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2022 (8) TMI 343 - HC - CustomsLiability of interest in terms of Section 28AB and Notification No.47/1996-CUS (NT) dated 9th October 1996 - import of medical equipments - non compliance with the conditions attached in Notification No.64/88-CUS dated 1st March 1988 - prospective effect of section 28AB - wilful suppression of facts or not - HELD THAT - In the case of DIWAN CHAND SATYA PAL AGGL. IMAGING RESEARCH CENTRE VERSUS UNION OF INDIA AND OTHERS 2016 (3) TMI 989 - DELHI HIGH COURT where the facts were similar, the Delhi High Court held that when the provisions of Section 28AB did not exist in the statute at the time of import of the equipments by petitioners, provisions of Section 28AB could not have been invoked - the view expressed by the Delhi High Court is agreed upon. Moreover, Section 28AB will be applicable only where any duty has not been levied or has been short levied or erroneously refunded by reasons of collusion or any wilful mis-statement or suppression of facts by a person, who is liable to pay the duty as determined under sub-Section (2) of Section 28 - sub-section (2) of Section 28 provides that notice under sub-Section (1) should have been first issued. To demand interest under Section 28AB, in such a notice there shall be allegations of collusion or wilful mis-statement or suppression of facts by the person liable to pay duty. Only after considering the representation of the person to whom such a notice has been issued, the proper officer should have determined the amount of duty or interest from such person. Otherwise no interest under Section 28AB can be demanded. None of the pre-conditions required to demand interest under Section 28AB, viz; (a) issuance of notice under Section 28(1) containing justifiable allegations of collusion or wilful misstatement or suppression of facts by the person liable to pay duty; (b) Permit noticee to file representation in response to the notice; (c) Consider such a representation ; and (d) determine the amount of duty or interest due from such person; has been complied with. When notice under Section 28 itself has not been issued in this case, the question of determination of any duty payable under sub-Section (2) of Section 28 does not arise and consequently, any interest payable under Section 28AB also would not arise - Petition disposed off.
Issues:
1. Claim for exemption from customs duty under Notification No.64/88-CUS for imported medical equipment. 2. Seizure of imported medical equipment and initiation of inquiry under Customs Act 1962. 3. Confiscation of medical equipment, imposition of penalty, and demand for payment of customs duty. 4. Claim for payment of fine and interest almost 12 years after the initial order. 5. Dispute over the applicability of Section 28AB and Notification No.47/1996-CUS (NT) for interest payment. 6. Legal challenge regarding the demand for interest under Section 28AB. 7. Compliance with pre-conditions for demanding interest under Section 28AB. Analysis: 1. The petitioners imported medical equipment in 1989 and 1990, claiming exemption from customs duty under Notification No.64/88-CUS. The Directorate General of Health Services (DGHS) later withdrew the Customs Duty Exemption Certificate issued to the petitioners, leading to a dispute. 2. Following an inquiry, the medical equipment was seized under the Customs Act 1962, and a show cause notice was issued in 1998 for confiscation and penalty. The petitioners responded and also filed a civil suit challenging the legality of the notice, which was later rejected. 3. In 2003, the show cause notice was disposed of by ordering confiscation of the medical equipment, imposing a penalty, and directing the payment of customs duty. Despite not being given an opportunity to show cause on the payment of customs duty, the petitioners paid the amount. 4. After almost 12 years, the petitioners were asked to pay a fine and interest, which they disputed, citing no provision for interest payment at the time of import and the demand being time-barred. 5. The dispute centered around the applicability of Section 28AB and Notification No.47/1996-CUS (NT) for claiming interest. The respondents argued for interest payment under Section 28AB, while the petitioners contested the retrospective application of this provision. 6. The court referred to a similar case where it was held that Section 28AB could not be invoked if it did not exist at the time of import. The court agreed with this view and analyzed the conditions for demanding interest under Section 28AB. 7. It was concluded that the pre-conditions for demanding interest under Section 28AB were not met in this case, as the required notice under Section 28 had not been issued. Therefore, the court ruled in favor of the petitioners, making the rule absolute and disposing of the petition. Judgment Summary: The High Court of Bombay ruled in favor of the petitioners, holding that the demand for interest under Section 28AB and Notification No.47/1996-CUS (NT) was not valid as the pre-conditions for demanding interest were not met. The court highlighted that Section 28AB could not be applied retrospectively and required specific allegations and procedures to be followed before claiming interest. As the necessary steps were not taken by the authorities, the court made the rule absolute, disposing of the petition in favor of the petitioners.
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