TaxTMI 
TaxTMI 
2025 (8) TMI 420
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....E Project') in Singtam, East Sikkim. The said hydroelectric project was certified as an inter-State Mega Hyder Power Plant by the Joint Secretary to the Government of India, Ministry of Power vide Office Memorandum No.8/1/99 DO (NHPC) dated 25.09.2000. Vide the said Office Memo, the Appellant was allowed to import goods required for initial setting up of the Teesta HE Project at NIL rate of Basic Customs Duty as per Sl. No. 338 r/w condition 80(b) of Notification No. 16/2000-Cus dated 01.03.2000 which was rescinded and subsequently replaced by Sl.No. 400(b) of Notification No.21/2001-Cus dated 01.03.2001. 2.2 The appellant entered into a contract with the overseas supplier, Mitsui & Co. Ltd. for the supply of such goods required for setting up the Teesta HE Project and such contract was registered under the Project Import Regulations, 1986. The appellant also submitted a bond for the value of Rs.2,17,55,76,500/- before the Ld. Deputy Commissioner of Customs (Project Import), Kolkata and accordingly the Appellant was allowed to provisionally assess the goods under Section 18(1) of the Customs Act, 1962. 2.3 In this regard, the appellant imported the main equipment which includ....
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....itted that the demand of interest and penalty cannot sustain since the Appellant had duly deposited the applicable customs duty prior to the finalization of provisional assessment and Section 18(3) of the Customs Act, 1962 is not applicable for levy of interest wherein the demand has been paid prior to the finalization of provisional assessment. Further, it was submitted that Section 18(3) of the Customs Act, 1962 cannot be invoked for the bills of entry filed and provisionally assessed prior to 13.07.2006 since during such period Section 18(3) was not existing, and that the operation of such provision is prospective in nature. 2.9 However, without considering the submissions of the appellant, the underlying Order dated 28.11.2019 was passed finalizing the provisional assessment, and appropriating the BCD and additional duty paid by the Appellant on the spare parts and charging of interest under Section 18(3) for the period post 13.07.2006 and imposition of penalty. Further, the underlying Order travelled beyond the Show Cause Notice and confirmed charging of interest under Section 28AB of the Customs Act, 1962 for the Bills of Entry filed and provisionally assessed before 13.07....
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....He further submits that no interest is payable under Section 18(3) of the Customs Act, 1962 where the differential duty has been deposited prior to finalization of the provisional assessments. Therefore, the demand of interest is not sustainable. It is his submission that the appellant has deposited the differential duty on 12.08.2019 whereas the provisional assessments were finalized only on 28.11.2019. Therefore, no interest is payable. 3.3 In this regard, he submitted that Section 18(3) of the Customs Act, 1962 is pari materia to Rule 7(4) of the Central Excise Rules, 2002 as for the provision of Section 18(3) of the Customs Act, 1962, the importer or exporter shall be liable to pay interest on any amount payable to the Central Government, consequent to the final assessment order or re-assessment order under Sub-section (2), at the rate fixed by the Central Government under Section 28AA from the first day of the month in which the duty is provisionally assessed till the date of payment thereof. Admittedly, the liability of interest arises if the duty is payable on finalization of provisional assessment and not duty was payable by the appellant on finalization of provisional a....
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....ect Import Regulations, 1986, by a sponsoring authority, statutorily empowered under the same regulations read with Customs Act, 1962. The importer, in availing the benefits of the said notification, had also bound themselves to the conditions governing such availment. Only when the importer failed to fulfill the conditions of the notification but concession of duty was availed by them thereby violating the regulations in service of which such notification was issued, did they become liable to pay duty for such violation. 4.4 Further, he submits that the question of payment of interest came into being only. after the event of payment of duty was over. The day on which such duty is paid, interest becomes payable and therefore, in the present case, the primary cause of action is the date on which such duty was paid. The importer/appellant paid the duty on 12.08.2019, therefore the cause of action came into play on that date, which is long after amendments made in section 18 of the Customs Act. 1962, by insertion of sub- section 18(3) on 13.07.2006. So, even if it were to be conceded that the said provision is substantive in nature and not merely clarificatory and that is a signifi....
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....evied or paid or has been shortlevied or short-paid or erroneously refunded...", and it is their case that no duty can be said to be short-levied or unpaid before an order for finalization/ re- assessment has been passed, which led them to the erroneous conclusion that since the differential duty was deposited before the passing of the finalization order, they would incur no interest liability. 4.7 It is his further submission that the above argument of the importer is fundamentally an unsound position because the differential duty in question was payable even at the time of provisional assessment of goods. The order for finalization or reassessment of provisional assessment merely confirms the quantum of duty that would have been payable by the importer and does not absolve the importer from any interest that the short- paid or unpaid duty might have attracted in the period leading up to the final assessment. 4.8 It is also submitted that even after introduction of section 18(3) in the Customs Act, 1962, it would not make them liable to pay interest on the differential duty. The question hinges on the interpretation of the phrase "consequent to finalization", which the ....
