TaxTMI 
TaxTMI 
2001 (2) TMI 149
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....nd also an agreement with Midrex International whereunder the petitioner was to pay a sum of DM 2 Million, DM 10.10 Million and DM 23 Million towards the Licence fees and technical services to be rendered by VAI. After the shipment, for each consignment Bill of Entry for clearance for home consumption under Section 46 of the Customs Act was filed. The contract was registered for import of the machinery under the Project Imports Regulations, 1986 (for short "Regulations") for classification and assessment under Heading 98.01 of the First Schedule to the Customs Tariff Act, 1975 (for short "Tariff Act"). Pursuant to the Registration of contract, the petitioner-company executed a Bond and furnished two Bank Guarantees dated 10-8-1998 and 6-5-1997 for Rs. 1,86,19,350/- and Rs. 30,86,200/- respectively. All assessments under the Project Imports were provisional and the petitioner extended and renewed the Bank Guarantee and bond. Validity was up to the period as mentioned in the Bank Guarantee (24-12-2000 & 20-1-2001 respectively). The Bill of Entry was accompanied with invoice issued by TIL and other relevant documents along with contract. Pro rata value of each consignment and calculat....
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.... order made by the Collector of Customs was subject matter before the Customs, Excise and Gold (Control) Appellate Tribunal (for short "the Tribunal") at the instance of both the sides, namely, the Revenue and the petitioner-company. By an order dated 13-2-1991 [reported in 1991 (56) E.L.T. 221], the appeal preferred by petitioner-company was allowed as a consequence of which petitioner was declared entitled to refund of Rs. 6,02,24,300/-. The appeal of the Revenue was dismissed. The order is annexed at Annexure C to the petition. The Apex Court has finally on 19-11-1996 disposed of the matter between Collector of Customs (Prev.) Ahmedabad v. Essar Gujarat Limited and held as under in Para 30 of the judgment [reported in 1996 (88) E.L.T. 609 (S.C) at p. 622]; "Therefore, we are of the view that DM 2,000,000 being the process licence fee paid to Midrex Corporation, DM 10,100,000 being the cost of technical service provided by Midrex and a sum of DM 2,310,000 being payment on account of engineering and consultancy fee payable to V.A., should be added to the value of the import plant." 6. In Para 29, the Apex Court pointed out as under : "But this apart, other services render....
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....(Del.)] wherein the petitioner challenged the validity of provisions of sub-section (1A) of Section 14 and Clause (a) of sub-section (2) of Section 156 of the Act being ultra vires and that the essential legislative functions could not have been delegated to the Executive. It was submitted to the Court that the demands were illegal, invalid and unauthorised as the assessment has not been finalised. In support of the contention, reliance was placed on various decisions. The Delhi High Court hearing the matter held that there is no substance in the submission of the learned Counsel but the provisions of the Rules 3, 4, 9(c) & (e) are not in conformity with the provisions of Section 14(1). The Court while rejecting the contention held that the said rules are not ultra vires the provisions of Articles 245, 246 265 and 19(1)(g) of the Constitution of India. 10.The notice of the demand was challenged by the petitioner-company on the aforesaid ground that the provisions of Section 1(1)(A) and Section 156(2)(a) as also the Rules are invalid and ultra vires to the Constitution of India. No specific plea of the nature sought to be urged now were pleaded in the above Writ petition and the ....
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....eputy Commissioner of Customs that the Bills of Entry filed by the petitioner-company were assessed provisionally under the Project Imports Regulations, 1986 on the basis of declared value and in view of the order of the Apex Court, the amount indicated in Paragraphs 26 & 27 of the order came to be added and provisional re-assessment was done on Bills of Entry. Re-assessment of Bills of Entry was, therefore, made provisional by loading the assessable value as held by the Hon'ble Supreme Court. Thus, it is an admitted position that there is no regular assessment. 13.Learned Counsel for the petitioners pointed out that without assessment in accordance with law, Customs authority issued demand notice demanding a sum of Rs. 10,63,39,665/-. During the pendency of the writ petition on 29th April, 1997, the Revenue enhanced the said amount to Rs. 16,60,35,971.44 by adding interest on the original demand. Learned Counsel submitted that the Delhi High Court did not issue any direction for finalising the assessment as the Court was of the view that; "The law has to take its own course and the statutory authority has to proceed in the matter in accordance with law." The Court had hop....
