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TMI Blog1995 (2) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... /94 - M/s. Ramco Industries Ltd. 3. The common issue that arises for determination in the above mentioned 11 appeals is whether the demand for interest calculated with effect from the date of the return of the Bill of Entry to the importer by the Licence Section for depositing duty and executing bond is tenable in law. 4. Initiating the presentation of the case of the appellants, Shri M.R. Srinivasan, representing M/s. TVS Whrilpool Ltd., M/s. Jay Engg. Works, and M/s. Amco Batteries Ltd., submitted that there are three broad issues on which the appellants shall make their submissions. Those issues are as under :- 1) Whether the Original Authority was competent to confirm the demand; 2) Whether on merits the demand deserves to be confirmed; and 3) Whether the demands are hit by limitation. 5. It is submitted by Shri Srinivasan that the Original Authority was not competent to issue the subject Demand Notice since on his admission, the demand was not covered by Section 28 of the Customs Act, 1962. Section 28 ibid, deals with the demand of duty and not interest. Besides, Section 28 stipulates time limit of six months and in the present case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. This also, according to them, is a pertinent point as it goes to show that the department should not have enforced the bonds at the material time of the demand notices. 9. As regards the merits of the case, being the second issue, Shri Srinivasan has forcefully pleaded that the Custom House made the correct interpretation of the provisions of Section 61(3) of the Customs Act, 1962 in the Public Notice No. 211/91, dated 23-12-1991. The words, "Bill of Entry is returned to the importer for warehousing the goods under Section 59A" should be interpreted to construe that the Bill of Entry is returned to the importer under Section 59A for warehousing the goods, meaning thereby that after due compliance of the provisions of Section 59(a) the Bill of Entry has been returned to the importer for warehousing the goods. Such interpretation was made in first Public Notice No. 211/91, dated 23-12-1991. The second Public Notice, it is submitted, clarifies the first Public Notice and merely reiterates verbatim the provisions of Section 61(3) of the Customs Act, 1962 in that the interest is chargeable from the expiry of seven days from the date on which the Bill of Entry is returned to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toppel should apply against the Government Department also. In Public Notice No. 211/91, dated 23-12-1991, the then Collector of Customs specifically instructed that interest shall be charged from the date the Bond department returns the Bill of Entry by way of affixing the date stamp on the Bill of Entry, to the importer, for warehousing the goods. The Department should now be estopped from going back on the said instructions and raise demand retrospectively with reference to an earlier date viz., the date on which the Bill of Entry was returned by the Licence Section/Group to the importer for depositing duty and executing the bond. 13. The Counsels for other appellants present during the hearing have adopted the reasonings advanced by the abovesaid Counsels. 14. The common issue that arises for determination in the subject eleven appeals is whether the interest under erstwhile Section 61(3) of the Customs Act, 1962 (since deleted) should be calculated with effect from the date of the return of the Bill of Entry to the importer by the Licence Section for depositing duty and executing bond under Section 59A of the Customs Act, 1962, or from the date on which the Bill of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings and arguments in support of their contention which can be broadly put under the following for sub-issues :- (i) Whether the Original Authority was competent to confirm the demand; (ii) Whether on merits, the demand deserved to be confirmed. (iii) Whether the demands were hit by limitation, and (iv) Whether the law of estoppel would apply in all these cases. 19. Let us take up those sub-issues, one by one. On the question whether the Original Authority was competent to confirm the demand, it is submitted by Shri M.R. Srinivasan representing the case of M/s. TVS Whirlpool Ltd., M/s. Jay Engg. Works Ltd. and M/s. Amco Batteries Ltd., that the original Authority was not competent to confirm the demands since on his admission, the demand was not covered by Section 28 of the Customs Act, 1962. Section 28 ibid, deals with the demand of duty and not interest. Section 28 stipulates time limit of six months and in the present cases, the demand notices have been issued after about two years from the dates of payment of duty, without alleging collusion, wilful mis-statement or suppression of facts. Since there was no other section in the Customs Act, 1962, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date of clearance of the goods from the Warehouse". In case, the importer does not pay interest as stipulated in Section 61(3), in pursuance of the principles of natural justice, it is quite reasonable on the part of the Customs Authority to give them an opportunity to explain why the said interest shall not be recovered from them. The plea that since Section 28 does not deal with interest, the department cannot issue any notice to the importer raising the demand of interest is not acceptable. As a matter of fact, sub-section (2) of Section 142 provides for recovery of any amount due under the terms of any bond or other instrument executed under the Customs Act, 1962. Section 59A(i), as it prevailed during the material time, provided for execution of bond by the importer binding himself to pay on or before the date specified in notice of demand all duties and interest, if any, payable under sub-section (3) of Section 61 of the Customs Act, 1962. Thus, it will be seen that a notice of demand for recovery of interest in terms of Section 61(3) read with Section 59A(1) and Section 142, in the subject cases would have been quite in order. 