2008 (8) TMI 83 - AT - Customs

Earlier, duty was paid claiming project import benefits was refunded later on finalization of assessment - Claim for interest on warehoused gods from date of filling Ex-bond B/E to date of finalization of provisional assessment merely because project import benefits were claimed at time of payment of duty, it cannot be said that duty was not paid at that time - refund claims for interest is accepted holding that interest is chargeable up to date of payment of duty

Summary

Issues Involved:
1. Refund claims for interest amount.
2. Applicability of interest under Section 61(2)(ii) of the Customs Act, 1962.
3. Determination of the period for which interest is payable.
4. Interpretation of statutory provisions and relevant case laws.

Detailed Analysis:

1. Refund Claims for Interest Amount:
The Appellant, M/s. Bharat Electricals Ltd., filed refund claims for interest amounts of Rs. 73,53,413/- and Rs. 48,57,048/- which were rejected. The rejection was based on the interpretation that interest under Section 61(2)(ii) of the Customs Act, 1962, is chargeable up to the date of finalization of assessment (14-1-2005) rather than the date of payment of duty (29-9-2004).

2. Applicability of Interest Under Section 61(2)(ii) of the Customs Act, 1962:
The primary issue was whether interest on the amount of duty payable on warehoused goods is chargeable up to the date of payment of duty or up to the date of finalization of assessment. The provisions of Section 61(2)(ii) state that interest is payable "till the date of payment of duty on the warehoused goods."

3. Determination of the Period for Which Interest is Payable:
In Appeal No. C/143/07/MUM, the goods were warehoused on 23-4-2003, and duty was paid on 29-9-2004. The interest was calculated from 22-7-2003 to 29-9-2004. Similarly, in Appeal No. C/144/07-MUM, the goods were warehoused on 1-9-2003, and duty was paid on 29-9-2004. The interest was calculated from 30-11-2003 to 29-9-2004. The Appellant argued that interest should not be charged beyond the date of duty payment, i.e., 29-9-2004.

4. Interpretation of Statutory Provisions and Relevant Case Laws:
The Tribunal examined the statutory provisions and relevant case laws. The Appellant contended that the amendment to Section 61(2)(ii) by the Finance Act, 1994, changed the liability to interest from "till the date of clearance" to "till the date of payment of duty." The Tribunal agreed with the Appellant, stating that the provisions do not distinguish between "advance duty" or "provisional duty" and that interest is payable only up to the date of duty payment.

The Tribunal noted that the judgments in Kesoram Rayon and Siganporia Bros. were not applicable as they pertained to the period before the amendment. The Tribunal also cited other relevant case laws such as Bangalore Wire Rod Mills, M.J. Exports Pvt. Ltd., and Biecco Lawrie Ltd., which supported the Appellant's interpretation.

Conclusion:
The Tribunal concluded that interest on the duty amount is chargeable only up to the date of payment of duty, i.e., 29-9-2004, and not up to the date of final assessment or clearance of goods. Consequently, the impugned orders passed by the Commissioner of Customs (Appeals) were set aside, and the appeals filed by the Appellant were allowed with consequential relief as per law.