NAVAYUGA ENGINEERING CO.LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) Introduction: "The following two questions arose for our consideration; i) Whether there is a liability to pay customs duty when the confiscated goods are redeemed after payment of fine under Sec. 125 of the Customs Act, 1962(Hereinafter referred to as 'the Act')? ii) Whether, the liability to pay such duty will include the liability to pay interest on delayed payment under Sec. 28AB of the Act? Adjudication of these questions brought to light certain seemingly contradictory decisions on this question, and this requires us to reflect on the correct ratio of the decision of this Court in Commr. of Customs (Import) v. Jagdish Cancer and Research Centre((2001) 6 SCC 483, hereinafter referred to as Jagdish Cancer case). Therefore, the third question that fell for our consideration is; iii) What is the true and correct ratio of the decision in Jagdish Cancer case?"

(2.) Facts: Between 30/11/2003 to 18/4/2007, the appellant availed the benefit of exemption from payment of customs duty under a notification dtd. 1/3/2002, as per which certain self-propelled hydraulic piling rigs were to be utilised exclusively for the construction of roads, bridges etc. for NHAI(National Highways Authority of India) and PWD(Public Works Department). When investigations revealed that the appellant has violated the import conditions, even before a show-cause notice was issued, the appellant deposited Rs.16,29,22,282.00 and interest of Rs.1,84,39,696.00 between May, 2007 to August, 2007. Thereafter, a show-cause notice(The show cause notice is purportedly issued under Sec. 124 read with Sec. 28 of the Act.) was issued on 23/1/2008 proposing confiscation under Sec. 111(o) with respect to goods that were valued at Rs.48.55 crores involving duty liability of Rs.17,37,57,039.00 under Sec. 28, interest under Sec. 28AB and penalties under Ss. 112(a) and (b) and 114A of the Act. The appellant filed an application under Sec. 127B of the Act before the Settlement Commission claiming that it has not violated any condition of the notification dtd. 1/3/2002 and further claimed that in order to avoid prolonged litigation, they had accepted the liability subject to further adjustments as may be approved by the Settlement Commission. The appellant also asserted that the claim for interest under Sec. 28AB is impermissible as the proceedings were initiated with show cause notice under Sec. 124 and not under Sec. 28.

(3.) Ss. 11 and 12 of the Act: Sec. 11 of the Customs Act(Sec. 11: Power to prohibit importation or exportation of goods.-(1) If the Central Government is satisfied that it is necessary so to do for any of the purposes specified in subsec. (2), it may, by notification in the Official Gazette, prohibit either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification, the import or export of goods of any specified description. (2) .. (3) ..) vests the power in the Central Government to prohibit absolutely or subject to such conditions, as may be specified in the notification, the import or export of goods into or out of India. Under Sec. 45 of the Act, all imported goods unloaded in a customs area shall remain in the custody of the customs authorities. The importer shall present a bill of entry under Sec. 46 and self-assess the duty under Sec. 17. Alternatively, under Sec. 47 the goods are provisionally assessed by the authority under Sec. 18 and cleared for home consumption. Goods are cleared for home consumption only after the customs officer is satisfied that the goods are not prohibited for home consumption and the import duty is paid. Duties of customs shall be levied under Sec. 12(Sec. 12: Dutiable goods.-(1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under [the Customs Tariff Act, 1975 (51 of 1975)], or any other law for the time being in force, on goods imported into, or exported from, India. [(2) The provisions of sub-sec. (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government.]) on goods that are imported into or exported from India at such rates as are specified under the Customs Tariffs Act, 1975.