M/S. Suren International Ltd vs C.C., New Delhi (Import & General)

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes

Appeal No.C/782/2008-CU[DB]

[Arising out of Order-in-Appeal No.CC(A)Cus/302/2008, dated 05.09.2008 passed by the C.C.E.(Appeals), New Delhi]

M/s. Suren International Ltd. Appellants

Vs.

C.C., New Delhi (Import & General) Respondents

Appearance

Shri R. Santhanam, Advocate - for the appellants

Shri Amresh Jain, DR - for the respondents

CORAM: Honble Honble Justice G. Raghuram, President

Honble Mr. R.K. Singh, Member (Technical)

Final Order No.51442/2015, dated 25.03.2015

Per Mr. R.K. Singh :

Appeal has been filed against Order-in-Appeal No.CC(A)Cus/302/2008, dated 05.09.2008, which upheld the Order-in-Original dated 07.12.2007 in terms of which three refund claims of the appellants were rejected. The brief facts of the case are that the appellants applied for refund of Rs.11,05,783/- on 25.06.2007, Rs.10,16,590/- on 04.07.2007 and Rs.41,282/- dated 26.07.2007 (Total Rs.21,57,655/-) as recorded in the impugned order as well as in the related order-in-original (though the amounts do not up to the said total). The plea taken by the appellants while filing the refund claims was that the Revenue insisted upon them to deposit 15% p.a. interest on the delayed payment of custom duty vide letter dated 10.10.2005, when the rate of interest prescribed by Govt. was 13% p.a. effective from 12.09.2003 as per Notification No.76/2003-Cus(NT). On an intelligence, Revenue seized 40 containers of the appellants for mis-declaration and concealment at the port of importation (ICD). Revenue suspected that the appellants had earlier also imported goods and cleared the same by way of mis-declaration and concealment and stored the same in the appellants godown. So the goods found at the appellants godown were also seized. Revenue issued a common Show Cause Notice to the appellants. The case was adjudicated by the Commissioner of Customs, ICD vide Order-in-Original No.AKR/CC/ICD/TKD/31 & 32/2003, dated 30.06.2003 and the goods were released after the appellants deposited the custom duty, redemption fine and penalty as per the adjudication order. The appellants paid the Govt. dues along with the interest on delayed payment at 15% p.a. as per directions of Revenue.

2. The primary adjudicating authority in the discussion and finding portion has recorded that the party was also ordered by the Department to deposit interest at the rate of 15% p.a. from 30.09.2003 upto 29.09.2005 under Section 28AA of Customs Act, 1962 (after three months from issuing of Order-in-Original dated 30.06.2003 passed by the Commissioner of Customs) and after final assessment of their Bills of Entry. The primary adjudicating authority also acknowledges that vide Ministry of Finance Notification No.76/2003-Cus (NT), dated 12.09.2003 the rate of interest was fixed at the rate of 13% p.a. Having thus noted, the adjudicating authority records the following findings:-

2.3 In my view the date of determination of rate of duty and tariff valuation of imported goods as provided under Section 15(a) of the Customs Act, 1962 which states that in the case of goods entered for home consumption under Section 46, on the date on which a bill of entry in respect of such goods is presented under that Section. The liability of payment of duty in this case was during 2001, when the actual Bills of Entry were filed and the assessment made, but in this case after receiving an intelligence department detained/seized the entire 40 nos. of containers and also the goods cleared and was stored in the partys godown for mis-declaration. The case was adjudication by the Commissioner of Customs, ICD on 30.6.2003 imposing the redemption fine and penalty and the department also directed them to submit the Bills of Entry for the assessment. This is the case were the duty liability as applicable to them during 2001 and not as applicable at the time of re-assessment of their Bills of Entry and the interest on delayed payment of duty ought to have been paid under Section 28AB of the Act ibid. Section 28AB lays down that the liability to pay interest is from the first day of the month in which the duty ought to have been paid under this Act. There was a short levy originally due to mis-declaration by the importer and hence the duty ought to have been paid at the time of first assessment only. Hence, the department has charged the interest from the party as per law. Thus, they are not entitled for refund of interest of Rs.11,05,783/-, Rs.10,16,590/- and Rs.41,282/- (Total Rs.21,57,655/-) in three refund applications.

The Commissioner (Appeals) in the impugned order pretty much echoed the primary adjudicating authoritys view while upholding the primary adjudicating order.

3. Ld. counsel for the appellants contented that for the period for which interest was demanded, the rate of interest was clearly fixed at 13% p.a. by the Central Government in terms of Notification No.76/03-Cus (NT), while they paid the interest @ 15% and thus they are clearly entitled for refund of the excess interest paid.

4. Ld. Departmental Representative strenuously argued that the interest is recoverable in this case from 2001 as has been held by the primary as well as first appellate authority and therefore they are not entitled to any refund whatsoever. He conceded that it being question of refund of interest, the provisions relating to unjust enrichment are not attracted in the present case.

5. We have considered the contentions of both sides. At the very outset it has to be delineated that the only issue involved in the present case is whether the appellants paid interest at a rate higher than the rate fixed by the Central Government for the period for which the interest was paid as per the directions of the Department. The primary adjudicating authority acknowledges that the Department directed the appellants to pay interest @ 15% p.a. from 30.09.2003 to 29.09.2005 under Section 28AA of the Act (although it is seen in para 2.3 of the primary adjudication order quoted above, it is stated that the interest was payable under Section 28AB ibid). In this regard it is also not disputed that the rate of interest under Section 28AB of the Act was fixed at 13% p.a. vide Notification No.76/2003-CUS(NT), dated 12.09.2003 and thus evidently the appellants paid interest in excess of what was required to be paid.

6. We find that the primary adjudicating authority as well as the first appellate authority instead of confining themselves to the issue involved in the present case have gone ahead to record a finding that the interest in this case was leviable from 2001. In this regard it is pertinent to mention that from which date the interest was leviable was not the issue in these refund proceedings. There had been no Show Cause Notice requiring the appellants to show cause as to why the interest should not be demanded/recovered from 2001. Indeed, even if it is eventually held through proper process of Show Cause/adjudication that the interest was leviable from the year 2001, the refund of interest paid in excess during the period 30.09.2003 to 29.09.2005 will have to be sanctioned and only then it can be adjusted towards the interest liability arising as a result of quasi-judicial determination that the interest was chargeable/ recoverable from the year 2001. We cannot stress this point enough that in the current proceedings it was not an issue as from which date the interest was recoverable; the only issue was whether, for the period for which the interest was demanded and paid, the amount of interest so paid was more than what was required to be paid. It is pertinent to note that there has been no action on the part of Revenue with a view to recovering interest from 2001. As stated earlier no Show Cause Notice has been issued to first determine quasi-judicially as to from which the date the interest is recoverable; indeed even a simple letter demanding interest from 2001 has not been issued. Thus the observation of the adjudicating authority to the effect that because the interest is recoverable from the year 2001, the Department charged interest from the appellant as per law is devoid of any basis, logic or rationale. The Department demanded interest for the period 30.09.2003 upto 29.09.2005 at the rate of 15% p.a. (which the appellants paid), while the applicable rate of interest during the period was 13% p.a. as mentioned in para 5 above. Thus the amount of interest paid (@ 15% p.a.) was evidently more than the interest payable (@ 13% p.a.) and consequently the appellants were clearly entitled to (sought) refund of excess interest so paid.

7. In the light of the aforesaid analysis, we set aside the impugned order and allow the impugned refunds.

(Justice G. Raghuram)

President

(R.K. Singh)

Member (Technical)

SSK

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