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....ion (3); but if it is found subsequent on examination or testing of the goods or otherwise that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act, be re-assessed to duty. 15.With regard to the Entry of Goods on Importation, Section 46 provides as under :- Section 46 :- Entry of goods on importation :- (1) The importer of any goods, other than goods intended for transit or transhipment, shall make entry thereof presenting to the proper officer a bill of entry for home consumption or warehousing in the prescribed form : Provided that if the importer makes and subscribes to a declaration before the proper officer, to the effect that he is unable for want of full information to furnish all the particulars of the goods required under this sub-section, the proper officer may, pending the production of such information permit him, previous to the entry thereof, (a) to examine the goods in the presence of an officer of customs, or (b) to deposit the goods in a publi....
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....duty : Provided 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 date of such commencement of the purpose of this section : Provided further 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. 17.Learned Counsel submitted that sub-section (2) has been inserted by Customs (Amendment) Act (55 of 1991). Thus, before sub-section was inserted, there was no question of demanding the interest. In the instant case, the goods were cleared for home consumption prior to insertion of sub-section (2) and, therefore, there cannot be any question of demand of interest. It was also submitted that sub-clause (1) refers to 'assessment' and not to the 'provisional assessment'. According to the learned Counsel, the Bill of Entry should have been assessed finally. Liability would have commenced only after making final assessment and not otherwis....
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....he proper officer may allow, submit a statement indicating the details of the goods imported together with necessary documents as proof regarding the value and quantity of the goods so imported in terms of these Regulations and any other document that may be required by the proper officer for finalisation of the contract. 19In view of. the affidavit in reply before us, a letter dated 15th May, 1992 addressed to the Assistant Collector of Customs, Surat along with documents (All Xerox) was produced to point out that documents were received by the officer on 15-5-1992. It is clearly mentioned that reconciliation statement was not submitted in view of the order passed by the Tribunal in Appeal. However, as it was understood that as reconciliation statement was required to be filed without waiting for the decision, reconciliation statement was forwarded indicating Sr. No., Name of the Vessel, Bill of Entry No., Date, Numbers of Packages, Description of Goods, CIF value, Amount of Duty Paid, Duty Payable, etc. It was also submitted that the machinery has been installed since long. Not only that but the Revenue is also collecting the excise duty on goods which are being manufacturing ....
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.... taken on record. 20.Before us, a Circular dated 14th June, 1991 addressed to all Collectors of Customs by the Ministry of Finance, on the subject of finalisation of Project Contract, delay in submission of reconciliation of statements, improvement in contract procedures and Customs Control, etc., is produced. Detailed letter was written in pursuance of recommendations contained in 16th report of Public Accounts Committee (1988-89, 8th Lok Sabha), DGI (Customs & Central Excise). It was clearly pointed out that there are prolonged delays in the submission of reconciliation statement after the completion of the last importation. Plant site verifications to check proper utilisation of imported goods are not being frequently done and for other items mentioned therein, the Board has taken a serious view of the matter and has indicated its desire that all Collectors of Customs should make continuous efforts to liquidate the pendencies in this area of the work. The Circular says as under :- (1) On completion of the prescribed period after the last importation, Bond enforcement notices should invariably be issued to those importers who have f....
