2014 (8) TMI 880 - AT - Customs

Provisional assessment - Finalization attained later on - Interest demand - Whether interest shall be levied on the differential duty in respect of provisional assessments made before 13.07.2006 but finalised on 18.07.2011. - Held that - There is no dispute of the fact about the import and the date of provisional assessment as well as date of finalisation thereof. Provisional assessments were completed on 18.02.2005 and finalisation thereof was made on 18.07.2011. Sub section 18(3) of Customs of the Act authorising recovery of interest came to the statute book on 13.07.2006. Rule of interpretation guides to hold that when subsection (3) was not in force on the date of filing of Bills of entry nor existing even on the date of finalisation of provisional assessments, but was enacted on 13.07.06, that shall have no application to the case of the appellant for the reason that it is, by now, well settled that the statutory amendments, either creating fresh liability hitherto not existing or extinguishing accrued rights would be considered prospective unless statute either specifically or by necessary implication gives such provision retrospective effect. Hon ble High Court of Gujarat in the case of CC(preventive) v. Goyal Traders reported in 2011 (8) TMI 720 - Gujarat High Court held that liability to pay interest created by statute shall have prospective application for which Revenue s contentions are devoid of merit and the impugned order has no basis - Decided in favour of assessee.

Issues Involved:
1. Applicability of interest on differential duty under Section 18(3) of the Customs Act, 1962, for provisional assessments made before 13.07.2006 but finalized after that date.
2. Interpretation of statutory provisions regarding retrospective application of interest levy.

Detailed Analysis:

Issue 1: Applicability of Interest on Differential Duty
The appellant challenged the order of the learned Commissioner (Appeal) that held interest on the differential duty levied upon finalization of provisional assessment recoverable under Section 18(3) of the Customs Act, 1962. The appellant contended that the provisions of Section 18(3) should not apply to provisional assessments made before 13.07.2006, even if finalized after that date.

The Tribunal noted that the appellant imported alcohol beverages between April 2002 and May 2004, which were subjected to provisional assessment. The final assessment, completed on 18.07.2011, resulted in an enhanced value and additional duty liability, which the appellant did not dispute. The sole question was whether interest on the differential duty was applicable for provisional assessments made before 13.07.2006 but finalized on 18.07.2011.

Issue 2: Interpretation of Statutory Provisions
The appellant argued that interest under Section 28AA could not be levied on provisionally assessed bills of entry filed before 13.07.2006, as the provisions of Section 18(3) were inserted by the Taxation Laws (Amendment) Act, 2006, and were not intended to have retrospective effect. The appellant cited several judgments, including Binani Industries Ltd. v. CCT and Rochiram & Sons v. Union of India, to support the principle that statutes are generally prospective unless expressly stated otherwise.

The Revenue contended that the assessment included provisional assessment and re-assessment was merely a confirmation of provisional assessment with the levy of differential duty. They argued that the interest was applicable since the final assessment was completed after 13.07.2006, and relied on the judgment in Binani Industries Ltd. v. CCT for functional interpretation.

The Tribunal examined the statutory provisions and noted that Section 18(3) of the Customs Act, authorizing recovery of interest, came into effect on 13.07.2006. The Tribunal emphasized that fiscal statutes creating liability are strictly construed and that Section 18(3) could not govern cases where bills of entry were filed and provisional assessments completed before its enactment.

The Tribunal referred to the principle that statutes are prima facie prospective unless expressly or by necessary implication made retrospective. It cited the case of Zile Singh v. State of Haryana, which held that new laws should regulate future actions, not past ones. The Tribunal also discussed the conditions under which a statute might be considered retrospective, emphasizing that the absence of express words or necessary implication in Section 18(3) indicated it was not intended to be retrospective.

The Tribunal concluded that since Section 18(3) was not in force at the time of filing the bills of entry or the completion of provisional assessments, it had no application to the appellant's case. The Tribunal noted that the Gujarat High Court in CC (preventive) v. Goyal Traders held that the liability to pay interest created by statute should have prospective application.

Conclusion:
The Tribunal allowed the appeal, holding that the interest under Section 18(3) of the Customs Act, 1962, was not applicable to provisional assessments made before 13.07.2006, even if finalized after that date. The Tribunal emphasized that statutory amendments creating new liabilities are considered prospective unless expressly or by necessary implication made retrospective.

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