2014 (2) TMI 1171 - AT - Customs

Re-import of goods - Goods cleared under Notification No. 158/95-Cus., dated 14-11-1995 - Though the appellant re-exported the goods after one year, the appellant had not paid any customs duty - Customs duty was realized by the customs authorities in the year 2008 by partially encashing the bank guarantee and partially recovering in cash - Demand of interest from the date of re-import of goods till the date of payment of duty - Held that - Admitted facts are that the appellant made re-import of goods and availed the benefit of Notification 158/95-Cus. As per the requirement of the Notification, the goods were to be re-exported within six months. The appellant had not re-exported the goods within six months nor asked for extension of time. Admittedly the goods were re-exported after one year and even after one year the appellant had not paid duty. Ultimately the duty was paid in the year 2008 though the goods were re-exported in the year 2005. For three years the appellant retained the amount of customs duty without any legal authority. The Hon ble Supreme Court in the case of Kanhai Ram Thekedar 2005 (4) TMI 75 - SUPREME COURT OF INDIA held that accrual of statutory interest is automatic and separate notice of demand is not required to be served in that respect. In the present case, as the appellant had retained the amount of customs duty without any legal authority of law, therefore we find no infirmity in the impugned order. - Decided against assessee.

Summary

Issues:
- Appeal against the order-in-appeal upholding the demand of interest on re-imported goods under Notification No. 158/95-Cus.
- Interpretation of provisions of Notification No. 158/95-Cus regarding re-export of goods within a specified time frame to avail exemption from customs duty.
- Applicability of Section 28AB of the Customs Act on the demand of interest in the absence of a demand under Section 28.

Analysis:
The appellant filed an appeal against the order-in-appeal upholding the demand of interest on re-imported goods under Notification No. 158/95-Cus. The appellant had re-imported goods under this notification but failed to re-export them within the stipulated time frame, leading to a demand for customs duty and interest. The appellant contended that the demand of interest was not sustainable under the provisions of the notification and Section 28AB of the Customs Act. However, the Revenue relied on a Supreme Court decision to argue that interest accrual is automatic without the need for a separate notice. The Tribunal noted that the appellant retained the customs duty amount without legal authority for three years, leading to the dismissal of the appeal based on the automatic accrual of interest without a separate demand notice.

The interpretation of provisions of Notification No. 158/95-Cus regarding the re-export of goods within a specified time frame was crucial in this case. The notification allowed exemption from customs duty if goods were re-exported within a specific period from the date of re-importation or with an extension granted by the Commissioner of Customs. The appellant failed to re-export the goods within the prescribed time, leading to the demand for customs duty and interest. The Tribunal emphasized the importance of adhering to the conditions outlined in such notifications to avail of duty exemptions, highlighting the significance of timely compliance with re-export requirements.

The issue of the applicability of Section 28AB of the Customs Act on the demand of interest in the absence of a demand under Section 28 was raised by the appellant. The appellant argued that only liability under Section 28AB existed at the time, and since there was no demand under Section 28, the interest demand was unsustainable. However, the Tribunal referenced a Supreme Court decision to support the automatic accrual of interest without a separate demand notice. The Tribunal's decision to dismiss the appeal was based on the appellant's failure to re-export goods within the specified time frame, leading to the retention of customs duty without legal authority and justifying the demand for interest.