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2024 (2) TMI 876 - AT - CustomsLevy of interest on short paid duty under section 28AA of the Customs Act - short paid duty amount was paid without demur or protest and in time, on issuance of SCN - HELD THAT - It is settled law that interest is compensatory in character and not punitive, we also take note of the fact that the short levy in the present case, in no way can be attributed to the assessee s fault. Section 28AA calls for payment of interest on short levied duty amount due in terms of Section 28 - It is noted that no sooner had the appellant been served with the Show Cause Notice, they paid the differential duty even before the lower authorities as observed from the Order-in-Original, the appellant never disputed the short paid duty and only contested the payment of interest thereon. As it was not attributable (a) to any fault on their count, (b) that there have been no short payment of assessed duty, in terms of what the Customs EDI System foretold and (c) that there was no case of any willful misstatement or suppression of facts. The Appellant has also brought to notice yet another case in the case of COMMISSIONER OF CUSTOMS VIJAYAWADA VERSUS RUCHI SOYA INDUSTRIES LIMITED 2016 (7) TMI 88 - CESTAT BANGALORE , wherein duty as assessed by the Customs Officer was paid by the importer on the very day as required under Section 47 of the Customs Act. However, because of the lag in time span between the day of assessment and that of entry inwards there was an enhancement in the rate of duty. The assessee however paid the differential duty as required under law and within the time specified. Upon reference to the Third Member it was held by the Tribunal that the importer in the said case was not liable to pay interest as the duty leviable under Section 47 of the Customs Act, stood duly discharged and there was no delay in payment thereof. The present case is somewhat similar, while in the cited case it was a change in the rate of duty in the time interlude between assessment and grant of entry inwards, in the present case it is a variation of duty rates that between the time of presentation of Bill of Entry and the enactment of the Finance Bill. The fact is that in both the cases, upon payment of import duty, out of charge order for home clearance, by the Proper Officer under Section 47 of the Act was appropriately issued, and it was only subsequent that demand for differential duty was raised. There being no delay in payment of this differential in duty it was held that no interest was therefore payable, as there was no late payment. In view of the fact that short paid duty amount was paid without demur or protest and in time, no sooner the Department brought the same to the importer s notice, besides the fact that duty short paid in the first instance, can in no way be attributed to any fault on the part of the importer/appellant, there are sufficient compliance of the requirements of Section 47 as at the time of clearance, and that is why order permitting clearance for home consumption was granted by the proper officer. Under the circumstances, subjecting the importer to levy interest on duty as short paid in terms of Section 28 is not warranted besides being unduly harsh, particularly when there is no omission on account of any fault attributable to the importer. The demand for interest is set aside and the appeal filed is allowed.
Issues Involved:
1. Short payment of Countervailing Duty (CVD) on imported goods classified under CTH 8607. 2. Appeal against confirmation of interest amount by the Ld. Commissioner. Summary of the judgment: Issue 1: The Appellant imported goods falling under CTH 8607 and self-assessed the duty based on the EDI system calculations. However, the duty rate was enacted as 12% instead of the proposed 6% at the time of import. This resulted in a short payment of CVD by 6%. The Department issued a Show Cause Notice confirming the demand for short levied CVD and interest under section 28AA of the Customs Act. The Appellant contested the interest amount, claiming that the duty paid was not challenged by the Department and there was no omission or commission on their part. They argued that the short payment was due to an error in the EDI system, and there was no willful misstatement. The Tribunal noted that the Appellant promptly paid the differential duty upon receiving the notice, and there was no delay in payment. Referring to a similar case, the Tribunal held that no interest was payable as the duty was paid without delay and the goods were cleared for home consumption without any fault on the importer's part. Issue 2: The Appellant appealed against the confirmation of the interest amount by the Ld. Commissioner. The Department argued that the duty was not paid at the appropriate rate of 12% and hence interest was applicable. However, the Tribunal found that the Appellant had complied with Section 47 of the Customs Act by paying the assessed duty within the specified time frame. As there was no delay in payment and the duty was discharged as required by law, the Tribunal set aside the demand for interest. The appeal was allowed, and the demand for interest was rejected. In conclusion, the Tribunal ruled in favor of the Appellant, setting aside the demand for interest on the short paid duty amount.
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