TaxTMI 
TaxTMI 
2026 (9) TMI 1947
X X X X Extracts X X X X
X X X X Extracts X X X X
....rly eight (08) long years. FACTUAL MATRIX: 3. In order to appreciate the controversy involved in the present Petition, the relevant facts, in brief, are required to be noticed. 4. The Petitioner is a proprietorship concern of Mr. Dalip Singh Rathore and is stated to be engaged in the business of import and sale of petroleum products. On 08.05.2015, the Petitioner filed Bill of Entry No. 9174780 at Inland Container Depot, Tughlakabad, New Delhi, through its Customs Broker, declaring the imported goods as "Bitumen" falling under Customs Tariff Heading 27132000. The declared value of the goods was Rs. 36,73,758/-. 5. The Bill of Entry was assessed on 08/09.05.2015 and customs duty of Rs. 9,22,210/- was assessed thereon. The consignment, however, was put on hold by the SIIB (Import), ICD Tughlakabad for physical examination. Upon examination conducted on 13.05.2015 and 14.05.2015, it was found that out of the 90 drums declared, 80 drums contained a black-coloured substance whereas 10 drums were empty. Representative samples were drawn and forwarded to the Central Revenue Control Laboratory, Pusa, New Delhi ['CRCL'] for examination. 6. The CRCL, vide test report dated 02.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....forded another personal hearing on 31.01.2023. The Petitioner's representative appeared at the hearing and reiterated the earlier submissions and requested that the Show Cause Notice be adjudicated without any further delay. 12. On 28.02.2023, the Additional Commissioner of Customs passed Order-in-Original No. 11/SK/ADC/ACE/2023. The adjudicating authority directed amendment of the description and classification in Bill of Entry No. 9174780 from "Bitumen" falling under CTH 27132000 to "Used Oil" falling under CTH 27101990. The adjudicating authority further recorded that the "Used Oil" was non-hazardous and held that no additional duty over and above the duty already determined was payable. The declared transaction value of Rs. 36,73,758/- was accepted and the customs duty liability of Rs. 9,22,210/- was confirmed, which, according to the order, had already been paid and was accordingly appropriated. 13. The Order-in-Original further held the goods liable to confiscation under Sections 111(l) and 111(m) of the Act. However, an option was granted to the Petitioner to redeem the goods on payment of redemption fine of Rs. 1,83,000/- under Section 125 of the Act. A penalty of Rs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sented on 08.05.2015 and there is no allegation that the Bill of Entry itself was presented belatedly. 18.2. It was further submitted that the Petitioner had continuously sought adjudication of the proceedings. The Petitioner had filed its reply to the Show Cause Notice on 01.10.2015, appeared through counsel at the personal hearing on 08.12.2015, and thereafter, by communication dated 27.10.2016, specifically requested that the matter be adjudicated expeditiously. Even when the matter was taken up in 2023, the Petitioner appeared and again requested adjudication. Thus, according to the Petitioner, the prolonged pendency of the proceedings cannot be attributed to it. 18.3. It was further submitted that the provisions relating to late presentation of a Bill of Entry under Section 46(3) of the Act have no application to the present case. The Bill of Entry was admittedly presented on 08.05.2015, shortly after the arrival of the goods, and there is no case of the Respondent that the amount reflected in the EDI System represents a charge for delayed presentation of the Bill of Entry. 18.4. Reliance was placed upon the decisions of this Court in Swatch Group India Pvt. Ltd. v. U....
