offences" must be inserted while adopting provisions of any other Act; as otherwise, consequences of absence of such expressions may be grave for the Revenue, but then Article 265 of the Constitution mandated that no tax shall be levied and collected except by authority of law. There is no authority of law to levy penalty, interest and fine under Section 3 of the Customs Tariff Act 1975 and there is no charging provision for such levies under the Customs Tariff Act 1975. Procedural provisions of the Customs Act and even the definitions given under the Customs Act may be applicable by virtue of Section 3 (12) of Customs Tariff Act 1975, but the charging provisions for interest (Section 28AA), penalty (Section 114A) and fine (Section 125) are not applicable to Tax levied under sub-section (7) of Section 3 of the Customs Tariff Act 1975. f) The impugned Orders have applied provisions of the Customs Act for levying interest (Section 28AA), for Penalty (Section 114A) and for Confiscation and Redemption Fine (Section 111 (o) and 125); but these provisions of the Customs Act 1962 ar....
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....ppellant to pay duty and claim its credit and/or refund as the case may be. The appellant has been actually allowed credit of the entire amount of duty paid on reassessment of bills of entry, and such credit stands completely utilized by the appellant within a month or two from date of allowing such credit. 2) If the proper Custom officers were aware about pre-import condition and its scope and exemption for imports under Authorization had not been allowed, then the appellant would have paid Integrated tax leviable under Section 3 (7) of the Customs Tariff Act, and its credit under the GST law would have been taken at that time of import itself; and such credit would have been utilized for payment of GST on other goods or the appellant would have been allowed refund of such credit because GST law permits for refund of credit of tax paid on goods utilized for export transactions. Considering this legal position, the Hon'ble Supreme Court has also observed at para 75 of the judgment rendered on April 28, 2023 for permitting the importers to claim refund or input credit upon paying integrated tax, and the Revenue was directed for the appropriate procedure to be followed in th....
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....iction to hold that interest liability automatically arose any duty was confirmed/determined under Section 28 of the Customs Act 1962. c) Appellant relied upon the cases of Sterlite Optical Technologies Ltd. V/s. CCE, Aurangabad 2011 (270) ELT 266 (Tri-Mum), Emcure Pharmaceuticals Ltd. 2014 (307) ELT 180, and M/s. Madhu Silica Pvt. Ltd-2016 (344) E.L.T. 1072 (Tri. - Ahmd.) the Hon'ble Tribunal has firmly settled the legal principle that the provisions for issuing Notice to Show Cause were applicable even when a bond was furnished by the assessee, and the time limitation provided under these provisions was also applicable for such demand notwithstanding the bond furnished by assessee. It is settled that for recovery, following the mandatory procedure of Section 11A of Central Excise Act 1944 and/or Section 28 of the Customs Act 1962, as the case may be though Bond was furnished by Appellant. 3.5 Submissions against confiscation and Redemption Fine imposed:- • The impugned Orders has applied provisions of the Customs Act for Confiscation and Redemption Fine (Section 111 (o) and 125); but it is the appellant's submission that there is no charging provision for....
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....ting goods in fulfilment of export obligations under the said Advance Authorisation Scheme. f) It is also settled that Revenue cannot invoke larger period of time limitation for duty demands in cases involving serious interpretation and resolution of the issues by higher courts and in a Revenue Neutral situation. Appellant never had any intent to evade payment of tax in such issues of interpretations or revenue neutral situation. 3.7 Penalty imposed under Section 114A of the Customs Act 1962 • The impugned Orders have applied of the Customs Act for Penalty (Section 114A); but it is the appellant's submission that there is no charging provision for Penalty in Section 3 (7) or 3 (12) of Customs Tariff Act 1975. In absence of any specific charging provision, Penalty cannot be imposed and levies cannot be recovered. • Penalty imposed on the appellant is also an action illegal and without jurisdiction because Section 114A of the Customs Act is not applicable for alleged violation or non-payment of IGST, which is an independent levy and this levy is imposed under a separate statute. Even in the facts of the present case, no penal action could have be....
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.... iv) Whether the amount deposited towards interest is liable to be refunded, and whether liabilities of penalty and confiscation/redemption fine are liable to be set aside? 5.1 We find that adjudicating authority has passed impugned Orders in the cases and- (i) confirmed total Customs Duty Rs. 13,90,69,214/- under Section 28 (4) of Customs Act, 1962 in the form of IGST saved in imports of goods under Advance Authorizations and has ordered appropriation of deposited duty of Rs. 13,90,69,214/-. (ii) Ordered to recover "interest" in respect of demand confirmed in (i) and ordered to appropriate paid interest of Rs. 12,92,61,984/-towards interest liability. (iii) hold that goods imported under Advance Authorizations are liable to confiscation under Section 111 (o) of Customs Act, 1962 and imposed total Redemption Fine of Rs. 2,31,00,000/- in lieu of confiscation under the Section 125 of Customs Act, 1962. (iv) imposed a total penalty of Rs. 13,90,69,214/- equal to the duty demanded and confirmed at (i) above under Section 114A of the Customs Act, 1962. 5.2 We find that an Advance Authorisation is issued in terms of Para 4.03 of th....
