2019 (9) TMI 1430 - Commission - Customs

Admissibility of settlement application - Section 127B of the Customs Act, 1962 - non-fulfilment of Export Obligation - goods imported under EPCG scheme - HELD THAT - The Bench finds that the contention that the accepted amount of ₹ 17,63,545/- includes duty and interest is contrary to the facts as disclosed in their application. Further, the Applicant has also submitted a working of their duty liability at page - 190 of the Application Paper Book, wherein they have stated that After paying ₹ 17,63,545.00 (i.e. 50% of the proportionate duty payable), which clearly indicates that ₹ 17,63,545/- was paid as duty. Further, at sub-para 12.1 (page 9-10 of the Application) under Brief Facts , it is stated that they have deposited ₹ 5 Lakh vide Challan No. 3210 dated 29-10-2018 towards duty during investigation and ₹ 12,63,545/- vide Challan No. 213 dated 19-8-2019 towards the balance amount. Scrutiny of the said challans (at page 35 36 of the Paper Book) also reveals that the payments were towards duty and not interest. Thus, the contention of the applicant that the accepted amount of ₹ 17,63,545/- was inclusive of interest is not factually correct. The Bench finds that no interest has been paid on the accepted duty amount and the deficiency subsists. Under normal situation, non payment of interest would have attracted the bar of admissibility under Section 127B of the Act - It is seen that while the legal provision under first proviso to Section 127B refers to ..interest due under Section 28AA ; the interest in the impugned SCN has been demanded under provisions of the Notification No. 97/2004-Cus., dated 17-9-2004 (though erroneously typed as 2007 in the SCN) and the Bond dated 22-5-2007 - Thus, strictly legally speaking, since the interest in the instant case has not been demanded under Section 28AA, the bar of the clause (c) of the first proviso to Section 127B of the Act is technically not applicable. Therefore, the application survives, though the applicant had not paid the interest due on accepted duty liability. Application allowed.

Summary

Issues:
Admissibility of settlement application under Section 127B of the Customs Act, 1962 by M/s. Harisons Industries for dispute arising from show cause notice regarding non-fulfilment of Export Obligation and conditions under EPCG scheme.

Analysis:
The Settlement Commission received an application from M/s. Harisons Industries seeking settlement of a dispute arising from a show cause notice for non-fulfilment of Export Obligation under the EPCG scheme. The application was scrutinized and found deficient in filing requirements and interest payment on accepted duty liability. The applicant rectified one deficiency by submitting the required sets of the application but claimed that the accepted amount included interest, contrary to the application's content. The applicant's request for a hearing extension was denied due to legal timelines for admissibility decisions.

The Settlement Commission found that the accepted amount did not include interest as claimed by the applicant. The applicant's own application and supporting documents indicated that the amount paid was towards duty, not interest. Despite the non-payment of interest, a closer examination of the legal provisions revealed that the interest demanded in the show cause notice was not under Section 28AA as required by the first proviso to Section 127B. Therefore, the technical bar of non-payment of interest under the Act was not applicable, allowing the application to proceed.

In conclusion, the Settlement Commission allowed the application to be proceeded with, considering the technical interpretation of the legal provisions regarding interest payment requirements under Section 127B of the Customs Act, 1962.