2025 (3) TMI 345 - AT - Customs

Denial of benefit of N/N. 48/94-C.E. dated 01.03.1994 on the ground of incorrect declaration of tariff entry and also on the ground that the appellant had not claimed it at the time of initial assessment - demand of interest - HELD THAT - The description of the subject goods is fully covered by the exemption notification and when there is no other Central Excise Tariff heading for unrecorded audio cassette except 8523.12 the exemption eligible to the appellant cannot be denied on the ground of incorrect tariff entry of the subject goods. Further we observe that the incorrect tariff entry was not raised in the SCN and hence the finding of the lower authorities on this ground is beyond the scope of the SCN and hence the same is not sustainable. With regard to the denial of benefit of Notification No. 48/94-C.E. dated 01.03.1994 on the ground that the same was not claimed by the appellant at the initial stage it is observed that if a benefit eligible to the appellant is not claimed initially it can be claimed even at a later stage. This view has also been taken by the Hon ble Apex Court in the case of Share Medical Care v. Union of India 2007 (2) TMI 2 - SUPREME COURT wherein the Hon ble Apex Court has held that it is clear that even if an applicant does not claim benefit under a particular notification at the initial stage he is not debarred prohibited or estopped from claiming such benefit at a later stage. Thus the appellant is entitled to the benefit of CVD in terms of the Notification No. 48/94-C.E. dated 01.03.1994 as claimed. Demand of interest at the rate of 24% per annum - HELD THAT - The appellant has cleared the goods as per the Notification No.204/92-Cus dated 19.05.1992. In this notification there is no provision for collection of interest. It is observed that the Department has relied upon Board Circular No.131/95-Cus dated 20.12.1995 to raise demand of interest @24% - the Circular No.131/95- Cus dated 20.12.1995 is not applicable to the present case. Further the interest under Section 28AB of the Customs Act 1962 is payable only w.e.f. 28.09.1996 whereas the subject goods were admittedly imported in Sep. 1995 i.e. prior to coming into effect of the provisions of Section 28AB of the Act 1962. Accordingly the interest is not liable to be paid by the appellant for the duty liable to be paid by them. Accordingly the demand of interest @24% confirmed in the impugned order set aside. Conclusion - i) The appellant is liable to pay duty at the rate of 50% and no CVD is payable in terms of Notification No. 48/94-C.E. dated 01.03.1994. ii) The demand of interest at the rate of 24% per annum confirmed in the impugned order is set aside. Appeal disposed off.

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

Whether the appellant is entitled to the benefit of exemption from countervailing duty (CVD) under Notification No. 48/94-CE dated 01.03.1994 despite not claiming it initially at the time of import.
Whether the demand for interest at the rate of 24% per annum on the customs duty is valid, considering the absence of a specific provision for interest in the relevant notification and the applicability of the Board Circular No.131/95-Cus dated 20.12.1995.
Whether the demand for customs duty and interest is barred by limitation due to the delay in issuing the show cause notice.

2. ISSUE-WISE DETAILED ANALYSIS

Entitlement to Exemption from CVD under Notification No. 48/94-CE

Relevant Legal Framework and Precedents: The appellant argued for exemption under Notification No. 48/94-CE, which allows for exemption from CVD for certain goods. The appellant cited precedents such as Share Medical Care v. Union of India, which established that benefits under an exemption notification can be claimed at any stage.
Court's Interpretation and Reasoning: The Tribunal noted that the description of the goods imported was fully covered by the exemption notification, and the incorrect tariff entry was not a valid ground for denial as it was not raised in the show cause notice.
Key Evidence and Findings: The appellant had declared the goods under Customs Tariff Heading 8523.90 instead of 8523.12, which was the correct heading under the Central Excise Tariff for "unrecorded audio cassette." The Tribunal found that this discrepancy should not bar the appellant from claiming the exemption.
Application of Law to Facts: The Tribunal applied the legal principle that benefits under an exemption notification can be claimed at any stage to conclude that the appellant was entitled to the CVD exemption.
Conclusions: The appellant is entitled to the benefit of exemption from CVD under Notification No. 48/94-CE.

Demand for Interest at 24% per Annum

Relevant Legal Framework and Precedents: The demand for interest was based on Board Circular No.131/95-Cus and provisions under Section 28AB of the Customs Act, 1962. The appellant argued that the circular was not applicable as it was issued after the importation date.
Court's Interpretation and Reasoning: The Tribunal found that the circular could not be applied retrospectively to imports made before its issuance. Furthermore, the relevant notification under which the goods were imported did not provide for interest.
Key Evidence and Findings: The goods were imported in September 1995, prior to the effective date of Section 28AB, which mandates interest. The circular did not mention the relevant notification (No. 204/92-Cus) under which the goods were imported.
Application of Law to Facts: The Tribunal concluded that the demand for interest was not sustainable as the circular was not applicable and there was no statutory basis for interest in the relevant notification.
Conclusions: The demand for interest at the rate of 24% per annum is set aside.

Limitation on Demand for Duty and Interest

Relevant Legal Framework and Precedents: The appellant contended that the demand was barred by limitation due to the delay in issuing the show cause notice.
Court's Interpretation and Reasoning: The Tribunal did not explicitly address the limitation issue in detail, focusing instead on the substantive grounds regarding the duty and interest.
Conclusions: The focus was on the substantive entitlement to exemption and interest, rather than procedural bars like limitation.

3. SIGNIFICANT HOLDINGS

Core Principles Established: The Tribunal reinforced the principle that exemption benefits can be claimed at any stage, even if not initially claimed, as long as the goods fall within the scope of the notification. It also established that interest cannot be demanded without a clear statutory basis or applicable circular.
Final Determinations on Each Issue:
- The appellant is entitled to exemption from CVD under Notification No. 48/94-CE.
- The demand for interest at 24% per annum is set aside as unsustainable.

The appeal was disposed of with the order that the appellant is liable to pay duty at the rate of 50% without CVD, and no interest at 24% is payable.

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