Customs - Differential duty paid on account of increase in rate of duty after assessment of Bill of Entry - Whether importer is liable to pay interest u/s 47(2) - Matter referred to Third Member in view of difference of opinion
By TIOL News Service
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BANGALORE, DEC 14, 2015: THE dispute in the present appeal relates to payment of interest and imposition of penalty upon the respondents. The Bill of Entry filed by the respondents on 20.11.2000 was assessed by applying the old rate of duty of 35% adv. and the “let go” order was made on 23.11.2000. The respondents deposited the duty, as assessed by the Customs officer and the goods were accordingly cleared. However, on 21.11.2000, duty rate was enhanced to 65%. In case of the importer, as the inward entry for the vessel was granted only on 21.11.200 and hence the enhanced rate would apply. It is only subsequently the Revenue found out the correct position and directed the respondents to deposit the differential duty. The respondent did not challenge the said direction and deposited the duty on 10.3.2001. The issue is whether the importer is liable to pay interest under Section 47(2) of the Customs Act for the delayed payment of differential duty. Revenue is in appeal against the order of Commissioner (Appeals) setting aside the demand of interest and penalty.
The Member (T) held:
- This is a case where the respondents have deliberately delayed the payment of differential duty of customs though it was payable to the national exchequer immediately i.e. as soon as the goods were released for home consumption. When the respondents knowingly and deliberately delayed the payment of differential duty of the customs they cannot claim any defense that they are not liable to pay any interest in this situation. When they delayed the payment of differential duty of customs for the period of delay they are liable to pay the interest for the said period of delay. The provisions of Customs Act both under 47 of the Customs Act and Section 28(1) of the Customs Act 1962 make it clear that the interest for delayed payment of duty is liable to be payable by the respondents. When the respondents have deliberately violated the provisions of law and have not paid the interest which was duly payable by them, the penalty imposed under Section 117 by the original adjudicating authority is also sustainable in law. Revenue appeal is allowed.
However, the Member (J) differed with the above view and held:
- Sub-section (2) of Section 47 provides for interest in those cases where importer has not paid the import duty assessed in terms of sub-section (1) of Section 47 within a period of 2 days from the date on which the assessed Bill of Entry is returned to him for payment of duty. In the present case, the respondent has admittedly paid the duty within a period of 2 days from the date of assessed Bill of Entry and there is no dispute about the same.
- Once the goods have been finally assessed for duty under Section 47 and such duty stands deposited by the importer and the goods stands cleared, the provisions of Section 17 could have no applicability.
- There was admittedly a short levy of duty, but instead of issue a show-cause notice for such levy in terms of Section 28 of the Act, the Revenue adopted a route of addressing letters to the respondents who deposited the differential duty. The said communication was accepted by the assessee and they deposited the duty accordingly. The interest stands confirmed against the assessee under Section 28 of the Act. When there is no show-cause notice issued by the Revenue in terms of Section 28 of the Customs Act, the confirmation of interest on delayed payment of duty in terms of Section 28AA cannot be invoked. The said interest provisions require an assessee to pay the assessed duty within a period of 3 months from the date of determination of duty. If there is no such determination by the Revenue, the question of payment of interest does not arise. As such there is no infirmity in the views adopted by the Appellate Commissioner. Similarly, the Commissioner (A) that when there is no interest liability alleging contravention of provisions of Section 47(2) of the Act, imposition of penalty upon the assessee was not justified. The Revenue's appeal is, accordingly, rejected. (Para 18-23)
In view of the difference of opinion, the matter was referred to Third member.
(See 2015-TIOL-2662-CESTAT-BANG)
