2007 (12) TMI 43 - AT - Customs

Any levy (interest) incidental to finalisation of a provisional event will be governed by the law which was in force at the time of the provisional event - provisional assessments were made prior to 13-7-2006 and the same were finalized after the said date Section 18(3) for levying interest cannot be given retrospective effect prior to date of its insertion i.e. 13-7-06 interest not leviable u/r 18(3) as provisional assessment was made before its insertion

Summary

Issues:
Levy of interest on differential duty paid upon finalization of provisional assessment for imported goods made before the insertion of sub-section (3) in section 18 of the Customs Act.

Analysis:
The appellants, who are manufacturers of copper anode, imported raw material (copper concentrate) for their product and cleared it on provisional duty assessment before the insertion of sub-section (3) in section 18 of the Customs Act. The finalization of these provisional assessments occurred after the said date, and additional duty amounts were paid within 5 days from the final assessments. The original authority demanded interest on duty under Section 18(3) of the Customs Act for the period from the provisional assessment to the payment of differential duty. The Commissioner (Appeals) upheld this decision, leading to the appeals by the assessee.

Upon reviewing the case, it was noted that Section 18(3) of the Customs Act, which deals with interest on differential duty upon finalization of provisional assessment for imported goods, came into force after the provisional assessments in the present cases were made. The Revenue argued that Section 28AB of the Act, which was in force during the provisional assessments, allowed for interest on differential duty. However, it was clarified that the substantive provision for interest on differential duty is Section 18(3) of the Act, and without retrospective effect, it cannot cover assessments made before its enactment. The case law of India Carbon Ltd. v. State of Assam was referenced to support this interpretation. The Board's circular also emphasized that interest could only be charged where provisional assessments were made after a specific date, aligning with the principle applied in this case.

Since all provisional assessments were made before the enactment of Section 18(3) and finalized afterward, the decision to levy interest on the differential duty paid by the appellants was deemed incorrect. Any levy related to the finalization of a provisional event should be governed by the law in force at the time of the provisional event. Therefore, no interest could be levied under Section 18(3) of the Customs Act on the differential duty paid for assessments made before the provision came into effect. Consequently, the impugned orders were set aside, and the appeals by the appellants were allowed.

In conclusion, the judgment clarified the application of interest provisions on differential duty paid upon finalization of provisional assessments made before the enactment of relevant sections in the Customs Act. The decision highlighted the importance of aligning the law in force at the time of the provisional event with any subsequent levies or charges, emphasizing the principle of non-retrospective application of substantive provisions.