2011 (8) TMI 1007 - HC - Customs

Whether under Section 47(2) of the Act, the department was entitled to charge interest in facts of the present cases? Held that - In such a case interest could be changed on the differential duty under Section 18(3) of the Act. This is the only way in which we can reconcile the provisions contained in Section 47 with those contained in sub-section (3) of Section 18 w.e.f. 13-7-2006. If we accept interpretation of the department that sub-section (2) of Section 47 permits charging of interest on difference in duty between finally assessed and provisionally assessed customs duty, to our mind sub-section (3) of Section 18 would be superfluous and redundant. It is precisely to cover the situation where an importer is held liable to pay higher duty upon final assessment as compared to that he paid at the time of provisional assessment that he can be asked to pay interest on the difference, that sub-section (3) of Section 18 was introduced in the statute book. To our mind Section 47 and particularly sub-section (2) thereof and sub-section (3) of Section 18 operate in different fields. In view of the above discussion, we do not find that the Tribunal has committed any error. Before closing we may record that there are no averments made before us that respondents-importers did not pay the provisional duty or the final duty as and when assessed within the time as envisaged in sub-section (2) of Section 47 of the Customs Act. Appeal dismissed.

Summary

Issues:
Challenging CESTAT judgment on interest liability under Sections 47 and 18 of the Customs Act.

Detailed Analysis:
1. The case involved an appeal by the Department challenging a CESTAT judgment on interest liability under Sections 47 and 18 of the Customs Act. The primary issue was whether the appellants were entitled to the benefit of interest liability introduced in 2006 only, as opposed to an earlier provision.

2. The respondents were ship breakers involved in importing ships for breaking. The final assessment of duties on these ships took considerable time, with the Assistant Commissioner passing the final assessment order in 2005, demanding a differential duty. The issue revolved around the interest to be levied on this differential duty, based on the applicable provisions of the Customs Act.

3. The Commissioner of Customs (Appeals) dismissed the appeal by the respondents, who then approached the Tribunal. The Tribunal, in its initial order, followed a Supreme Court decision on duty demand but considered the interest liability clause introduced in 2006, providing some benefit to the appellants.

4. The Department filed an application for rectification with the Tribunal, contending that Section 47 permitted the collection of interest on the differential duty. The Tribunal dismissed this application, leading the Department to approach the High Court, consolidating all appeals with similar facts for a common judgment.

5. The Department argued that prior to the amendment in 2006, Section 47(2) allowed charging interest on differential duty in cases like the present ones, where both provisional and final assessments were made before 2006.

6. The High Court analyzed the relevant provisions of the Customs Act, focusing on Section 47 and the amendment to Section 18 in 2006. It noted the distinction between provisional and final assessments, emphasizing the different liabilities and scenarios covered under these sections.

7. The Court highlighted that Section 47(2) pertained to clearance of goods for home consumption and the levy of interest on delayed duty payments. It clarified that interest would be payable on final duty if not paid within the specified timeframe, distinguishing between final and provisional assessments.

8. By reconciling the provisions of Section 47 with the amended Section 18(3) introduced in 2006, the Court concluded that the two sections operated in different contexts and covered distinct scenarios related to duty assessments and interest liabilities.

9. Ultimately, the Court found that the Tribunal had not erred in its interpretation, noting the absence of evidence that the importers failed to pay the provisional or final duties within the specified timelines. Consequently, all tax appeals were dismissed based on the above analysis and conclusions.