STERLITE INDUSTRIES (INDIA) LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THE appellants are manufacturers of copper anode. For the manufacture of this product, they used to import the raw material viz. copper concentrate, which is cleared on payment of duty assessed provisionally. The provisional assessments, in the present cases, were made prior to 13.7.2006, the date on which Sub -section (3) was inserted in Section 18 of the Customs Act. The duty so assessed was paid within 5 days from the date of assessment. The finalization of these provisional assessments took place after the said date and additional amounts of duty consequent upon such finalization were also paid within 5 days from the date of the final assessments. The original authority also demanded interest on duty under Section 18(3) of the Customs Act for the period from the first day of the month in which the relevant Bill of Entry was provisionally assessed till the date of payment of differential duty. Such orders of the original authority for various periods were taken in appeal to the Commissioner (Appeals), but the appellate authority upheld the decision of the lower authority. Hence these appeals of the assessee.

(2.) AFTER considering the grounds of these appeals, arguments of ld. counsel for the appellants and arguments of ld. JDR for the Revenue, we note that Section 18(3) of the Customs Act, the charging provision for interest on differential duty paid upon finalization of provisional assessment in respect of imported goods, came into force on 13.7.2006 only. All the provisional assessments, in the present cases, were made prior to the said date. The case of the Revenue, reiterated by JDR, is that Section 28AB of the Act, referred to in Section 18(3) of the Act, was in force during the period of provisional assessments and, therefore, it was open to the department to levy interest on the differential amounts of duty paid by the assessee upon finalization of such assessments. This case of the Revenue is not acceptable inasmuch as the charging provision for interest on any differential amount of duty paid on finalization of provisional assessment is Section 18(3) of the Act. This is a substantive provision of law, which, in the absence of express mention of retrospective effect, cannot be given retrospective operation so as to cover the provisional assessments made prior to 13.7.2006. In this context, it will be apposite to refer to the Hon'ble Supreme Court's judgment in India Carbon Ltd. v. State of Assam , wherein it was held that interest could be levied and charged on delayed payment of tax only if the statute that levied and charged the tax made a substantive provision in this behalf. The substantive provision of law relevant to the present case, we repeat, is Section 18(3) of the Customs Act and not Section 28AB of the Act. Where any interest on duty is leviable from an assessee under Section 18(3) of the Act, it shall be recovered at the rate prescribed under Section 28AB. This does not mean that the substantive provisions of Section 28AB are attracted. The case of the Revenue is, therefore, not sustainable. The appellants are also supported by the CBECs letter bearing F. No. 354/66/2001 -TRU dt. 21.6.2001, which laid down that interest could be charged under Rule 7(4) of the Central Excise (No. 2) Rules, 2001 only in those cases where the provisional assessment was resorted to on or after 1.7.2001, the date on which the provision came into force. The Board, further, clarified that there could be no such levy of interest in cases where the provisional assessment was made prior to 1.7.2001 and its finalization was effected after that date. We find that Sub -section (3) of Section 18 of the Customs Act and Sub -rule (4) of Rule 7 of the Central Excise (No. 2) Rules, 2001 are pari materia provisions. Ld. JDR has not cited any circular of the Board interpreting or clarifying the Customs provision differently.

(3.) AS already indicated, all the provisional assessments in the present cases were made prior to 13.7.2006 and the same were finalized after the said date. Hence the view rightly taken by the Board in relation to Rule 7(4) ibid must be squarely applicable in principle to these cases.