2009 (5) TMI 690 - AT - Customs

Liability of Interest - duty short paid confirmed under Section 18(2) of Customs Act, 1962 - finalisation of Provisional assessment - Held that - The period involved is prior to 13-7-2006, the date on which the Sub-Section (3) was inserted in Section 18 of the Customs Act, 1962. Therefore the provisions of Sections 18(3) of the Customs Act, 1962 are not applicable in the present case - demand of interest not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Application for staying recovery of interest on differential duty amount.

Analysis:
The case revolved around the question of whether interest is payable on the duty short paid confirmed under Section 18(2) of the Customs Act, 1962. The duty was provisionally assessed for the period 31-1-1997 to 25-6-2004 but finally assessed on 29-2-2008/10-3-2008. Section 18(3) of the Customs Act, 1962 states that the importer or exporter shall pay interest on the amount payable to the government after final assessment. The duty in this case was paid on 28-3-2008 after final assessment, and Section 18(3) came into force on 13-7-2006. The Tribunal's decision in Sterlite Industries (I) Ltd. v. CC, Tuticorin was cited, emphasizing that interest cannot be levied retrospectively for assessments finalized before the insertion of Section 18(3) on 13-7-2006.

The judge noted that the period in question was before 13-7-2006 when Section 18(3) was inserted. As a result, the provisions of Section 18(3) of the Customs Act, 1962 were deemed inapplicable in this case based on the precedent cited from Sterlite Industries (I) Ltd. v. CC, Tuticorin. Consequently, the appeal was allowed, and the impugned order demanding interest on the differential duty amount was set aside.