2003 (8) TMI 430 - AT - Customs

Summary

Issues:
1. Validity of the impugned order of the Commissioner of Customs.
2. Power of the Commissioner to condone delay in payment of interest.
3. Breach of Notification No. 203/92 by the respondents.
4. Liability of the respondents to pay customs duty.

Analysis:
The case involved the issuance of value-based advance licenses to the respondents for importing materials under the DEEC Scheme. The respondents availed benefits under a specific notification but were found to have also taken Modvat credit on the imported inputs, contrary to the notification's terms. The Commissioner of Customs dropped the proceedings after the respondents reversed the credit and paid interest, claiming they were not liable for customs duty. The Revenue appealed, challenging the Commissioner's order, arguing that the delay in interest payment could not be condoned, and the respondents were still liable for customs duty due to the breach of the notification.

Upon review, the Tribunal found that the respondents had indeed breached the terms of the notification by availing Modvat credit on duty-free inputs meant for export. The subsequent actions of reversing the credit and paying interest did not absolve them of liability. Citing a Supreme Court judgment, the Tribunal emphasized that there was no provision for extending time for interest payment under such schemes, and strict compliance was required. Therefore, the Commissioner's order absolving the respondents from customs duty payment was deemed legally unsustainable. The Tribunal set aside the Commissioner's order, confirming the liability of the respondents to pay customs duty as per the show cause notice and any applicable interest, ruling in favor of the Revenue.

In conclusion, the Tribunal held that the respondents were indeed liable to pay customs duty and interest as detailed in the show cause notice. The decision highlighted the importance of strict compliance with notification terms and the lack of authority to relax time limits for interest payment under such schemes. The appeal of the Revenue was allowed, overturning the Commissioner's order in favor of holding the respondents accountable for customs duty and any associated interest.