2019 (2) TMI 1503 - AT - Customs

Rate of Interest - appellants have challenged the order of Commissioner stating that interest should be charged from them @ 15% instead of 24% - Import of capital goods under EPCG Scheme - failure to fulfill the export obligations - recovery of the of the duty saved along with the interest due - release of attached goods - Held that - Issue is squarely covered by the decision of Hon ble Delhi High Court in case of Rai Agro Industries Ltd, 2006 (2) TMI 191 - HIGH COURT OF DELHI , where it was held that Claim for interest, it is fairly settled, can arise either on the basis of a statute or a contract or trade usage. In the instant case, the claim for payment of duty is supported not only by the statutory provisions of Sections 28AA and 28AB, but also the terms of the statutory policy and the legal undertaking provided, by the petitioner in accordance with the same. In terms of DGFT policy circular No 9/2003 dated 22.05.2003, for licenses issued prior to the date of Circular, interest rate shall be 24% till the date of Circular and 15% from the date of Circular. Commissioner has in his order given the benefit of reduced interest rate from 13.05.2002, which is much prior to the date of issue of this circular. Hence order of Commissioner cannot be faulted on this account. In the present case the demand for interest was confirmed along with the demand for duty and hence demand of interest was made under the Customs Act, 1962. Further from the impugned order, it is quite evident that interest has to be calculated from the date of importation and not the date of issue of license. Since Commissioner has himself allowed for computation of interest from the date of importation, as claimed by the appellants we do not reason why the said issue has been agitated again in the appeal - appeal dismissed.

Summary

Issues:
1. Challenge against the order of Commissioner regarding the interest rate charged.
2. Dispute over the computation of interest and request for installment payment.
3. Interpretation of DGFT policy circular reducing interest rate from 24% to 15%.
4. Appellant's argument for interest to be charged from the date of importation.

Analysis:
1. The appeal challenged the Commissioner's order directing the payment of interest at 24% per annum for a specific period and 15% thereafter. The appellants imported capital goods under the EPCG scheme and executed a bond to pay interest on the duty saved if export obligations were not met. The tribunal confirmed the duty recovery along with interest, leading to the appellants disputing the interest rate and requesting installment payments.

2. The appellants disputed the computation of interest, arguing for a lower rate of 15% instead of 24%. They also sought permission for installment payment. The High Court stayed auction proceedings and directed the department to decide on the matter. The Commissioner's order followed, leading the appellants to appeal before the tribunal.

3. The appellants relied on a DGFT policy circular reducing the interest rate to 15%. However, the tribunal noted that the circular did not retrospectively reduce the interest rate from 24% to 15%. The reduced rate applied only from the date of the circular, not affecting cases prior to its issuance. The Commissioner correctly applied the interest rate from the date specified in the circular, which was after the period in question.

4. The tribunal dismissed the appeal, emphasizing that interest had to be calculated from the date of importation, not the date of the license issuance. The Commissioner's order allowed interest computation from the importation date, aligning with the appellants' claim. As the demand for interest was confirmed along with the duty, the issue of interest calculation from the importation date was deemed settled and not a valid ground for appeal.

In conclusion, the tribunal upheld the Commissioner's order, dismissing the appeal and affirming the interest calculation from the date of importation as per the Customs Act, 1962.