TMI Blog2017 (7) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... funded. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 34,400/-. 3.2. The assessee, being aggrieved, filed an appeal with the Commissioner of Customs (Appeals) [in short, 'the Commissioner (Appeals)']. The Commissioner (Appeals) rejected the appeal vide order, dated 11.1.2001. Against this order, the assessee preferred an appeal with the Tribunal. The Tribunal vide order, dated 08.12.2009 remanded the matter to the adjudicating authority for calculating afresh, the duty payable by the assessee, after taking into consideration 5% wastage, in respect of the imported lycra yarn, which was used for manufacturing the final product. 3.3. Upon remand, the adjudicating authority, vide order-in-original, dated 11.5.2010 directed the assessee to pay the duty, in the sum of ₹ 1,34,210/- along with penalty, in the sum of ₹ 34,400/-. In addition there to, the assessee was directed to pay interest, amounting to ₹ 4,84,222/-. It was further directed that the interest would run till such time, the duty is paid. 3.4. The assessee, being aggrieved, once again, preferred an appeal to the Commissioner (Appeals). This time around, the Commissioner (Appeals) vide order, dated 01.12.2012, modified the Order-in-origina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was payable under the notification. For this purpose, learned counsel drew our attention to Part 1 [part G] of the annexure appended to the 1992 notification. 5.1. It was further submitted that since the exemption from duty in respect of imports was linked to fulfillment of the export obligation, failure to fulfill the export obligation would automatically involve, inter alia, imposition of liability, in the form of interest and, therefore, the same could be recovered, in terms of the provisions of the Act. 5.2. In support of her submissions, learned counsel, in sum, relied upon the impugned Judgment in rebuttal to the pleas raised by the counsel for the assessee. Furthermore, the learned counsel submitted that the Judgment of the Supreme Court in: REXNORD ELECTRONICS AND CONTROLS LTD and the Judgment of the Bombay High Court in the matter of: PRATHIBHA SYNTEXT LTD, was, on all fours, applicable to the instant appeal and, therefore, the appeal should be dismissed. 5.3. Dr.S.Seethalakshmi, learned counsel for the Revenue, in support of her submissions, apart from the Judgments cited above, also, relied upon the Judgment of this Court in: FAL INDUSTRIES LIMITED VS. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 8. 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. This principle is deducible from the Judgment of the Privy Council, in the matter of: BENGAL NAGPUR RAILWAY COMPANY LIMITED V. RATANJI RAMJI [1938 ILR 72]. The observations of the Privy Council, in this behalf, are set forth herein below: ....The crucial question, however, is whether the Court has au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed. It is, in this background, that the matter travelled to the Supreme Court. The question, which was, raised before the Supreme Court by the appellant, was that, since, the interest payable under the bond had a direct nexus with payment of excise duty, the Settlement Commission had the requisite jurisdiction to waive the whole or a part of the interest payable under the bond, as well (See para 8 of the Judgment). 11.3. 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. 11.4. In sum, the Supreme Court held that, since, interest was payable under the bond furnished to the DGFT, the Settlement Commission had no jurisdiction to pass any orders qua the same, as it is operated within the realm of the 1962 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority. As a matter of fact, in paragraph 23 of the said Judgment, the learned single Judge relied upon a Division Bench Judgment of this Court in the matter of: COMMISSIONER OF CUSTOMS (SEA) V. M/S. MEIRS PHARMA INDIA PRIVATE LIMITED., which, fortifies the view taken by us in the instant appeal. For the sake of convenience, the observations made in paragraph 23 are extracted hereunder: 23. But, the learned counsel for the petitioner would rely on an unreported judgment of a Division Bench of this Court in Commissioner of Customs (Sea) vs. M/s.Meirs Pharma India Private Limited (C.M.A.No.3221 of 2004) (referred to above). I have carefully gone through the said judgment. In my considered opinion, the said judgment cannot be taken as a precedent in respect of the law, which is under discussion in the present judgment. In that case, the judgment of the Hon'ble Supreme Court in Rexnord Electronics and Controls Limited case (cited supra), was not at all brought to the notice of the Division Bench. It was also not argued before the Division Bench that interest could be levied under a bond, which is outside the scope of the Customs Act. The whole gamut of argument of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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