2006 (6) TMI 440 - AT - Customs

Summary

Issues:
Demand of interest on duty determined upon finalization of provisional assessment in respect of imports made by the appellants.

Analysis:
The appeals before the Appellate Tribunal CESTAT, Chennai were against the demand of interest by lower authorities on duty determined upon the finalization of provisional assessment concerning imports made by the appellants. The imported item in question was copper concentrate, which necessitated provisional assessment due to its composition containing Gold, Silver, Copper, and requiring chemical analysis for accurate determination. The provisional assessments were conducted before 13-7-2006, with duty paid within five days of assessment. Finalization of provisional assessment occurred after this date, with additional duty amounts paid within five days of final assessments. The dispute arose as the lower authorities demanded interest on the duty payable/paid upon finalization, invoking sub-section 3 of Section 18 of the Customs Act. The appellants contested this demand, arguing that the provision could not apply to cases where provisional assessments were conducted before 13-7-06, the enactment date of the provision. The appellants relied on a circular by the CBEC concerning a similar Central Excise provision, which clarified that interest could only be charged if provisional assessment was conducted on or after the provision's enactment date.

The Tribunal, after considering submissions from both sides, found that sub-section 3 of Section 18 of the Customs Act and sub-rule 4 of Rule 7 of the Central Excise (No.2) Rules, 2001 were similar provisions. The Tribunal noted that the circular clarifying the Central Excise provision would govern cases like the present one, as the SDR did not provide any circular clarifying the Customs provision. Consequently, the Tribunal held that if a provisional assessment on a Bill of Entry was conducted before 13-7-06 and finalized after that date, sub-section 3 of Section 18 of the Customs Act could not be invoked for levying interest on the duty paid by the assessee upon finalization. The Tribunal distinguished the substantive provisions of Section 28AB from sub-section 3 of Section 18, stating that Section 28AB had a limited purpose related to interest rates. The appellants successfully made a prima facie case against the interest levy, resulting in a waiver of predeposit and stay of recovery for the demanded interest. The Tribunal acknowledged the significant amount involved, over Rs. 12 crores, emphasizing the importance of expeditiously disposing of the appeals, setting a future hearing date for the case.