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2017 (7) TMI 9 - HC - CustomsLiability of interest - The assessee's one and only contention before us is that, at the relevant time, there was no statutory provision in place for levy of interest and, therefore, the provisions in the bond executed by it, which provided for payment of interest, upon failure to fulfill export obligation could not to be enforced under the provisions of Customs Act, 1962 - whether, the customs authorities could enforce the bond and recover the interest? - Held that: - This is a case, where Section 28AB, if at all, would have given the right to the Revenue to demand interest, provided the imports had been made after the Section was brought on to the Statute book. Because of the failure to fulfill the export obligation by the Assessee, the Assessee's case would have, if at all, fallen within the ambit of Section 28AB, which, inter alia, imposes a liability on an Assessee to pay interest, where any duty has not been levied or paid, or has been short-levied or short-paid or erroneously refunded. Therefore, Section28AA, to our minds, would not be applicable in the instant case. Interest, as is well known, is payable, broadly, in three circumstances. First, where the statute provides for the same. Second, where there is a contract or agreement in place for payment of interest. Third, where it is payable by usage of trade having the force of law - the assessee could not have been called upon to pay interest by the customs authorities, by taking recourse to the provisions of the 1962 Act, as it obtained at the relevant time i.e., in and about, February, 1995. Whether the Supreme Court in REXNORD ELECTRONICS AND CONTROLS LTD [2008 (3) TMI 8 - SUPREME COURT] has stated anything to the contrary? - Held that: - The Supreme Court held that under the provisions of 28AA, the customs authority, for non payment of duty, would seek payment of interest, by initiating proceedings under Section 28 of the 1962, Act. Insofar as the interest on bond was concerned, the Court went on to observe that, since, the bond had been executed in favour of a different authority i.e. DGFT, and, it was payable in terms thereof and not in terms of the statutory scheme, the customs authorities would not be able to proceed, in terms of Section 28 of the Act. Appeal allowed - decided in favor of assessee.
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