TMI Blog2019 (10) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... 962, providing for the demand of duty short/ not paid at the time when the same was due, we are not in agreement with the submissions made by the appellant by invoking the principle of promissory estoppel. It is also settled law that in case of exemption, it is responsibility of the person claiming the exemption to satisfy that the said exemption is available to him - demand of interest upheld. Permitting the debit of the duty demanded in cash from SFIS Scrips - HELD THAT:- It is not in dispute that during the relevant period when the imports were made such debits from the SFIS Script was not permitted. Had the appellants claimed the duty exemption against the EPCG Licenses issued to them in 2005, at the time of import, they would have paid duty @ 5.1% in cash. Now when the benefit of inadmissible exemption has been denied to them, and as special measure benefit of debit against EPCG license has been allowed by the EPCG Committee against the licenses issued in 2005, appellants could not be placed in better position then what they would have been in if they had cleared these goods against these license - there are no infirmity in the order of Commissioner denying the debit from S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready cleared under EOU scheme as per the notification No 97/2004-Cus dated 17.09.2004 subject to the goods being covered under the said licenses and necessary debits (quantity, value and duty) and fulfilment of export obligation as may be fixed/ determined and accounted by the Regional Authority. v. The importer is permitted to debit the duty of ₹ 67,91,49,875/- (Rupees Sixty Seven Crores Ninety One Lakhs Forty Nine Thousand Eight Hundred and Seventy Five only) against EPCG licenses and pay the remaining amount of duty of ₹ 10,94,98,744/- (Rupees Ten Crores Ninety Four Lakhs Ninety Eight Thousand Seven Hundred and Forty Four only) in cash as per the table A annexed to this order. The request of the importer to debit the duty against the SFIS licenses is rejected. vi. The show cause notices vide F Bo S/6-Gen-416/06 Bond JNCH dated 02.11.2006, 22.01.2007 and 29.01.2007 stand disposed of accordingly. 2.1 Appellants were granted license No PN-1/Customs- 01/2006 dated 26.05.2006 as private bonded warehouse under Section 58 of the Customs Act, 1962 and for in Bond port handling services under Section 65 of the Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in respect of the goods initially imported claiming the benefit of Notification No 52/2003-Cus against the various EPCG Licenses issued to them in 2005. They are entitled to debit remaining amount of duty i.e. 5.1% ad-valorem, by utilizing the SFIS Scrips available with them for the reasons as stated below: From 01.01.2009 (under Policy of 2009-14) the SFIS Scrips have been allowed to be utilized towards payment of duty under EPCG scheme; The duty @ 5.15% scheme is being paid vide EPCG Committee order dated 19.09.2014; It is settled that duty credit scrip is equivalent to cash and hence is the alternate mode of payment of duty. The next issues raised by them in the appeal are in respect of the demand of the interest. Since they have acted bonafidely and the duty payable on the imported goods have been permitted to be debited against the EPCG License that were issued to them in 2005, the demand of interest should not be there because at the relevant time of importing the goods they could have instead of availing the benefit of Notification No 52/2003-Cus, applicable to EOU, debit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the period of imports the Foreign Trade Policy as it existed then did not permitted the debits from the SFIS Scrips/ License against the imports made under EPCG Scheme, Commissioner was absolutely justified in denying such permission. 4.1 We have considered the impugned order with the submissions made in appeal and during the course of arguments on appeal. 4.2 Commissioner has in para 27 to 31 of the impugned order recorded as follows: 27. The contentions being raised by the importer are examined point-wise as follows: i. In the instant case as there was a dispute related to the provisions of foreign trade policy and scope of the Notification No. 52/2003-Cus dated 31.03.2003 read with para 11 thereof, three SCN s dated 02.11.2006, 22.01.2007 and 29.01.2007 were issued to the importer. In light of the BoA order dated 13.11.2007 cancelling the EOU status ab-initio, interim order of the Hon ble Bombay High Court and the EPCG Committee s decision dated 19.09.204, the said SCN s are now being taken up for adjudication. ii. The EPCG Committee s decision dated 19.09.2014 issued with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e BoA vide order dated 13.11.2007, the EOD registration dated 09.06.2006 and the customs bonding licence dated 26.05.2006 issued to the importer become null and void and stand cancelled ab-initio. The post facto application dated 15.02.2013 of the importer for renewal of the customs bonding licence therefore does not merit consideration. Accordingly, the imported goods are not eligible for duty exemption under the notification no. 52/2003-Cus dated 1.03.2003 and the domestically procured goods are not eligible for the benefit of notification no. 20/2003-C. Ex dated 31.03.2003 and the good cease to be warehoused goods and are deemed to be have been cleared for home consumption under Section 47 of Customs Act, 1962 on the date of bonding itself. Thus, the importer is liable to pay the duty on the imported goods at the rate applicable on the date of filing of the warehouse bill of entry and the same becomes payable on the date of assessment of the warehouse bill of entry and is recoverable under Section 28 of the Customs Act, 1962 along with the applicable interest under Section 28AB of the Customs Act, 1962 (Section 28 AA w.e.f 08.04.2011). In respect of the duty free procurement eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for waiver of interest as a special case, the same was contested by the CBEC vide letter F. No. 605/53/2014-DBK dated 05.11.2014 stating that the same had been done without tile concurrence from the Department of Revenue and it was requested that the same be expunged from the minutes of the meeting dated 19.09.2014 as it would not be proper to decide on the issue of interest beforehand under the para 2.5 of the FTP as the issues of interest related to the chargeability of customs duty and the date on which the duty becomes due were to be decided by the jurisdictional Customs Authority. Further, as per the provisions of Section 61 of the Customs Act, 1962 waiver of interest can only be ordered by the CBEC if the same serves the public interest. The provisions of Section 28AA(3) and Section 151 A of the Customs Act, 1962 are not applicable in the instant case as the duty has become payable consequent to the order of BoA and not that of CBEC. xiv. As the instant case pertains to the imports effected during the period 2006-2007, the same are to be governed as per the FTP 2004-2009. The para 4.29 of HBP Vol. I of