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2018 (4) TMI 169 - AT - CustomsDemand of interest - whether the appellant is required to discharge interest for the period from 13.02.2007 to 23.10.2007 on the duty free imported goods to SEZ on its clearance to DTA on payment of duty of ₹ 3,20,52,673/- as assessed under section 30 of SEZ Act, 2005? Held that - on clearance/removal of the goods from the SEZ to DTA, the Applicable duties of Customs as levied under the CTA, 1975 are required to be paid and the rate of duty and tariff valuation, if any applicable would be the rate as in force on the date of its removal or payment of duty as the case may be . No where under the said provision there is any mention of the payment of interest on clearance of the goods from SEZ to DTA. Under the SEZ Act and the Rules made thereunder, there is no substantive provision for charging interest. In the event, the bill of entry is returned to the importer after assessment by the proper officer, the duty shall be required to be paid and in the event he fails to pay the duty within the specified period then interest would be leviable on the amount of duty for the delayed period - In the present case, it is not in dispute that the bill of entry was filed on 23.10.2007 and after assessment, within five days, i.e. on 24.10.2007, the duty was paid. Thus, there was no delay in discharging the duty after assessment under Section 47 of the Customs Act, 1962 - interest cannot be levied for the period 13.02.2007 to 23.10.2007. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Applicability of Customs Act provisions versus SEZ Act provisions for interest on duty-free imported goods cleared from SEZ to DTA. 2. Interpretation of SEZ Act and Rules regarding the payment of interest. 3. Relevance of Section 47 of the Customs Act, 1962 in the context of SEZ clearances. 4. Determination of the period for which interest is payable. Detailed Analysis: 1. Applicability of Customs Act provisions versus SEZ Act provisions for interest on duty-free imported goods cleared from SEZ to DTA: The appellant argued that the SEZ Act, 2005, and its rules govern the removal of goods from SEZ to DTA, not the Customs Act. Section 30 of the SEZ Act provides for the assessment of goods removed from SEZ to DTA and does not stipulate payment of interest. The appellant contended that Rule 25 of SEZ Rules, which the Department relied upon, is relevant only to developers or entrepreneurs in SEZ and not applicable to DTA units purchasing from SEZ units. The appellant also referred to Rule 47(4) of SEZ Rules, which states that the assessment of goods sold to a DTA Unit should be made per the Customs Act, implying that sales to DTA should be on payment of customs duty as determined under Section 30 of SEZ Act. 2. Interpretation of SEZ Act and Rules regarding the payment of interest: The appellant argued that there is no provision under the SEZ Act or its rules for the payment of interest on the removal of goods from SEZ to DTA. They cited several judgments, including India Carbon Ltd. vs. State of Assam and JK Synthetics Ltd. vs. Commercial Taxes Officers, to support the argument that interest, penalty, or fine is payable only if there is a substantive provision for it. The absence of such a provision in the SEZ Act or rules means that the collection of interest would be without jurisdiction. 3. Relevance of Section 47 of the Customs Act, 1962 in the context of SEZ clearances: The appellant argued that Section 47 of the Customs Act, 1962, could not be invoked for levying interest since the assessment of goods was under Section 30 of the SEZ Act, 2005, not under Section 47 of the Customs Act. They reiterated that there was no delay on their part in discharging the duty, as the applicable customs duty was paid within two days of filing the bill of entry. Therefore, even assuming Section 47 of the Customs Act is applicable, no interest is attracted as there was no delay beyond five days in discharging the duty after the assessment of the bill of entry. 4. Determination of the period for which interest is payable: The Department argued that a combined reading of Rules 34, 25, and 47(4) of SEZ Rules, 2006, and Section 30 of SEZ Act, 2005, indicates that duty is chargeable from the date of importation into SEZ if the goods were not used for authorized operations. Therefore, the goods should be treated as cleared for home consumption from the date of importation, and interest under Section 47 of the Customs Act, 1962, is required to be discharged from the date of importation into SEZ. The Department emphasized that since the imported goods were not utilized for the intended purpose, customs duty along with interest is payable from the date of importation. Judgment: The Tribunal analyzed the provisions of the SEZ Act, 2005, and the relevant rules, particularly Section 30 of the SEZ Act, which mandates the payment of applicable customs duties on the removal of goods from SEZ to DTA but does not mention the payment of interest. The Tribunal referred to the Supreme Court judgment in India Carbon Ltd., which held that interest could only be levied if there is a substantive provision for it. Since the SEZ Act and its rules do not provide for charging interest, the Tribunal found that the interest on customs duty determined and paid under Section 30 of the SEZ Act could not be demanded under Section 47 of the Customs Act, 1962. The Tribunal noted that the duty was paid within five days of assessment, and there was no delay in discharging the duty after assessment under Section 47 of the Customs Act, 1962. Thus, the Tribunal concluded that interest could not be levied for the period from 13.02.2007 to 23.10.2007, set aside the impugned order, and allowed the appeal with consequential relief as per law.
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