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....d the goods from its factory without invoice but it is also specifically mentioned that by the aforesaid act, the appellant had contravened the provisions of Rule 11 of the Rules. Thus, the appellant was put on clear notice as to what kind of violation it had made. The penalty is a consequence thereof and, therefore, non-mentioning of Rule 25 of the Rules was mere inadvertent omission. 4.12 In the case of Indus Integrated Information MGMT. Ltd. -Vs- Pr. Commr. Of S.T. Kolkata-1 reported 2018(14) G.S.T.L. 24(Cal), the Hon'ble Calcutta High Court has held as under : "... The liability to pay Service Tax is admitted by the Assessee. The adjudicating authority is entitled to apply the law as applicable to the facts of the case, notwithstanding a show cause notice containing a different charging section. The applicability of the section under which the petitioners have been charged is not substantiated to be incorrect. Although there are differences between Section 73A and Section 73 of the Act of 1994, the Assessee was well aware of the charges levelled against it. The Assessee had answered the charges. The objections were duly considered and negated in the impugned ord....
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....the date of payment thereof." Admittedly, the said provisions has been brought under the Customs Act, 1962 only on13.07.2006. Therefore, the issue arises whether prior to the period 13.07.2006, the appellant is liable to pay interest or not ? 9. The said issue has been examined by this Tribunal in the case of M/s Century Pulp & Paper (supra), wherein this Tribunal has observed as under : "10. From the aforesaid it is evident that the court's have repeatedly held the amendment to Section 18 of the Act, as a substantive piece of legislation and it cannot be considered to be of a clarificatory nature. The same cannot be therefore given a retrospective effect. The provisions of Section 18(3) of the Act, would have no application to the present case and the Assessment Order demanding payment of interest, in respect of provisional assessment made prior to 13.07.2006 is not in accordance with law. 11. The said issue being no more res integra, it need to be also pointed out that with the reference to similar provisions on the excise side, incorporated vide Rule 7(4) of the Central Excise Rules, 1944, the Board Vide Order- Instruction- Central Excise issued vide ....
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....f Section 171 thus, for the first time, imposed in the case of this kind joint and several liability on the members for the tax assessed on Hindu Undivided family and thus was personal liability as distinguished from the liability limited to the joint family property received on partition. The Apex Court thereupon held and observed that: "We cannot, therefore, consistently with the rule of interpretation which denies retrospective operation to a statute which has the effect of creating of imposing a new obligation or liability, construe sub-section (6) of Section 171 as embracing a case where assessment of a Hindu undivided family is made under the provisions of the old Act. Here in the present case, the assessments of the Hindu Undivided Family for the assessment years 1950-51 to 1956-57 were completed in accordance with the provisions of the old Act which included Section 25A and the Income Tax officer was, therefore, not entitled to avail of the provision enacted in sub-section (6) read with sub-section (7) of Section 171 of the new Act for the purpose of recovering the tax or any part thereof personally from any members of the joint family including the petitioners" ....
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....n 18 (3) of the Act, therefore, not being in consonance with the show cause notice issued to the petitioner as well as the relevant statutory provisions, cannot be sustained." 10. Thus, we do not find any merit in the appeal and accordingly, appeal stands rejected." 11. Further, the Hon'ble Madras High Court in the case of M/s Sterlite Industries India Limited (supra), has examined the issue and observed as under : "4. In view of the aforesaid and having heard the learned Counsel for the parties, we are satisfied that prior to amendment of law, by insertion of Section 18(3) of the Act in the Customs Act, the Revenue could not demand any interest on the differential duty assessed upon final assessment where the goods have been cleared on provisional assessment under Section 18(1) of the Act. The retrospective levy is not intended and the amendment in Law is a substantive provision for making a provision for levy of interest in the present case. Therefore, for a period prior to 13.07.2006, such levy of interest cannot be imposed on the Assessee. Therefore, being in respectful agreement with the view of the Gujarat High Court, we do not find any merit in the prese....
