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2006 (2) TMI 191 - HC - CustomsDemand of interest - Writ jurisdiction - violation of Section 28 of the Customs Act, 1962 - principles of natural justice - Whether the demand made by the respondents for payment of interest on the differential customs duty payable on the import of machinery under EPCG Scheme is legally valid? - HELD THAT:- On perusal of the official record which was produced, learned counsel for the respondents, shows that notices were in fact issued to the petitioner in connection with the payment of interest due from the petitioner to which the petitioner had not responded. Notices dated 28-4-1999, 20-7-1999, 7-3-2000 and 30-3-2000 sent to the petitioner did not evoke any response from it forcing the Assistant Commissioner of Customs EPCG Section, Mumbai to direct the Assistant Commissioner of Central Excise, Sangrur to verify the existence of the unit and to send a report. There is in the light of these facts no gainsaying that the petitioner had been given an opportunity of being heard in the matter and that a demand was raised only after it failed to respond to or avail of that opportunity. There has thus been no violation of either the provisions of Section 28 or the requirement of principles of natural justice on which the said provision is based. Section 28AB deals with interest on delayed payment of duty in special cases and inter alia provides that where any duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who is liable to pay duty as determined under sub-section (2) or has paid the duty under sub-section (2B) of Section 28, shall, in addition to the duty, be liable to pay interest at such rate not below 10% and not exceeding 36% per annum, as is fixed by the Central Government by notification. It is, thus, evident that duty determined as payable would earn interest in the event of a delay in the payment of the same. But for the exemption from payment of duty under the EPCG scheme, the petitioner would have been liable to pay the duty at the rate stipulated for the imports made by it. A concessional rate was, however, applied to the said imports subject to the petitioner's satisfying the requirements stipulated for the said benefit. No sooner it is found that the petitioner has failed to perform its export obligation which was one of the conditions for applying a concessional rate of duty, the exemption would cease to be effective and the liability to pay the duty at the rate ordinarily applicable re-emerge. Consequently non-payment of the differential would attract payment of interest in terms of the statutory provisions referred to above. Claim for interest, it is fairly settled, can arise either on the basis of a statute or a contract or trade usage. In the instant case, the claim for payment of duty is supported not only by the statutory provisions of Sections 28AA and 28AB, but also the terms of the statutory policy and the legal undertaking provided, by the petitioner in accordance with the same. In the result, this writ petition fails and is hereby dismissed but in the circumstances without any order as to costs.
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