2019 (3) TMI 1150 - AT - Customs

Re-assessment under the EPCG scheme - rejection of refund claim - relevant rate of duty - effect of reduction in the rate of duty - N/N. 97/2004-Cus dated 17th September 2004 - Held that - Though the present dispute is not of that genre, the denial of lower of the rates between date of shipment and date of arrival has been subjected to judicial resolution on many occasions. It is now settled in law that chargeability to duty on import crystallises on the entry of goods into the territorial waters of India and that the rate of duty that conforms to the prescription in section 15 of Customs Act, 1962 applies. There is no ambiguity that section 15 of Customs Act, 1962 prescribes that rate prevailing on the date of presentation of the bill of entry should be applied. On the facts and time-lines there is no dispute. The bills of entry for the clearance of the impugned goods were presented much before notification no. 64/2008-Cus dated 9th May, 2008 was issued. Therefore, the rate of duty applicable under the earlier notification would have to be adopted. The rate prescribed in the authorization produced by the appellant at the time of import would well have reflected the new Policy and if the Policy was to be arbiter of the rate of duty, there would be no need to take recourse to section 25 of Customs Act, 1962 which is the foundation of the claim of the appellant. The Policy is given effect only upon the issue of corresponding notification under the enabling statute, viz., section 25 of Customs Act, 1962. On the relevant date, the duty that was to be levied was 5% and not 3%. Appeal dismissed - decided against appellant.

Summary

Issues:
Import of textile machinery under EPCG scheme, benefit of notification no. 97/2004-Cus, denial of refund claim, reassessment under EPCG scheme, lower rate of duty application, statutory prescription of Customs Act, application of promissory estoppel, chargeability to duty on import, rate of duty determination, Policy vs. Customs Act application.

Analysis:
The dispute revolves around the import of textile machinery under the Export Promotion Capital Goods Scheme (EPCG) against bills of entry benefiting from notification no. 97/2004-Cus exempting duty beyond 5%. The issue arose when the import duty was lowered to 3% after the goods were assessed and cleared, leading to a claim for refund of excess duty. The original authority rejected the refund claim citing failure to challenge the assessment itself as a preclusion to entitlement for refund.

The first appellate authority set aside the assessment and ordered re-assessment under the EPCG scheme while also setting aside the rejection of the refund claim. However, in the reassessment proceedings, the benefit of the lower rate of duty was denied on the grounds that the revised exemption was not operational at the time of assessment. The dispute escalated to the Tribunal after the first appellate authority upheld the denial of the lower duty rate benefit.

The appellant contended that the license had been revised to entitle the lower rate of duty, which should have been applied at the time of assessment. Reference was made to relevant legal precedents to support the argument. On the other hand, the Authorized Representative relied on a different Tribunal decision to argue against the appellant's claim.

The Tribunal analyzed the statutory prescription under the Customs Act, emphasizing that the rate of duty applicable is determined as of the date of presentation of the bill of entry. It was clarified that the duty applicable should conform to the Customs Act's section 15, which mandates the prevailing rate on the bill of entry presentation date. The Tribunal dismissed the appeal, concluding that the duty rate prevailing at the time of bill of entry presentation (5%) should apply, not the later reduced rate (3%) under the Policy.

The judgment highlights the distinction between the Policy and the Customs Act, emphasizing that the Policy's effect is contingent upon corresponding notifications under the Customs Act. The Tribunal's decision rested on the clear application of section 25 of the Customs Act, which determined the duty rate applicable at the time of bill of entry presentation. Consequently, the appeal was dismissed due to the lack of merit in seeking the lower duty rate retrospectively.

In conclusion, the Tribunal's decision underscores the importance of adhering to statutory provisions, particularly regarding the determination of duty rates on imports under the Customs Act. The judgment clarifies the precedence of the Customs Act over policy considerations in duty rate application, ultimately leading to the dismissal of the appeal.