2013 (2) TMI 199 - HC - Customs

Direction to pay interest u/s 28 AB on the full amount of the duty by Settlement Commission - Held that - Under section 127B, the jurisdiction of the Settlement Commission can be invoked only after the applicant has filed a bill of entry or a shipping bill in support of the import or the export goods, as the case may be, and where in relation to such bill of entry a show cause notice is issued by the appropriate officer. Admittedly, the application filed by the Petitioner to the Settlement Commission was after the amended provisions of Section 127H were brought into force with effect from 1 July 2007. The Settlement Commission has no jurisdiction to grant an immunity or a waiver from the statutory liability to pay interest. The liability to pay interest on delayed payment of duty under section 28AB is mandatory where any duty has not been levied or paid or has been short levied or short paid or erroneously refunded - no merit in the petition and the order of the Settlement Commission does not suffer from any error - against assessee.

Summary

Issues:
Challenge to Settlement Commission's order directing payment of interest under section 28 AB of the Customs Act, 1962.

Analysis:
1. The Petitioner challenged an order of the Settlement Commission directing payment of interest on the full duty amount. The Petitioner's initial application was rejected for being premature. Subsequently, a notice to show cause was issued, leading to a valid application before the Settlement Commission. The Commission ordered payment of duty with immunity from penalty and prosecution. A writ petition by the Union of India directed the Commission to reconsider interest, which was then ordered to be paid under section 28AB.

2. The amendment to Section 127H of the Customs Act in 2007 removed the Commission's power to grant immunity from interest payment. The Petitioner argued events occurred before the amendment, but the Court held it irrelevant. The Settlement Commission's jurisdiction can only be invoked after a bill of entry and a show cause notice, as per Section 127B. Since the Petitioner's application was after the amendment, the Commission lacked jurisdiction to waive interest payment.

3. The Supreme Court judgment cited by the Petitioner did not support their claim. The Court clarified that the amended Section 127H applied once a show cause notice was issued. Therefore, the Commission correctly ordered interest payment under the amended provisions, as it lacked authority to grant immunity from interest liability.

4. The Court found no merit in the Petitioner's arguments, upholding the Settlement Commission's order as error-free. The petition was dismissed without costs, but compliance time was extended by four weeks upon the Petitioner's counsel's request.