FTP 2004-2009 does not provide for payment of customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation No 52/2003-Cus. Subsequently it was determined that the appellants were not eligible to benefit of exemption under the said notification accordingly the proceedings to demand the duty short/ not paid by the Appellants were initiated under Section 28 of the Customs Act, 1962. The demands in respect of the duty short/ not paid by the appellant have been confirmed by the Commissioner along with the interest in respect of the duty short/ not paid. 4.4 The contentions raised by the Appellant in respect of the demand made under Section 28 and interest under Section 28AA have been considered by the Hon ble Bombay High Court in case of Valecha Engineering Ltd [2010 (249) ELT 167 (Bom)], and following has been held: 22. Normally in a case when import or export of goods is covered by an import free license or notification, the goods are released against a bond for the amount of duty otherwise payable so that the party complies with the conditions of the notification failing which the duty as set out in the bond becomes payable and can be recovered under Section 143 and 143A of the Act. The Notification itself normally provide that in the event of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid or short paid. Such an exercise would not be without jurisdiction. Once duty is payable the importer would be liable for interest on the unpaid duty under Section 28AB, as by operation of law, when duty is not paid or short paid on ascertainment of such nonpayment and ascertainment of interest under Section 28AB becomes payable. If interest is payable under a bond or notification the interest would be payable pursuant to the bond or notification. In such cases there can be no further interest under Section 28AB. 25. The judgment in Rexnord Electronics Controls Ltd. v. Union of India, 2008 (224) E.L.T. 184 (S.C.) may now be considered. The Supreme Court in that case held that the interest was payable pursuant to a bond given and it will be contractual and the Settlement Commission would have no jurisdiction to waive the interest. The Court there was considering the provisions of Section 28AA of the Customs Act. Under that provision on duty being ascertained, if not paid, within three months, interest is payable. On the facts of that case though the goods were dutiable in terms of the Notification they were exempt from duty subject to terms and conditions. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of these Rules for failure to comply with the conditions of imports power is conferred to recover the difference of duty and interest fixed by the Notification under Section 28AB of the Customs Act. Though ultimately as can be seen considering the Notification issued under the Rules the interest is secured by a bond notwithstanding the interest is payable pursuant to an exercise in subordinate legislation. Therefore, in our opinion, what emerges is that interest payable is compensatory for failure to pay the duty. It is not penal in character in that context. The Supreme Court under the provisions of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 in Collector of C.Ex., Ahmedabad v. Orient Fabrics Pvt. Ltd. - 2003 (158) E.L.T. 545 (S.C.) was pleased to observe that when the breach of the provision of the Act is penal in nature or a penalty is imposed by way of additional tax, the constitutional mandate requires a clear authority of law for imposition for the same. There the Court noted that the Act created liability for additional duty for excise, but created no liability for any penalty. The Supreme Court noted the judgment of the Federal Court in Chatt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le under the Customs Tariff Act. The law as now settled is that the charging Section for Customs Duty is Section 12 whereas the charging Section in so far as the Customs Tariff Act is Section 3. However, relevant for our discussion would be the Sections 3, 3A and their relevant sub-sections. Would a construction of these provisions, result in holding that interest be treated as having been incorporated under the provisions of the Customs Tariff Act, 1975. The provision for interest as now settled is a part of the machinery provisions. It by itself is not penal in character, but is compensatory in nature. In other words it recompensates the State on failure to pay duty at the rate of interest as determined by the Board. Two constructions flow. One the rule of strict construction it being a taxing statute and the other not a strict construction if it be part of the machinery provisions. We may now refer to Section 28AA. Under Section 28AA interest becomes automatically payable on failure by the assesee to pay duty as assessed within the time as set out therein. Similarly, under Section 28AB on duty being ascertained as under Section 28 interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest was payable and alternatively on the ground that the Commission had no jurisdiction to direct refund of interest. 4.5 Appellants have sought to contest the demand of interest by invoking the provisions of promissory estoppel. It was there submission that once they had been allowed registration as EOU, and clearance of the goods by allowing the exemption under Notification No 52/2003- Cus, the demand made under Section 28 and demand of interest under Section28AA/ 28AB will be hit by the principles of promissory estoppel. Hon ble Supreme Court has constantly held that there is no estoppel against the operation of law: Elson Machines Pvt Ltd [1988 (38) ELT 571(SC)] 8. The next submission on behalf of the appellant is that the Classification Lists had been approved earlier and the Excise authority was estopped from taking a different view. Plainly there can be no estoppel against the law. The claim raised before us is a claim based on the legal effect of a provision of law and, therefore, this contention must be rejected. Plasmac Machine Mfg Co Pvt Ltd [1991 (51) ELT 361 (SC)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has in case of Dilip Kumar Co [2018 (361) ELT 577 (SC)] held as follows: 52. To sum up, we answer the reference holding as under - (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) . 4.7 In view of the discussions as above we are not inclined to agree with the submissions made by the appellant s respect of the interest. We are also not inclined to agree that demand of interest should be limited to the amounts demanded in cash and not in respect of the amounts allowed to be debited from the EPCG licenses. In our view when short/ nonpayment is adjudged under Section 28, Section 28AA mandates the interest t appropriate rate on the quantum of short/ nonpayment adjudged independent of the fact that how the said amount is paid. 4.8 Now coming to the issue of permitting the debit of the duty demanded in cash from SFIS Scrips. It is not in dispute that during the relevant period when the imports were made such debits from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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