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....5 The Director General of Foreign Trade issued one Notification No. 33/2015-20 dated 13-10-2017, which amended Para 4.14 of Foreign Trade Policy (2015-20), to incorporate exemption from IGST, subject to compliance of the pre-import and physical export conditions. Thus, in post GST regime, amended Notification No. 18/2015-Cus., dated 01-04-2015, provided for levy of the following duties in addition to duty levy u/s of Customs Act 1962 :- (1) levy of a duty (referred to as additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India [Section 3 (1) CTA 1975]; (2) levy of 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 production or manufacture of such article [Section 3 (3) CTA 1975]; (3) levy of additional duty as would counter-balance the sales tax, value added tax, local tax or any other charges for the time being leviable on a like article on its sale, purchase or transportation in India [SAD, under Section 3(5) CTA 1975]; (4) levy of integrated tax as lev....
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....'ble Apex Court and CBIC Circular dated 07-06-2023. Appellant has paid such duty [IGST] and allowed Credit of such duty [IGST]. Therefore, Appellant has also not objected the duty [IGST] payment seriously. There is no requirement to pass any detailed order on such payment of duty [IGST], which is paid and its credit is allowed to Appellant. The Situation has become Revenue Neutral for Appellant, Hence, we also refrain from passing any order on such confirmation of duty, which is allowed as credit by Revenue, though duty may or may not be sustainable on other grounds in these cases. 5.8 In the present cases, confirmation of interest demand, confiscation of goods, imposition of Redemption Fine and Penalty are objected claiming it to be illegal and unjustified. This Hon'ble Tribunal in case of Commissioner V/s. GNFC Ltd. 2010 (262) ELT 829 has held that even in case of voluntary payment of time-barred duty, it was open to contest liability of interest when department proposed to charge duty with interest which assessee paid voluntarily. This decision is upheld by a detailed judgment by the Hon'ble Gujarat High Court in Tax Appeal No. 56 of 2011 in case of GNFC Ltd. V/s. Commissione....
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....eable under this section as they apply in relation to duties leviable under that Act." SECTION 9A of Customs Tariff Act 1975 provides for imposing "Anti-dumping duty". Section 9A (8) ibid has provide as under :- "[(8) The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder, including those relating to the date for determination of rate of duty, assessment, non-levy, short levy, refunds, interest, appeals, offences and penalties shall, as far as may be, apply to the duty chargeable under this section as they apply in relation to duties leviable under that Act.]" 5.10 We find from above provisions that for recovery of IGST on import of goods, provisions are made under section 3 (7) of Customs Tariff Act 1975. However, no specific provision is made for recovery or charging of Interest, Fine and Penalty u/s 3 (7) or 3 (12) of Customs Tariff Act 1975 as compared to such similar provisions made under the Section 8B (9) and Section 9A (8) of Customs Tariff Act 1975. Such provisions u/s 9A (8) were introduced in Statute by The Finance (No. 2) Act, 2009 way back on 19-08-2009. However, while introducing similar provisions post GST Re....
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....ovide 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." 5.12 In case of - Pioneer Silk Mills Pvt. Ltd vs UOI-1995 (80) E.L.T. 507 (Del.), Section 3 (3) of Additional Duties of Excise (Goods of Special Importance) Act, 1957 was for consideration before the Hon'ble Delhi High Court. Section 3 (3) of Additional Duties Act 1957 was similar to Section 3 (12) of Customs Tariff Act, 1975 which is involved in the present case. The provisions of the Central Excise Act and the Rules made thereunder were adopted by virtue of Section 3 (3) of Additional Duties Act, whereas provisions of Customs Act and Rules made thereunder are adopted by virtue of Section 3 (12) of Customs Tariff Act 1975 in present cases. Having recorded the core question in para 8 of judgment, the Hon'ble Delh....
