2018 (1) TMI 1118 - HC - Customs

Demand of interest - scope of the order of the settlement commission - provisionally assessed Bills of Entry - power to issue clarifications u/s 127C(5) of the Customs Act, 1962 - revenue failed to raise the issue if Interest before the settlement commission - Held that - It is clear from the provisions of the Act, and particularly Section 127H(1) of the Customs Act, 1962 that the Settlement Commission has power only to grant immunity from penalty and prosecution for any offence under the Customs Act, 1962. It has no power to grant immunity from payment of any duty or interest. Albeit, the Settlement Commission in regard to the case before it, can exercise all the powers of the Customs Officers and that is clear from the language of Section 127F(1) - From the record, it is apparent that the Settlement Commission did not agree with this stand of the Revenue for, on 19th June, 2017, it communicated that the provisions of the Customs Act, particularly in relation to the powers of the Commission, are clear and self explanatory. The Revenue was told to take appropriate action at its end. We do not see how the Revenue, when being in receipt of such communication from the Commission, could have pursued the action in terms of the impugned letter dated 10th April, 2017. The Revenue knew where it stands and in the scheme of the law. If it has not raised the contentions in the affidavit in reply or in the communication to the Settlement Commission during the proceedings or post its final order dated 2nd March, 2017, then, in the facts and circumstances of this case, it is alone to be blamed. It must blame itself if it has not conducted the proceedings before the Commission in the manner demanded by the statute or its report or its conduct of the proceedings was deficient in any manner. In the Petition challenging the impugned communication / letter dated 10th April, 2017 at the instance of the petitioner, the Revenue cannot call upon this Court to undertake an exercise which stands concluded by the final order of the Settlement Commission dated 2nd March, 2017. More so, when the said final order is not challenged by the Revenue in substantive proceedings. Demand of interest set aside - Decided in favor of assessee.

Summary

Issues Involved:
1. Legality of the impugned letters demanding interest on provisionally assessed Bills of Entry.
2. Whether interest is payable on provisionally assessed Bills of Entry when the differential duty has been paid before final assessment.
3. Authority of the Settlement Commission to issue clarifications after passing a final order.
4. Compliance with the final order of the Settlement Commission.

Detailed Analysis:

1. Legality of the Impugned Letters:
The petitioner challenged two impugned letters dated 10.04.2017 and 30.11.2017, which demanded payment of interest on provisionally assessed Bills of Entry. The petitioner argued that these letters were illegal as they demanded interest that was not payable according to the final order of the Settlement Commission dated 02.03.2017. The court considered the facts and the procedural history, noting that the Settlement Commission's order did not explicitly state that interest was payable on the provisionally assessed Bills of Entry. The court found that the impugned letters were not justified and quashed them.

2. Interest on Provisionally Assessed Bills of Entry:
The petitioner contended that no interest was payable on the differential duty for provisionally assessed Bills of Entry when the duty was paid before final assessment. The court examined the relevant provisions of the Customs Act, 1962, particularly Section 18(3), which deals with interest on provisionally assessed duties. The court noted that the Settlement Commission had already settled the duty and interest amounts, and the Revenue had accepted these amounts without raising any discrepancies. Therefore, the court held that the demand for additional interest was not sustainable.

3. Authority of the Settlement Commission:
The petitioner sought a writ of mandamus directing that the Settlement Commission has the power to issue clarifications even after passing a final order under Section 127C(5) of the Customs Act, 1962. The court observed that the Settlement Commission had directed the Revenue to verify the interest amount and report any discrepancies. However, the Revenue did not report any discrepancies, and the Settlement Commission did not issue any further clarifications. The court concluded that the Settlement Commission's authority was appropriately exercised, and no further clarifications were necessary.

4. Compliance with the Final Order:
The petitioner argued that they had fully complied with the Settlement Commission's final order by paying the differential duty and the interest amount specified. The court reviewed the Settlement Commission's order and the subsequent actions by the petitioner and the Revenue. The court found that the petitioner had indeed complied with the order, and the Revenue's demand for additional interest was not supported by the Settlement Commission's final order. The court emphasized that the final order of the Settlement Commission was binding and had not been challenged by the Revenue.

Conclusion:
The court quashed the impugned letters dated 10.04.2017 and 30.11.2017, ruling that the demand for additional interest on provisionally assessed Bills of Entry was not justified. The court held that the petitioner had complied with the Settlement Commission's final order, and no further interest was payable. The court directed the Revenue not to act in furtherance of the impugned letters and made the rule absolute, with no order as to costs.