2020 (2) TMI 770 - HC - Customs

Interpretation of Statute - imposition of interest on the difference of duty upon final assessment made by the Assessing Authority, for the period prior to the amendment in law, viz., w.e.f. 13 July 2006 - insertion of the provisions in Section 18(3) of the Customs Act, 1962, w.e.f. 13 July 2006 - HELD THAT - Prior to amendment of law, by insertion of Section 18(3) of the Act in the Customs Act, the Revenue could not demand any interest on the differential duty assessed upon final assessment where the goods have been cleared on provisional assessment under Section 18(1) of the Act. The retrospective levy is not intended and the amendment in Law is a substantive provision for making a provision for levy of interest in the present case - Therefore, for a period prior to 13.07.2006, such levy of interest cannot be imposed on the Assessee. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Interpretation of Section 18(3) of the Customs Act, 1962 regarding the imposition of interest on differential duty.
2. Applicability of interest levy on differential duty assessed upon final assessment before the amendment in law.
3. Comparison of judgments from different High Courts regarding the retrospective operation of interest levy provisions.

Interpretation of Section 18(3) of the Customs Act:
The High Court analyzed the appeal against the Customs, Excise & Service Tax Appellate Tribunal's order regarding the imposition of interest on differential duty under Section 18(3) of the Customs Act, 1962. The Tribunal's decision was based on the insertion of provisions in Section 18(3) w.e.f. 13 July 2006, allowing interest on the difference of duty upon final assessment. The High Court examined the plain reading of Section 18(3) and previous cases to determine that interest was not applicable for provisional assessments made before 13 July 2006. Various judgments were considered to conclude that interest could not be levied by the Assessing Authority for the period before the amendment in law.

Applicability of interest levy on differential duty:
The Court discussed the Gujarat High Court's judgment, emphasizing that prior to the amendment introducing Section 18(3) of the Act, no interest could be demanded on differential duty assessed upon final assessment. The retrospective levy was deemed unintended, and the amendment was seen as a substantive provision for interest levy. Therefore, the Court agreed with the Gujarat High Court's view that interest could not be imposed on the Assessee for the period before 13 July 2006. The appeals filed by the Revenue were deemed devoid of merit, and the Tribunal's order was upheld as correct.

Comparison of judgments from different High Courts:
The High Court compared judgments from different High Courts regarding the retrospective operation of interest levy provisions. It discussed the Gujarat High Court's decision, emphasizing that the liability to pay interest on the difference between finally assessed duty and provisionally assessed duty only arose after the introduction of Section 18(3) w.e.f. 13 July 2006. The Court concluded that applying such provisions retrospectively to cases of provisional assessment before the said date would amount to retrospective operation of the law. Consequently, the High Court dismissed the appeals filed by the Revenue and upheld the Tribunal's order, agreeing with the Gujarat High Court's interpretation.