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....ers, AIR 1985 Supreme Court 989, with reference to the expression "so far as may be", the Supreme Court said that the expression had always been construed to mean that those provisions may be generally followed to the extent possible and it is not that those provisions have been incorporated by pen and ink (like in Section 3 (3) of the Additional Duties Act). This expression, therefore, negatives any plea that the whole of the provisions of the Central Excises Act have been incorporated by virtue of Section 3 (3) of the Additional Duties Act. We have already held that the term "levy and collection" has restricted meaning and inclusive provisions have been made only in relation to the refunds and exemptions. It cannot be interpreted to cover penalty and offences as well. In Statutory Interpretation by F.A.R. Bennion (1984 Edition), it is said "where it is doubtful whether a stated term does or does not include a certain class, and words of extension are added which cover some only of the members of the class, it is implied that the remaining members of the class are excluded" (Expressiounius principle : words of extension). Again we have also referred to certain enactments wherein p....
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....s ORIENT FABRICS PVT. LTD-2003 (158) E.L.T. 545 (S.C.), in para 20 of this judgment, the Hon'ble Supreme Court has also referred to an amendment made in year 1994 by inserting the expression "offences and penalties" in Section 3 (3) of the Additional Duties Act and held that such amendment was required to remedy the defect contained in the unamended provisions. In absence of specific insertion of words like offences, penalties and interest, such levies could not be assumed and such additional tax cannot be charged. The Hon'ble Apex Court has held as under :- "1 The short question that arises for our consideration in these appeals, which arises from the judgments and orders dated 10-2-1997 and 26-3-1996, as regards jurisdiction of the authorities under the Central Excise Act, whether it is permissible to resort to penalty proceedings or forfeiture of goods for non-payment of additional duty in terms of the Additional Duties of Excise (Goods of Special Importance) Act , 1957 (for short „the Act') by taking recourse to the provisions of the Central Excise Act and Rules framed thereunder. ... 8. A comparison of the amended provisions with the unam....
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.... to the excise duty for the time being leviable on a like article to the one which is imported if produced or manufactured in India. The explanation to this sub-section expands the meaning of the expression "the excise duty for the time being leviable on a like article if produced or manufactured in India". The explanation to Section 3 has two limbs. The first limb clarifies that the duty chargeable under sub-section (1) would be the excise duty for the time being leviable on a like article if produced or manufactured in India. The condition precedent for levy of additional duty thus contemplated by the explanation is that the article is produced or manufactured in India. The second limb to the explanation deals with a situation where "a like article is not so produced or manufactured" The use of the word "so" implies that the production or manufacture referred to in the second limb is relatable to the use of that expression in the first limb which is of a like article being produced of manufactured in India. .... 12. Section 12 of the Customs Act levies duty on goods imported into India at such rates as may be specified in the Customs Tariff Act, 1975. When we tu....
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....The case of CCE, Surat-I V/s. Ukai Pradesh Sahkari Khand Udyog Mandli Ltd - 2011 (271) ELT 32 (Guj.) shows that the Hon'ble Gujarat High Court while considering demand of "Cess" under Sugar Export Promotion Act, 1958 has held that interest can be levied and charged on delayed payment of "Cess", if statute that levies and charges the tax makes a substantive provision in that behalf. Section 7 (4) Sugar Export Promotion Act, 1958 were similar to Section 3 (12) of the Customs Tariff Act, 1975; and provisions of Central Excise Act, 1944 and rules made were made applicable for levy of sugar Cess by Section 7 (4) of Sugar Export Promotion Act, whereas provisions of Customs Act, 1962 are made applicable by Section 3 (12) of Customs Tariff Act 1975. Revenue demanded interest on late payment of Sugar Cess under Section 11AA of Central Excise Act on ground that provisions of Central Excise Act and the Rules made, including those relating to refund and exemptions from duty were adopted for levy of Sugar Cess, and interest for late payment of Sugar Cess. The Hon'ble Gujarat High Court has conclusively held that interest was a separate levy and interest could be charged on delayed payment of....
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....SHI FINANCE CORPORATION LTD, wherein it is held that decisions of higher authorities should be followed by all authorities in department. In case of 2016 (340) ELT-193(Tri.-LB) -J.K. Tyre & Industries Ltd v/s CCE, on binding Precedent of the decision, it has been held that Precedent where Conflicting judgments of the various High Courts are available on the issue, Judgment of jurisdictional High Court shall prevail following the Judicial discipline, as held by Tribunal Larger Bench of five Member in 1997 (96) E.L.T.257 (Tribunal) resolving the issue of binding precedent in case of conflicting judgments of High Courts. It has been ordered to follow judgment of jurisdictional High Court in such cases. Accordingly, in the facts of this case, decisions of the Hon'ble Gujarat High Court in case of CCE, Surat-I V/s. Ukai Pradesh Sahkari Khand Udyog Mandli Ltd reported in 2011 (271) ELT 32 (Guj.) needs to be followed. 5.17 The case of Mahindra & Mahindra Ltd. V/s. Union of India reported in 2022 (10) TMI 212-Bombay High Court = (2023) 3 Centax 261 (Bom.) - is a case relating to Section 3 of the Customs Tariff Act, 1975, which is the provision involved in present case also. In thi....