23. I find from the demand notices that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 109/93 dated 29-9-1993. This Public Notice, according to the learned Counsel, was in the nature of clarification to Public Notice No. 211/91, as the subject itself revealed. The said Public Notice stated that, "interest is chargeable on Bills of Entry from the expiry of 7 days from the date on which the Bill of Entry was returned to the importer/CHA for warehousing the goods under Section 59A of the Customs Act, 1962 till the date of clearance of the goods from the warehouse. The Licence Section/Group will affix the stamp as indicated below : - "Bill of Entry is ready for payment of duty and interest shall be chargeable after expiry of seven (7) days from ... till clearance from the warehouse". 26. In the second para, the Public Notice states that the date stamp affixed by the Bond Department as per Public Notice No. 211/91, will be taken only for computing warehousing period of 30 days under Section 61(1)(b). 27. In other words, the earlier practice of charging interest from the expiry of seven days from the date of return of the Bill of Entry by the Bond Department to the importer was dispensed with from 29-9-1993 and the relevant date for the purpose of charging int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as if warehousing of the goods was to be under Section 59A. 32. The above words can be interpreted in the following two manners :- 33. First, it may be interpreted in the sense the department has interpreted it, (i.e.) that the Bill of Entry has been returned to the importer for complying with the conditions under Section 59A for the purpose of warehousing the goods. Obviously here, the Department has given stress on the words "under Section 59A". Secondly, it may also be interpreted in the manner the appellants have suggested, i.e. Bill of Entry has been returned to the importer for warehousing the goods after Section 59A has been complied with. The stress here is obviously on the words "for warehousing the goods", inasmuch as goods can be warehoused only after the conditions under Section 59A have been complied with. 34. It is, however, seen in Section 59A, as it stood at the material time, that there was no mention of the return of the Bill of Entry to the importer for warehousing the goods. It is for this reason that the contention of the department that one should take the impugned words in Section 61(3) as suggesting that the Bill of Entry is returned to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any time limit for issue of demand notice under the erstwhile provisions of Rule 57(1) of the Central Excise Rules, the department should raise the demand within a reasonable time limit and the said reasonable time limit was to be governed by Section 11A of the Central Excises & Salt Act, as the demand under Rule 57(1) had a nexus with the duty. On the same analogy, it is submitted by Shri Vijayaraghavan that reasonable time limit for demand notice under Section 61(3) of the Customs Act, 1962 should be taken as 6 months, as provided under Section 28 of the Customs Act, 1962. Since the subject demand notices were issued after expiry of approximately two years, all these demand notices should be held as time-barred. All the more so, when those demands are not recoverable in terms of bonds as those bonds with the normal validity period of one year had already `lapsed'. It is not the case of the appellants that interest has not been paid by the appellants under Section 61(3) of the Customs Act, 1962. In fact, interest was paid all along under the said Section and in terms of the Custom House's Public Notice No. 211/91. It is only the question of interpretation of the words of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the law of estoppel applies in the present cases. Shri Rajagopal, representing the case of M/s. Ramco Industries Ltd. has submitted that if a demand has been raised, owing to change in appellant's stand and going against established practice, the said demand shall be enforceable prospectively. He has relied upon the CEGAT's decision 1985 (22) E.L.T. 487 (Tri.) in this regard. 41. Shri I. Arokiasamy representing the case of M/s. M.M. Rubber & Co. and Alagiri Spinning & Weaving Mills has submitted that the law of estoppel should apply against the Government Department also.. 42. The question whether the law of estoppel applies against the Government & Government Offices is now well settled by the Judgments of Supreme Court in the case of Godfrey Philips India Ltd. & Others [1985 (22) E.L.T. 306 (S.C.)] and also in the case of Amrit Banaspati Co. Ltd. v. State of Punjab - 1992 (59) E.L.T. 13 (SC). In the former case, the Hon'ble Court held that "the true principle of promissory estoppel is that where one party has by his word or conduct made to the other a clear and unequivocal promise or representation which is intended to create legal relation or affect a legal relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on would believe it to have been made on behalf of the Government then unless such representation is established to be beyond scope of authority, it should be held binding on the Government. 43. In one of the latest judgments of Supreme Court vide 1994 (74) E.L.T. 5 in the matter of M/s. Rainbow Industries (P) Ltd., it is held that `once the Department accepted the price list, acted upon it and the goods were cleared with the knowledge of the Department, then in absence of any amendment in law or judicial pronouncement, the reclassification should be effective from the date the Department issued the show-cause notice. The reason for it is clearance with the knowledge of the Department and no intention to evade payment of duty. It was held that `the appellant is liable to pay duty on the dyestuffs manufactured by it in the manner calculated by the department from 16th October, 1976, the date the show cause notice was was issued to the appellant', and not before that date. 44. From the above 3 landmark judgments of the Supreme Court, it is quite evident that the law of equity has been made applicable to Customs proceedings in all those cases where the Department by their ..... X X X X Extracts X X X X X X X X Extracts X X X X
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