2011 (5) TMI 598 - AT - Customs

Duty on movable gears, bunkers, stores of the imported vessel on breaking - Circular No.37/96-Cus, dt.3.7.96 issued by CBE&C - Time limitation - Held that - It is an undisputed fact that the provisional assessment was ordered on 26.9.95 prior to 13.7.06, the date on which Section 18(3) came into force in view of this it can be concluded that the interest clause on the amount of differential duty will be applicable only after 13.7.06 Regarding limitation - Held that Re-assessment arose out of final order dt.29.5.09, allowing the benefit of interest. The benefit of interest cannot be denied as the provisional assessment was prior to the amendment of Section 18 - in favour of assessee.

Summary

Issues:
1. Whether the recovery of interest was legal.
2. Whether the issue is time-barred.

Analysis:

Issue 1 - Recovery of Interest:
The case involved the Ship Breaking Corporation importing an old vessel for breaking purposes, with a duty levy on movable gears, bunkers, and stores. The appellant contested the recovery of interest amounting to Rs.58,635/-, arguing that the interest clause should only apply post the enactment of Section 18(3) of the Customs Act, 1962 on 13.7.06. The Tribunal's decision in the case of Sterlite Industries Vs. CCE supported the appellant's stance. The Tribunal concurred that since the provisional assessment was conducted before 13.7.06, the interest liability clause introduced in 2006 would not apply, entitling the appellants to benefit.

Issue 2 - Limitation:
The re-assessment stemming from an order allowing interest benefit was deemed not time-barred as it arose from a final order prior to the amendment of Section 18. Citing judgments like UoI Vs. LTC Ltd. 1993(67) ELT 3 (SC) and Patel India (Pvt.) Ltd. Vs. UoI 1983 (13) ELT 1495, the appellant argued successfully that interest charged without lawful authority falls outside the scope of Section 27 of the Customs Act. Consequently, the Tribunal held that the interest recovery was unjustified, and a refund was deemed payable, if found appropriate. The appeal was allowed, granting consequential benefits to the appellant.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Ahmedabad, under the direction of Dr. P. Babu, addressed the issues of interest recovery legality and limitation in a meticulous manner, ultimately ruling in favor of the appellant based on legal precedents and the timing of the provisional assessment vis-a-vis relevant statutory provisions.