2014 (1) TMI 1071 - HC - Customs

Demand of interest - Provisional assessment of goods - Held that - interest which is being demanded from the petitioner is not for the period 18 March 1996 to 7 November 1997 i.e. the period for which the goods continued to be provisionally assessed. On 7 November 1997, the adjudication order was passed confirming two demand notices dated 2 May 1997, demanding an amount of ₹ 2,08,103/. The petitioner failed to pay the same within the period of 3 months from the date of the order dated 7 November 1997. In terms of Section 28AA of the said Act as existing at the relevant time an importer (petitioner) was liable to pay interest on the confirmed duty demanded, in case, the duty demanded was not paid within 3 months from the date of order confirming the duty demand under Section 28 of the Act - interest is being demanded by the revenue not for the period when the assessments were provisional but for the period post finalization of the assessment - no reason to interfere with the demand for interest made by the revenue on the petitioner - Decided against assessee.

Summary

Issues:
Challenge to Customs Department's action seeking interest on duty payable on goods imported in 1996 provisionally assessed under Section 18 of the Customs Act, 1962.

Analysis:
The petitioner imported goods in 1996, provisionally assessed under Section 18 due to a dispute on countervailing duty. Demand notices were issued in May 1997, confirmed by an order in November 1996, leading to duty payment over years. Revenue demanded interest on delayed payments, contested by petitioner citing lack of provision for interest on provisional assessment. Revenue argued interest was for post-order period under Section 28AA, not provisional assessment period. Court found interest demand valid under Section 28AA for non-payment within 3 months of order confirming duty demand.

Significant Legal Precedent:
The court referred to Essar Steel Ltd. v. Union of India, where interest dispute arose post-provisional assessment. The Apex Court held interest could not be levied during provisional assessment period, but did not address interest post-finalization. The court distinguished Essar Steel Ltd. case as not applicable to the present facts, emphasizing interest demand post-finalization, unlike the provisional assessment period in the referenced case.

Conclusion:
The court dismissed the petition, upholding revenue's interest demand post-finalization of duty assessment under Section 28AA. The judgment clarified the distinction between interest on provisional assessment and post-finalization, aligning with statutory provisions. The decision highlighted the legal basis for interest recovery post-duty confirmation, emphasizing compliance with relevant provisions of the Customs Act, 1962.