Customs - Differential duty paid on account of increase in rate of duty after assessment of Bill of Entry - Matter goes to Third Member in CESTAT
HERE is an interesting case:
The importer filed a Bill of Entry on 20.11.2000 for clearance of the declared quantity of RBDPalmolein on 20.11.2000. As the rate of duty on the goods on that date was 35% ad valorem , the Bill of Entry was assessed by the Customs officers with the duty liability of Rs.1,62,40,718/-. The appellant paid the said assessed duty on 20.11.2000 and the requisite order in terms of the provisions of Section 47(1) of the Customs Act for clearance of the goods for home consumption was made on 23.11.2000.
However, vide a subsequent Notification No. 142/2000-Cus dated 21.11.2000, the effective rate of Basic Customs Duty on RBDPalmolein was enhanced from 35% to 65%. Inasmuch as the Entry Inwards of the vessels loaded with the imported goods was granted on 21.11.2000, the said enhanced rate of duty was applicable to the goods in question, in terms of the provisions of Section 15 of the Customs Act, 1962. The said facts of enhancement of rate of duty did not come to the notice of the Customs officers, who passed the ‘out of charge' order on 23.11.2000 and the goods were accordingly cleared by the respondents.
Subsequently, a letter was issued to the importer on 24.11.2000 and they were directed to pay the differential duty amounting to Rs. 1,02,84,944/-. As the respondent did not deposit the said amount during the intervening period, the duplicate copy of the Bill of Entry was endorsed referring to increase of Customs duty from 35% to 65% and quantifying the duty on the said account as also on the excess discharged cargo amounting to Rs. 1,02,84,944/-, on 12.3.2001. The respondents, in fact, admitted their excess duty liability and accordingly, wrote to the department that they would be depositing the same. In fact, they made part payment of Rs. 25 lakhs during the first week of December 2000 itself which was rejected by the Revenue on the ground that they should pay the entire duty in one go as there is no provision for part payment of duty under the Customs Act. Ultimately, the total differential duty of Rs. 1,02,84,944/- was paid by the respondents on 10.3.2001.
However, a show-cause notice dated 3.4.2001 was issued alleging contravention of provisions of Section 47(2) of the Customs Act, 1962 and proposing interest of Rs. 6,96,558/- under Section 28(1) of the Customs Act as also proposing imposition of penalty under Section 117 of the Customs Act. The show-cause notice culminated into an order passed by the Deputy Commissioner confirming the interest and imposing penalty of Rs. 10,000/-. On appeal against the said order, the Commissioner (Appeals) reversed the same.
Revenue is in appeal before CESTAT.
The Member (Technical) observed,
This is a case where the respondents have deliberately delayed the payment of differential duty of customs though it was payable to the national exchequer immediately i.e. as soon as the goods were released for home consumption. When the respondents knowingly and deliberately delayed the payment of differential duty of the customs they cannot claim any defence that they are not liable to pay any interest in this situation.
The provisions of Customs Act both under 47 of the Customs Act as well as Section 28(1) of the Customs Act 1962 make it clear that the interest for delayed payment of duty is liable to be payable by the respondents. When the respondents have deliberately violated the provisions of law and have not paid the interest which was duly payable by them, the penalty imposed under Section 117 by the original adjudicating authority is also sustainable in law .
The Member (J) however did not agree.
She observed,
There was admittedly a short levy of duty, but instead of issue a show-cause notice for such levy in terms of Section 28 of the Act, the Revenue adopted a route of addressing letters to the respondents who deposited the differential duty. The said communication was accepted by the assessee and they deposited the duty accordingly. The interest stands confirmed against the assessee under Section 28 of the Act. When there is no show-cause notice issued by the Revenue in terms of Section 28 of the Customs Act, the confirmation of interest on delayed payment of duty in terms of Section 28AA cannot be invoked. The said interest provisions require an assessee to pay the assessed duty within a period of 3 months from the date of determination of duty. If there is no such determination by the Revenue, the question of payment of interest does not arise. As such, I find no infirmity in the views adopted by the Commissioner (Appeals). Similarly, I agree with the Commissioner (Appeals) that when there is no interest liability alleging contravention of provisions of Section 47(2) of the Act, imposition of penalty upon the assessee was not justified. The Revenue's appeal is, accordingly, rejected.
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