2004 (11) TMI 371 - AT - Customs

Summary

Issues:
1. Determination of duty and interest payable on imported machinery.
2. Date of debonding for EOU and liability to pay interest on duty paid.
3. Interpretation of payments made by the appellant as deposits or duty.
4. Appeal against the Commissioner (Appeals) decision regarding interest liability.

Analysis:

Issue 1: Determination of duty and interest payable on imported machinery
The appellant, a 100% EOU for ceramic tiles, imported machinery duty-free under Notification No. 13/81. The Assistant Collector determined duty at Rs. 2,60,20,094/- with interest of Rs. 32,24,500/-. The debonding date was crucial for calculating the duty and interest.

Issue 2: Date of debonding for EOU and liability to pay interest on duty paid
The dispute revolved around the debonding date, initially set at 7-1-87 by the Assistant Commissioner but later corrected to 31-12-93. The question was whether interest on duty paid should be levied until debonding, considering the appellant's payments exceeding the duty liability.

Issue 3: Interpretation of payments made by the appellant as deposits or duty
The appellant argued that payments made towards duty, as directed by the High Court and Govt., should not be considered deposits. They contended that interest should not be demanded post full duty payment, especially as they fulfilled the export obligation before the duty determination.

Issue 4: Appeal against the Commissioner (Appeals) decision regarding interest liability
The Tribunal found the interest demand until 31-12-93 unjustified, as the appellant had paid more than the determined duty liability by that date. The Tribunal emphasized that interest should be calculated per Section 61(2) of the Customs Act, considering duty paid in instalments before the Assistant Commissioner's order.

In conclusion, the Tribunal remanded the case to the Commissioner (Appeals) for a fresh determination of interest liability in alignment with Section 61(2) of the Customs Act, factoring in the duty paid earlier. The Tribunal highlighted the importance of natural justice principles in recalculating the interest and directed adjustment against the appellant's prior deposits.