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.... than basic customs duty. .... 19. When a statute levies a tax it does so by inserting a charging section by which a liability is created or fixed and then proceeds to provide the machinery to make the liability effective. It, therefore, provides the machinery for the assessment of the liability already fixed by the charging section, and then provides the mode for the recovery and collection of tax, including penal provisions meant to deal with defaulters. Provision is also made for charging interest on delayed payments, etc. Ordinarily the charging section which fixes the liability is strictly construed but that rule of strict construction is not extended to the machinery provisions which are construed like any other statute. As held by the Apex Court in the matter of J.K. Synthetics Ltd. v. Commercial Tax Officer [1994] 1 SCC 276 relied upon by Mr. Sridharan, any provision made in a statute for charging or levying interest on delayed payment of tax must be construed as a substantive law and not adjectival law. 20. Section 28AB of the Customs Act, 1962 is a taxing provision which creates and fastens the liability on a party. The provision has to be stric....
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.... penalty can be levied on the portion of payment pertaining to surcharge, CVD and SAD. ... 30. As stated earlier, sub-section (6) of Section 3 and sub-section (8) of Section 3A of the Customs Tariff Act, 1975 referred to the procedural aspect and machinery provisions under the Customs Act, 1975 and not the charging provisions. So also Section 90 of the Finance Act, 2000. As held by the Apex Court in Jain Brothers v. Union of India AIR 1970 SC 778, which was also cited by Mr. Sridharan, penalty was not a continuation of assessment proceedings and penalty partook all the character of the additional tax. There is no provision under section 3 for additional duty or Section 3A for special additional duty under the Customs Tariff Act, 1975 or Section 90 of the Finance Act, 2000 that creates a charge in the nature of penalty or interest. ... 36. We find support for our view in Hyderabad Industries Ltd. v. Union of India 1999 (108) E.L.T. 321 (SC) relied upon by Mr. Sridharan. The Apex Court considered Section 12 of the Customs Act, 1962 and went on to hold that the charging section to impose CVD is Section 3 of the Customs Tariff Act, 1975. Paragraphs 1....
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....f Customs Tariff Act, 1975. The Hon'ble Bombay High Court in the case of Mahindra & Mahindra Ltd. v. Union of India (supra) had considered the said issue and held that interest and penalty in relation to CVD cannot be demanded in the absence of specific provisions for levy of interest, penalty in the Customs Tariff Act, 1975. The said decision was upheld by Hon'ble Apex Court as reported in 2023 (8) TMI 135-SC. Following the same, we hold that the confiscation of goods, interest on CVD, redemption fine and penalties cannot sustain on this ground also." 5.19 In Final Order No. 40846/2023 dated 25.09.2023 passed by the Tribunal, Chennai in case of M/s. Acer India Pvt.Ltd the Chennai Bench of this Hon'ble Tribunal also, the same legal issues arose whether demand of interest on additional duty of customs (CVD) and SAD was sustainable by applying provisions of Customs Act, 1962? The Tribunal has held in paras 21, 24, 25, 26 and 28 that penalty, interest etc. cannot be levied in regard to collection of CVD and SAD. The Tribunal has also observed in para 26 of decision that the entire situation was revenue neutral; and therefore the demand for interest, Confiscation of goods, impositio....
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....venue neutrality and interpretation of provisions. There is no substantive provision for confiscation or imposing Redemption fine in Customs Tariff Act 1975. There is no evidence showing intention for evasion of duty. There is no justification for confiscation of goods or imposing redemption fine, where the goods in question were released on Final Assessment and not available for release. The Larger Bench decision by the Hon'ble Tribunal in Shiv Kripa Ispat Pvt. Ltd-2009 (235) ELT 623 supports Appellant's contention. Thus, the orders for confiscation of goods and imposing redemption fine are not sustainable, in terms of the applicable provisions of law and the decisions relied upon by the Appellant. 5.22 This is a case also of interpretation of provisions. There is no statutory provision for imposing Penalty under section 3 (7) or 3 (12) of the Customs Tariff Act 1975. There is no evidence showing intention for evasion of duty. Imposition of penalty requires mala fide intention to evade duty, which is not found in these cases. The ingredients required for imposing penalty are not found in these cases. Thus, the orders for imposing Penalty are not sustainable, in terms of the app....