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2019 (8) TMI 1344 - HC - CustomsProject import - Recovery of Interest on delayed payment of duty - section 28AA of Customs Duty - HELD THAT - The assessee's liability to pay interest arises under section 28AA on account of nonpayment of duty determined by the authorities within three months of such determination. The order in original determining such duty in our case was passed after the introduction of Section 28AA in the Act. The assessee was, in the premises, bound to pay the duty within three months of such determination and in the absence of such payment, liable to pay interest immediately after expiry of three months and till payment of such duty. It is also pertinent to note that the order in original, assessing the customs duty payable, itself provided for payment of interest under Section 28AA of the Customs Act if the duty assessed was not paid within three months. The Union of India never challenged the order in original or any of its provisions before any statutory appellate authority and accepted the order. That is one more reason why it ought not to be permitted to now challenge the stipulation of interest. Petition dismissed.
Issues: Challenge to order claiming differential duty and interest, applicability of interest on delayed payment of duty, interpretation of Section 28AA of the Customs Act, relevance of prior court decisions on interest recovery, acceptance of order in original by the Union of India, significance of non-appeal by the Department.
Analysis: 1. Challenge to Order and Interest Claim: The Writ Petition filed by the Union of India challenges an order claiming differential duty and interest issued by the Commissioner of Customs. The Union has paid the differential duty but disputes the recovery of interest. The main contention is that there was no provision for claiming interest on delayed payment of duty at the time of import in 1986-1987 under the Project Import Regulations. The petitioner argues that since duty was paid without any provision for interest, the Commissioner cannot charge interest on delayed payment. 2. Interpretation of Section 28AA: The petitioner argues that Section 28AA of the Customs Act, providing for interest on delayed payment of duty, was introduced in 1995 and cannot be applied retrospectively to imports made prior to its enactment. The petitioner relies on court decisions and tribunal orders to support the claim that interest cannot be claimed for imports made before the introduction of Section 28AA. However, the Court notes that the duty determined by the Deputy Commissioner was paid after the stipulated period, making the petitioner liable to pay interest under Section 28AA from the date of determination till the actual payment date. 3. Relevance of Prior Court Decisions: The Court distinguishes the case of Dev Ashish, which dealt with penal interest provisions under a different Act, from the current case involving interest under Section 28AA of the Customs Act. The Court clarifies that the liability to pay interest arises from the date of determination of duty and expiry of the three-month period for payment, as per Section 28AA. Additionally, the Court discusses the Supreme Court's ruling on penalty provisions, emphasizing that interest under Section 28AA is prospective and applicable to cases where duty is not paid within the stipulated time. 4. Acceptance of Order in Original: The Court highlights that the order in original assessing customs duty provided for payment of interest under Section 28AA if duty was not paid within three months. The Union of India did not challenge this order before any appellate authority, implying acceptance of its provisions. Therefore, the Court finds it unjust for the Union to contest the interest stipulation at this stage. 5. Significance of Non-Appeal by Department: The Court addresses the non-appeal by the Department in a similar case, clarifying that non-filing of an appeal does not indicate acceptance of the decision. This further weakens the petitioner's contention regarding the applicability of interest on delayed payment of duty. In conclusion, the Court dismisses the Writ Petition, ruling that there is no merit in challenging the recovery of interest under Section 28AA of the Customs Act, considering the circumstances of the case and the legal provisions involved.
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