2015 (4) TMI 730 - AT - Customs

Demand of interest - respondents admitted duty liability and contested only the interest - violation of conditions of DEEC Advance Licences - import of Polyurethane Spandex Yarn/Lykra - Notification No.204/92-Cus. dt. 19.5.92 - Held that - Apex court in the order 2008 (3) TMI 8 - SUPREME COURT has referred and considered the decision of Hon. Bombay High Court of Pratibha Syntex case; By virtue of above High Court and Supreme Court orders, the demand of interest for non-fulfilment of condition under Notfn. No.204/92 has attained finality. The respondents and LAA placing reliance of Tribunal decision in the case of FEMCO Filters (P) Ltd. Vs CC Bangalore (2006 (5) TMI 317 - CESTAT, BANGALORE) and the other decisions as referred in OIA have no relevance as these decisions are rendered prior to the Hon'ble High Court and Apex Court's order. By respectfully following the orders of Hon'ble High Court & Apex Court, the interest @ 15% demanded in the original adjudication order is restored and the impugned order to the extent of giving relief on interest is set aside. - Following decision of Pratibha Syntext Ltd. Vs UOI 2003 (7) TMI 78 - HIGH COURT OF JUDICATURE AT BOMBAY - Decided in favour of Revenue.

Summary

Issues:
- Appeal against setting aside interest demanded by the adjudicating authority under Notification No.204/92 for non-compliance with export obligation.

Analysis:
1. The respondent, a cotton garment exporter, imported Polyurethane Spandex Yarn/Lycra Spandex Yarn under DEEC Advance licenses, seeking duty-free exemption under Notification No.204/92. Due to a shortfall in the export obligation, the adjudicating authority confirmed a demand of &8377; 3,83,990/- with interest and penalty. After remand and re-computation, the duty was re-determined at &8377; 3,44,210/- with interest and penalty. The respondent contested only the interest demanded, leading to the appeal against setting aside the interest.

2. The Revenue argued that the respondent failed to comply with the notification conditions, justifying the demand for duty and interest as per the bond executed. The Commissioner (Appeals) erred in setting aside the interest, as Part-G of the notification mandates duty and interest payment for non-compliance. Case laws supported the Revenue's stance.

3. The respondent countered that the notification did not authorize interest recovery, citing specific clauses. Previous decisions were relied upon to support this argument. The Tribunal's decisions were also referenced to oppose the interest demand.

4. The Tribunal analyzed the contentions, emphasizing the respondent's breach of DEEC licensing conditions and Notification No.204/92. Upholding the Revenue's appeal, it referenced the High Court's ruling in Pratibha Syntext Ltd. case, affirming the entitlement to recover duty and interest for notification breaches. The Supreme Court's decision in Rexnord Electronics case further clarified that interest under the bond is distinct from statutory interest under the Act, supporting the interest recovery stance. The Tribunal's order restored the interest demand, aligning with the High Court and Supreme Court precedents.

This detailed analysis showcases the legal arguments, precedents, and the Tribunal's rationale in resolving the appeal concerning interest demanded for non-compliance with duty-free exemption conditions under Notification No.204/92.