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....an be made is indicated. Section 18 does not refer to reassessment of the provisional assessment. Section 17 refers to assessment. In view of clear definitions and distinction between the assessment and provisional assessment and also the fact that law does not provide for mechanism of reassessment of provisional assessment, the learned Counsel for the Revenue is not right in stating that the letter impugned can be considered as reassessment of the provisional assessment. After the provisional assessment was made, it was bounden duty of the Revenue to make final assessment. Learned Counsel appearing for the petitioners drew our attention to the decision of the Apex Court in case of Samrat International (P) Limited v. Collector of Central Excise reported in 1992 (58) E.L.T. 561 (S.C.) and submitted that unless and until there is final assessment, there is no question of demanding interest at all. In the instant case, the amount of duty paid by the petitioner-company to the Revenue was obviously provisional and subject to the result of the final assessment that may be made by the Officer and without final assessment being made, there is no question of fastening of the liability of in....
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....ently, the amount which was liable to be recovered from the petitioner (1). This notice, therefore, cannot be regarded as a show cause notice against the modification of the classification list in respect of the aforesaid period. In these circumstances, the show cause notice is bad in law and no legal effect as far as the earlier period is concerned." The Court struck down the notice insofar as the period up to February, 1984 is concerned. 24.Learned Counsel relying on this judgment, submitted that in the instant case, no hearing is given to the petitioner-company before making a demand; no final assessment is made and as demand notice is issued without hearing the petitioner, the same is required to be quashed and set aside. 25.The learned Single Judge of Calcutta High Court, (Mrs. Ruma Pal, J, as She then was) in case of Nayek Industries Private Limited v. Union of India, reported in 1991 (56) E.L.T. 31 (Cal.), in Para 20, has observed as under: "There was no final approved classification list. The condition precedent to the exercise of power under Section 11A(1) of the Act is absent." For the reasons aforesaid, the learned Judge upheld the contention of the petiti....
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.... However, he further submitted that the Assessing officer must assess duty finally and only after making final assessment, the Proper Officer is entitled to demand the difference of duty if the duty already paid as per provisional assessment is less. In the instant case, as the procedure is not followed for making final assessment, the demand cannot be raised and it is on such difference, if not paid, amount of interest is to be charged. After final assessment being made, the proper officer could have returned the Bill of Entry for making payment and not before that. 31.In case of J.K. Synthetics Limited and Another v. Commerical Taxes Officer, reported in (1994) 4 SCC 276, the Apex Court pointed out as under : "When a statute levies a tax it does so by inserting a charging 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 provision meant to deal with defaulters. Provision is also made for charging interest on delayed....
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....by the Court reads as under : "On the application for stay, we think, it is not appropriate to order stay of the refunds. The respondent shall be entitled to the refund subject to the furnishment of a bank guarantee for the amount of the refund, to the satisfaction of the Collector of Customs (Preventive) Ahmedabad. A fresh bank guarantee, in lieu of existing bank guarantee, shall be furnished respondent shall ensure that the guarantee shall for the entire period of the pendency of these appeals if necessary by renewal from time to time. The (sic) shall be strictly subject to this condition." "The refunds shall be made within two weeks from the date of the furnishment of the bank guarantee or within a six weeks whichever is late. If the appellants succeed in appeals, the amount of refund obtained pursuant to order shall be made good and restituted back to the appellants by the respondent together with interest thereon @ 18% per annum from the date of the refund". "The appeals shall be listed for final hearing in 2nd week of January, 1992. Liberty to file additional papers, if any, within six weeks from today". 35.Thus on the application for stay, while disposing of the ....
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....ed to be noted that in the instant case, before the Apex Court there was no question with regard to the provisional duty but the real question was with regard to the consultancy fees/service charges and the Court pointed out that; "The expenditure was needed to be incurred for dismantling the plant and making it ready for delivery has to be added to the value of the plant. The specialist supervision for dismantling of the plant and also engineering and consultancy services for this purpose will have to be added to the value of the imported plant. Since there is no clear indication as to how the various services have been valued separately, 10% of the amount of DM 23,100,000 should be added to the value of the plant on this account". 39.It is an admitted position even before this Court that only provisional assessment is made and the respondent has sworn an affidavit stating that there is provisional assessment and therefore, the learned Counsel is not right in stating that in view of the order made by the Apex Court, straightway demand can be made but they have to make assessment finally as laid down in the Statute. We have indicated that the question of interest would arise ....