2016 (3) TMI 989 - HC - Customs

Applicability of Section 114A and 28AB of the Customs Act, 1962 to the imports - Medical equipment imported for use in the diagnostic centre cleared without payment of duty - Availed exemption from payment of customs duty under Customs Notification No.64/88 dated 1st March, 1988 on the strength of certificate issued by Director General of Health Services - Held that - on the date of import of the seven consignments by the Petitioner, i.e. March 1990 to December 1992, neither Section 28AB of the Act nor Section 114A of the Act existed in the statute. It is not the case of the Department that these provisions, introduced with effect from 28th September 1996, had retrospective operation. Therefore, it is clear that the said two provisions could not be applied to the Petitioner for the non-compliance with the conditions attached to under Notification No. 64/88. In law there is no denial by the Department that the said two provisions did not exist in the statute at the time of import of the seven equipments by the Petitioner. In other words, the Department is unable to deny that neither Section 114A nor Section 28AB could have been invoked as far as the SCN issued to the Petitioner was concerned. Therefore, in the interests of justice recovery of penal interest under Section 28AB as well as the penalty under Section 114A of the Act by the department is not sustainable. Decided in favour of petitioner

Summary

Issues:
Challenge to a notice issued by the Assistant Commissioner of Customs demanding payment of duty, redemption fine, interest, and penalty. Applicability of Sections 28AB and 114A of the Customs Act, 1962 to the petitioner's case. Interpretation of previous judgments and orders by the Customs Excise & Gold (Control) Appellate Tribunal (CEGAT), Supreme Court, and High Court.

Analysis:
1. The petitioner, a diagnostic center, imported medical equipment between 1990-1992 under an exemption from customs duty. A Show Cause Notice (SCN) in 1998 challenged this exemption, proposing recovery of duty, penalty, and interest under Sections 112, 114A, and 28AB of the Customs Act, 1962.

2. The Commissioner of Customs adjudicated in 1999, imposing duty, fine, penalty, and interest on the petitioner. The petitioner appealed to the Customs Excise & Gold (Control) Appellate Tribunal (CEGAT), which set aside the penalty and interest due to the non-applicability of Sections 28AB and 114A to the imports made before their enactment.

3. The Supreme Court, in a related case, referred to a judgment without considering the applicability of Sections 114A and 28AB. The petitioner argued against the imposition of penalty and interest under these sections, which were not challenged by the Revenue Department.

4. The High Court noted that Sections 28AB and 114A did not exist when the petitioner imported the equipment, and their retrospective application was not intended. The Court found the notices demanding penalty and interest unsustainable in law, quashing them and relieving the petitioner from furnishing security.

5. The Court declared the impugned notices void, directing the refund of any amounts paid towards penalty and interest. The judgment emphasized the legal position that the provisions in question could not be invoked for imports made before their enactment, thereby ruling in favor of the petitioner.