2016 (11) TMI 1139 - AT - Customs

Demand of interest - N/N. 110/95 dt. 05.06.1995 - EPCG Scheme - non-fulfilment of export obligation within the stipulated time - Held that - The learned Commissioner (Appeals) held that interest liability is unsustainable as time-barred, but the respondent has not cared to comply with the statutory obligation. The interest liability accrues from the date of duty liability. I also find from the decision relied by Revenue in the grounds of appeal in the case of NCS Sugars Ltd. Vs CC Visakhapatnam 2010 (10) TMI 301 - CESTAT, BANGALORE holding that duty demanded cannot be claimed time-barred since the appellant had executed a bond undertaking to meet such liability in case of its failure to fulfill the conditions of the Notification No.43/02-Cus. dt.10.04.2002 therein - appeal allowed - decided in favor of Revenue.

Summary

Issues:
- Appeal against orders confirming demand of interest in terms of Notification No.110/95 of the Customs Act, 1962.
- Importer's failure to fulfill export obligation under EPCG Scheme.
- Applicability of interest clause and time-barred nature of the demand.
- Non-appearance of the respondent during proceedings.

Analysis:

1. The appeal was filed by Revenue against the orders confirming the demand of interest in accordance with Notification No.110/95 of the Customs Act, 1962. The respondent, an importer, had availed the concessional rate of duty under the EPCG Scheme with the condition to fulfill the export obligation prescribed by the Licensing Authority. However, the importer failed to meet this obligation within the specified time frame, leading to the demand of interest amounting to &8377; 5,76,718. The Revenue argued that the importer neither cooperated with the proceedings nor attended the personal hearing, resulting in the encashment of the Bank Guarantee submitted by them towards the liability.

2. The Revenue contended that the appellate authority's observation of the demand of interest being time-barred was erroneous. They highlighted that the issue had been raised back in 1998 through a letter to the importer, followed by a show cause cum demand notice in 2001. The Revenue emphasized that there was no time limit prescribed for the demand of interest, and the bond executed by the importer was not canceled. Additionally, they pointed out the amendment in the notification, stating the importer's liability to pay the proportionate duty amount along with interest for the unfulfilled export obligation. The Revenue argued that the interest clause was applicable in this case, considering the period of dispute fell within the introduction of the Finance Bill 2003.

3. Despite several notices, the respondent did not appear during the proceedings, as noted in the records. The Tribunal proceeded to dispose of the appeal on its merits due to the respondent's consistent non-appearance.

4. Upon hearing the Revenue's arguments and reviewing the records, the Tribunal found merit in the Revenue's submissions. The Tribunal disagreed with the appellate authority's decision that the interest liability was time-barred. Citing a similar case, the Tribunal emphasized that the interest liability accrues from the date of duty liability and cannot be claimed time-barred if the statutory obligations are not met. Consequently, the Tribunal set aside the appellate authority's order and allowed the Revenue's appeal.

5. In the final judgment, delivered on 30.08.2016, the Tribunal upheld the Revenue's appeal, thereby confirming the demand of interest in line with Notification No.110/95 of the Customs Act, 1962.