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....We borrow the other relevant facts from the judgment and order passed by the learned Single Judge dated 20th August, 2018 more particularly, from paragraph 4.3 therein:- "4.3 Pertinently, the e-stamp paper dated 06.07.2016 purchased by the petitioners, sets down the following details: (i) Particulars of the property, which was proposed to be purchased; (ii) the names of the parties, who intended to execute the sale deed; (iii) the consideration to be paid for consummating the sale transaction; and (iv) the value of e-stamp paper. 4.4 According to the petitioners, though initially, the intention was to execute the sale deed concerning subject property in July, 2016, since, there was some delay in closing the loan transaction via which the transaction was to be funded, the execution of the sale deed was delayed. 4.5 This delay proved to be fatal, inasmuch as, 4.8.2016, the petitioners were told by the broker, who had the custody of the estamp paper, that the e-stamp paper dated 6.7.2016 had been misplaced. 4.6 The petitioners realizing the enormity of the loss, filed a complaint with the Crime Branch, Delhi Police, on that very day i.e. 4.....
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....these assertions were made by the petitioners to allay the apprehensions of respondent No.2. 5.5 However, the petitioners' plea for refund of stamp duty did not cut much ice with the respondents and, consequently, vide order dated 21.10.2018, Collector of Stamps (HQ) rejected the petitioners' application dated 11.8.2016 maintained for refund of stamp duty. 6. Aggrieved by the impugned order dated the 21.10.2016, the petitioners have preferred by instant writ petition." 16. Thereafter, the refund claim was allowed, but no interest was paid. The said order was challenged by the claimant in LPA No.288 of 2019 before the Hon'ble Delhi High Court and raised the issue of nonpayment of interest and the said LPA was missed. Against the said order, the claimant preferred SLP before the Hon'ble Supreme Court and in that case, the short issue was involved before the Hon'ble Supreme Court that in view of the facts and circumstances of the case, the appellant is entitled to claim interest on refunded amount and it was the submission of the ld.Counsel for the respondent that there is no provision in the Statute for payment of interest on refund of the amount of the e....
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....said rule." 18. In view of the above discussions, we hold that for the period prior to 13.07.2006, the demand of interest under Section 18(3)/28AB of the Customs Act, 1962, is not sustainable. 19. Now, we come to the issue whether post 13.07.2006, can interest be demanded when the demand of duty on finalization of assessment is nil. For better appreciation of facts, the provisions of Section 18 (3) are to be seen, which are as under : "18 (3) The importer or exporter shall be liable to pay interest, on any amount payable to the Central Government, consequent to the final assessment order under sub-section (2), at the rate fixed by the Central Government under Section 28AB from the first day of the month in which the duty is provisionally assessed till the date of payment thereof." Under Section 18(3) of the Customs Act, 1962, the demand of interest arises consequent to the assessment order or re-assessment order under sub-section (2) of Section 18. The interest is payable by the importer/exporter when duty is provisionally assessed till the date of payment thereof. Admittedly, consequent to the assessment, no duty is payable by the appellant. In that circumstances....
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.... something more that has been recovered in the provisional assessment. When that exercise is finalized and consequent thereon that the Assessee shall be liable to pay interest on any amount payable to the Central Government. Thus, the liability to pay interest arises on any amount payable to Central Government and consequent to order for final assessment under Rule 7 sub-rule (3). We are in agreement with the Assessee in the present case that the later part of sub-rule (4) is not attracted. The liability to pay interest on any amount payable to Central Government consequent to order for final assessment under Rule 7 sub-rule (3). We are in agreement with the assessee in the present case that the later part of sub-rule (4) is not attracted. The liability to pay interest on any amount payable to Central Government consequent to order for final assessment is not a situation to be found in the present case. It is not the argument of the Revenue that what was paid by the Assessee as differential duty and prior to finalizing of the assessment, is not correct, accurate or proper computation of the liability. Having found that the final assessment resulted in nothing due and payable to the....
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.... the Assessee is entitled to refund. He may interest on the sum refunded from the date of payment. However, Rule (6) cannot be construed in that manner. Hence, the words "such amount is determined" appearing in Rule 7(4) and "such refund is determined" in Rule 7(5) are crucial. The determination is thus a relevant factor." The said decision of the Hon'ble Bombay High Court has been affirmed by the Hon'ble Apex Court holding that there is no liability to pay interest on the differential duty paid before finalization of provisional assessment. Admittedly, in this case, the appellant has paid differential duty before finalization of provisional assessment. In that circumstances, no interest is payable by the appellant. The same view was taken by this Tribunal in the case of Tata Motors Limited Vs. Commissioner of Central Excise & Service Tax (LTU), Mumbai reported in 2016 (11) TMI 149-CESTAT Mumbai, wherein this Tribunal has observed as under : "4. It is the case of the appellant that the provisions of Rule 7 of the erstwhile Central Excise Rules, 2001 can be invoked for demanding interest only if the differential duty is payable by an assessee on an amount which his confi....