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2016 (9) TMI 220 - AT - CustomsDemand of interest - Section 28 AA of the Customs Act, 1962 manufacture of railway wagons and parts thereof import of goods falling under CTH 8607 of the Customs Tariff from USA payment of duty made under section 28 of the finance act, 1962 Held that - once the appellant has paid the amount under section 28, the payment of interest is automatic. Section 28AA of the Customs Act, 1962 mandates the appellant to pay interest. Period for which interest required to be paid interest payable from the date when DRI pointed out the applicable rate of interest or from the first date of the month succeeding the month in which duty was expected to be paid by the appellant? Held that - Section 28AA (2) of the Customs Act, 1962 mandates the appellant to pay interest from the first date of the month succeeding the month in which duty was expected to be paid by the appellant. This is held in view of the statutory mandate provided under Section 28 AA(2) of the Customs Act, 1962, substituted w.e.f. 18.04.2011 under Section 43 of the Finance Act, 2011 appeal rejected decided against appellant.
Issues:
1. Applicability of interest under Section 28AA of the Customs Act, 1962 on the appellant. Analysis: The appellant filed an appeal against an Order-in-Original confirming a demand of differential duty and interest under Section 28 of the Customs Act, 1962. The appellant, a Private Ltd. Company engaged in manufacturing Railway Wagons and Parts, imported goods from the USA and paid duty as per the EDI system of Kolkata Customs. The issue arose when the Directorate of Revenue Intelligence (DRI) pointed out that the Central Value Duty (CVD) rate was higher than what was assessed by the EDI system. The appellant paid the differential duty but contested the interest demanded, claiming it was not payable. The Revenue argued that once differential duty is paid, interest is automatic under Section 11AA of the Customs Act, 1962. The main issue in this appeal was whether interest under Section 28AA of the Customs Act, 1962 was payable by the appellant. Section 28AA mandates interest payment from the first day of the month following when duty ought to have been paid. The EDI system calculated duty rates, and the appellant argued that the lower rate assessed by the system should absolve them from paying interest. However, the Tribunal held that the appellant was aware of the correct duty rate and should have paid accordingly. The Tribunal emphasized that the procedural machinery of the EDI system being outdated does not exempt the appellant from paying interest as per statutory provisions. The Tribunal rejected the appellant's argument that interest should only be payable from the date when the DRI pointed out the correct duty rate, stating that the appellant was obligated to pay interest from the expected duty payment date. In conclusion, the Tribunal upheld the demand for interest under Section 28AA of the Customs Act, 1962, from the date duty was expected to be paid by the appellant. The appeal filed by the appellant was rejected, emphasizing compliance with statutory mandates regarding interest payment on delayed duty.
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