2015 (12) TMI 1094 - AT - Customs

Liability to pay interest on the differential duty of the customs - Delay of 103 days in making duty deposit - no show-cause notice issued by the Revenue in terms of Section 28 - Difference of opinion. Whether the appeal filed by the Revenue has to be allowed, as held by the Member (Technical) or the same has to be rejected as held by the Member (Judicial).

Summary

Issues Involved:

1. Liability to pay interest on the differential duty of customs.
2. Imposition of penalty for delayed payment of differential duty.

Detailed Analysis:

1. Liability to Pay Interest on the Differential Duty of Customs:

The primary issue revolves around the liability of the respondent to pay interest on the differential duty of customs, which was paid 103 days after the due date. The Commissioner of Customs, Visakhapatnam, appealed against the Commissioner (Appeals) order that reversed the original adjudicating authority's decision, which had confirmed the liability of interest amounting to Rs. 6,96,558/- and imposed a penalty of Rs. 10,000/-.

The facts are clear: the respondents filed a bill of entry on 20.11.2000, and the vessel was granted entry on 21.11.2000. The duty was revised on the same date through Notification No. 142/2000-Cus and 144/2000-Cus, increasing the duty rate from 35% to 65%. The relevant date for determining the rate of duty, as per Section 15 of the Customs Act, was 21.11.2000. The respondents initially paid duty based on the rate prevalent on 20.11.2000, leading to a reassessment and a demand for differential duty.

The respondents argued that under Section 28AA of the Customs Act, they had three months to pay the differential duty, and interest liability would only accrue after this period. However, the Tribunal concluded that the respondents were liable to pay interest for the delay in paying the differential duty, as per the reassessment under Section 17 of the Customs Act. The original adjudicating authority's reference to Section 47(2) and Section 28 of the Customs Act was upheld, confirming the interest liability.

2. Imposition of Penalty for Delayed Payment of Differential Duty:

The original adjudicating authority imposed a penalty of Rs. 10,000/- under Section 117 of the Customs Act for the delay in payment of differential duty and non-payment of interest. The Tribunal supported this imposition, citing the CESTAT Delhi decision in Ajanta Tubes Ltd. Vs. CCE, Meerut-II, which established that statutory interest is automatically payable for delays in duty payment. The Tribunal emphasized that the respondents deliberately delayed the payment of differential duty, making them liable for interest and the penalty.

Separate Judgment by Member (Judicial):

Member (Judicial) disagreed with the conclusion of Member (Technical) and provided a detailed separate order. The key points highlighted were:

- The respondents filed the bill of entry on 20.11.2000, paid the assessed duty on the same day, and the goods were cleared for home consumption on 23.11.2000.
- The effective rate of duty was increased on 21.11.2000, but this was not initially noticed by the customs officers.
- The respondents were directed to pay the differential duty on 24.11.2000, which they eventually paid on 10.3.2001.

The Member (Judicial) argued that Section 47(2) of the Customs Act, which requires payment of interest if duty is not paid within two days, was not applicable as the respondents had paid the assessed duty within the stipulated time. The reassessment and subsequent demand for differential duty did not fall under the purview of Section 47(2). Instead, any short levy or short payment should be addressed under Section 28 of the Act, which was not invoked in this case.

The Commissioner (Appeals) had accepted the respondents' plea, stating that the provisions of Section 47(2) could not be invoked post-clearance of goods and that the reassessment under Section 17 was not applicable after the goods were cleared. The demand for differential duty and interest should have been raised under Section 28, which was not done.

The Member (Judicial) found no infirmity in the Commissioner (Appeals) reasoning and concluded that the interest and penalty imposed were not justified. The appeal by the Revenue was rejected.

Difference of Opinion:

The final judgment noted a difference of opinion between the Member (Technical) and Member (Judicial) on whether the appeal filed by the Revenue should be allowed or rejected.