X X X X Extracts X X X X
X X X X Extracts X X X X
....edemption under Section 125 of the Act and, consequently, the Petitioner became liable to pay the duty and other charges payable in respect of the goods. 19.4. Reliance was placed upon the judgment of the Supreme Court in M/s Navayuga Engineering Co. Ltd. v. Union of India & Anr. 2024 INSC 547, to submit that once confiscated goods are redeemed upon payment of fine under Section 125 of the Act, the owner is liable to pay the duty and charges payable in respect of the goods and the consequential statutory interest on delayed payment of duty. 19.5. It was further submitted that the EDI System does not create the liability but merely reflects the statutory liability arising under the Act. According to the Respondent, the fact that the adjudication proceedings remained pending for some time cannot, by itself, extinguish a statutory liability. It was also submitted that the Petitioner cannot rely upon alleged financial hardship, detention charges or demurrage to seek waiver of statutory interest. ANALYSIS & FINDINGS: 20. This Court has carefully considered the submissions advanced on behalf of the parties and perused the material on record. 21. At the outset, it is necess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to be determined through the machinery of Section 28, the statutory interest provision would follow in accordance with law. 25. Applying the aforesaid principle to the facts of the present case, it is important to notice the chronology. The Bill of Entry was filed on 08.05.2015 and was initially assessed on the basis of the declaration made by the Petitioner that the goods imported were "Bitumen". The goods were thereafter examined, found to be "Used Oil", seized on 05.06.2015 and made the subject matter of confiscation proceedings. 26. The Show Cause Notice was issued on 15.09.2015. The Petitioner submitted its reply on 01.10.2015 and a personal hearing was afforded on 08.12.2015. Thereafter, although another hearing was fixed on 27.10.2016, the proceedings were not brought to conclusion. The matter was ultimately taken up by the Additional Commissioner of Customs only in January, 2023 and the Order-in-Original came to be passed on 28.02.2023. 27. Thus, the proceedings arising out of the Show Cause Notice dated 15.09.2015 remained pending for more than seven (07) years before the liability arising from the confiscation proceedings was finally determined by the adjudicat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cifically held that the obligation to pay duty and charges under Section 125(2) arises in the context of the exercise and acceptance of the redemption option, while the assessment and determination of the duty liability is undertaken through the machinery provided under Section 28. It is upon such determination that the statutory interest provision becomes attracted. 34. In the present case, the amount/liability arising from the adjudication proceedings was determined by the Order-in-Original dated 28.02.2023. Therefore, the period prior thereto, during which the confiscation proceedings themselves remained pending and the amount payable pursuant thereto had not been finally determined, cannot be treated as a period of delayed payment of the amount determined under the said proceedings. 35. This Court is conscious that the original Bill of Entry did contain an assessment of customs duty of Rs.9,22,210/-. However, the Respondent itself does not contend that the present interest demand is merely interest on an unpaid amount arising from that original assessment. Its case is founded upon the liability consequential to confiscation and redemption under Section 125. Once the Respo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted grievance is as to the period for which the consequential interest has been computed. 41. The Respondent has also submitted that the EDI System merely reflects the statutory liability and does not itself create such liability. There can be no quarrel with the proposition. The EDI System cannot create a liability which is otherwise not authorised by the Act. Conversely, an amount which is statutorily payable cannot be avoided merely because it is reflected in the EDI System. The question, therefore, is one of correct computation in accordance with the statutory provisions. 42. In this regard, the amount reflected in the EDI System, as stated by the Petitioner, had reached Rs. 11,74,806/- on 16.11.2023 and continued to increase thereafter. The fact that the amount continued to increase is itself indicative of the computation being made by reference to an earlier date. If the computation has proceeded from the original assessment in May, 2015, the same would necessarily require correction in view of the legal position discussed hereinabove. 43. This Court, therefore, holds that the Respondent was not justified in computing the interest liability arising from the confiscat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ined by the Supreme Court in Navayuga Engineering (supra). 49. The contention regarding availability of an alternate statutory remedy also does not warrant dismissal of the present Petition. The Petitioner is not seeking, in these proceedings, adjudication of the correctness of the confiscation, classification or penalties imposed under the Order-in-Original. The limited question concerns the computation of consequential interest and, in particular, the period from which such interest can validly be computed. Since the material facts are undisputed and the issue turns upon the application of the statutory scheme to the admitted chronology, the present Petition can be disposed of by issuing a limited direction for recomputation. 50. Accordingly, the challenge to the entire interest liability cannot be accepted. However, the computation of interest for the period prior to determination of the amount pursuant to the Order-in-Original dated 28.02.2023 cannot be sustained. CONCLUSION: 51. In view of the aforesaid discussion, the present Petition is partly allowed in the following terms: i. The Respondent shall recompute the interest liability in respect of Bill of E....