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2024 (9) TMI 940 - AT - CustomsRecovery of IGST / Customs duty on import of goods - Liability of appellant to pay duty, Interest, Redemption Fine and penalty for violation of Pre-Import Condition in connection with imports made under Advance Authorization scheme during the period from 13-10-2017 to 09-01-2019 - time-bar demands under extended period - HELD THAT - For recovery of IGST on import of goods, provisions are made under section 3 (7) of Customs Tariff Act 1975. However, no specific provision is made for recovery or charging of Interest, Fine and Penalty u/s 3 (7) or 3 (12) of Customs Tariff Act 1975 as compared to such similar provisions made under the Section 8B (9) and Section 9A (8) of Customs Tariff Act 1975. Such provisions u/s 9A (8) were introduced in Statute by The Finance (No. 2) Act, 2009 way back on 19-08-2009. However, while introducing similar provisions post GST Regime under Section 3 (7) or 3 (12) of the Customs Tariff Act 1975, Government of India has not incorporated such provisions for recovery of the Interest, Fine and Penalty under Section 3 (7) or Section 3 (12) of Customs Tariff Act 1975. Revenue has also not been able to show us such charging provision for levy and collection of interest, Fine and Penalty for late payment of IGST leviable under Section 3 (7) or under Section 3 (12) of Customs Tariff Act 1975. Therefore, the orders for recovery of interest, fine and Penalty on late payment of the IGST during Re-assessment process of Bill of Entry for the period from 13-10-2017 to 09-01-2019 are without authority of law and the same are unsustainable. In case of BIRLA CEMENT WORKS JK. SYNTHETICS LTD. VERSUS COMMERCIAL TAXES OFFICER AND STATE OF RAJASTHAN 1994 (5) TMI 233 - SUPREME COURT the Hon ble Apex Court has held that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf. In the case reported in COLLECTOR OF C. EX., AHMEDABAD VERSUS ORIENT FABRICS PVT. LTD. 2003 (11) TMI 75 - SUPREME COURT the Hon ble Supreme Court has also referred to an amendment made in year 1994 by inserting the expression offences and penalties in Section 3 (3) of the Additional Duties Act and held that such amendment was required to remedy the defect contained in the unamended provisions. In absence of specific insertion of words like offences, penalties and interest, such levies could not be assumed and such additional tax cannot be charged. Penalties - HELD THAT - This is a case also of interpretation of provisions. There is no statutory provision for imposing Penalty under section 3 (7) or 3 (12) of the Customs Tariff Act 1975. There is no evidence showing intention for evasion of duty. Imposition of penalty requires mala fide intention to evade duty, which is not found in these cases. The ingredients required for imposing penalty are not found in these cases. Thus, the orders for imposing Penalty are not sustainable, in terms of the applicable provisions of law and the decisions relied upon by the Appellant. Time limitation - HELD THAT - There is no suppression by appellant. Since the case was made out on the basis of alleged violation of Pre-Import Condition in imports under Advance Authorisation scheme, customs authorities were also aware of the said Pre-Import Condition inserted by the Notification on 13-07-2017, hence the department could have taken action within the normal period. Further, the situation was complete revenue neutral for Appellant on availability of credit of duty paid. In these facts, since no suppression of fact is there and show cause notices were issued beyond two years, from import, the entire demand is time barred - There is no evidence or justification to invoke extended period u/s 28 (4) of Customs Act 1962. Since the demand made against the appellant was barred by time limitation, the duty liability is illegal and liable to be set aside. Such duty liability, would be permissible only when the assessee was guilty of deliberate omissions and/or commissions with mala fide intention, to evade duty. Thus, allegation of suppression of facts etc and invocation of extended period of limitation is not correct. Thus, it is settled that in the absence of specific provision relating to levy of Interest, Redemption Fine and Penalty in respective legislation for levy duty, the same cannot be demanded or imposed or recovered by taking recourse to machinery provisions relating to recovery of the duty. Therefore, the orders for recovery of Interest, Redemption Fine and Penalty in these cases are not sustainable considering charging provisions of the Customs Act 1962 and relevant provisions under the Customs Tariff Act, 1975 and the decisions rendered thereon as mentioned above. The issue on imposing Interest, Redemption Fine and Penalty is no longer Res Integra. The impugned orders on confirmation of demands for interest and appropriation thereof, order of confiscation of goods, imposition of Redemption fine and penalty are not sustainable and the same are set aside - Appeal allowed.
Issues Involved:
1. Whether customs duty (in nature of Integrated Tax) was recoverable from the appellant, considering the time-bar demands under the extended period. 2. Whether interest is chargeable, whether goods are liable to confiscation entailing imposition of redemption fine, and whether penalty is imposable. 3. Whether the liabilities of interest, confiscation/redemption fine, and penalty imposed are without jurisdiction and untenable due to the absence of statutory provisions. 4. Whether the amount deposited towards interest is liable to be refunded, and whether liabilities of penalty and confiscation/redemption fine are liable to be set aside. Issue-wise Detailed Analysis: 1. Recovery of Customs Duty (Integrated Tax): The appellant paid the IGST as per the Supreme Court's directions and CBIC Circular No. 16/2023-Cus dated 07-06-2023. The situation was revenue-neutral, as the appellant was allowed to take credit of the entire amount of tax paid. Despite the duty being potentially unsustainable on other grounds, the appellant did not seriously object to the demands of IGST deposited after 07-06-2023. The Tribunal refrained from passing a detailed order on the confirmation of duty, which was allowed as credit by the Revenue. 2. Interest, Confiscation, Redemption Fine, and Penalty: The appellant contested the imposition of interest, redemption fine, and penalty on the grounds that there is no statutory provision under Section 3 (7) or 3 (12) of the Customs Tariff Act, 1975 for such recoveries. The Tribunal agreed, noting that interest, fine, and penalty are separate financial levies requiring specific charging provisions in the statute. The provisions of the Customs Act, 1962 for levying interest, penalty, and fine were not applicable to the IGST levied under Section 3 (7) of the Customs Tariff Act, 1975. 3. Jurisdiction and Statutory Provisions: The Tribunal found no charging provision for interest, fine, and penalty under Section 3 (7) or Section 3 (12) of the Customs Tariff Act, 1975. The Tribunal cited various judgments, including those of the Supreme Court and High Courts, which established that additional levies like interest and penalty cannot be imposed without explicit statutory provisions. The Tribunal concluded that the orders for recovery of interest, fine, and penalty on late payment of IGST were without authority of law and unsustainable. 4. Refund of Interest and Setting Aside Penalties and Fines: The Tribunal held that the appellant could contest the liability of interest, confiscation, redemption fine, and penalty even though the IGST was voluntarily paid. The Tribunal found that the orders for recovery of interest, fine, and penalty were not sustainable due to the absence of specific charging provisions in the Customs Tariff Act, 1975. The Tribunal also noted that the entire situation was revenue-neutral, and there was no evidence of intent to evade duty. Consequently, the Tribunal set aside the orders for confiscation of goods, imposition of redemption fine, and penalty, and allowed the appeals with consequential reliefs. Conclusion: The Tribunal allowed the appeals, set aside the orders for recovery of interest, confiscation of goods, imposition of redemption fine, and penalty, and ordered the refund of the interest recovered/collected from the appellant. The Tribunal's decision was based on the absence of statutory provisions for levying interest, fine, and penalty under the Customs Tariff Act, 1975, and the revenue-neutral nature of the situation.
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