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TMI Blog2024 (3) TMI 1251X X X X Extracts X X X X X X X X Extracts X X X X ..... of the fourth respondent. 3. Mr.S.Murugappan, the learned counsel appearing on behalf of the appellant would submit that the appellant is engaged in the manufacture and export of various products including typewriters and air purifiers. A Scheme called to Export Promotion Capital Goods Scheme came to be introduced by the Government and the appellant had obtained a licence from the first respondent for the purpose of manufacture and export of air purifiers. Under the said Scheme, the importer was eligible to avail the concessional rate of customs duty for importing machineries, which was subject to the condition that the licencee exports a specified quantum of goods manufactured by using the machinery. He would further submit that the appellant had imported machineries worth about Rs. 59,59,050/- and based upon the concessional duty that was available to them, they had also paid a sum of Rs. 8,68,724/-. The appellant company had executed a bond with the customs authority and also an undertaking with the first respondent with regard to the completion of the exporting obligations as required under the licence. 4. Since, there was no demand for the air purifiers abroad, the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs, Chennai from the date of issue of the said letter. He would therefore, submit that the said communication, which relates to the payment of 24% of interest on the customs duty is liable to be set aside. 7. He would further submit that the learned single judge had not appreciated the material facts on record and only by relying upon a judgement of the Hon'ble Apex Court in Rexnord Electronics and Controls Limited's case reported in 2008 (12) SCC 156 had dismissed the Writ petition. In that context, he would submit that the said judgment does not deal with the facts of the present case and the judgment relied upon by the appellant in VVS sugars case reported in 1999 (4) SCC 192 and in the case of India Carbon Limited's case reported in 1997 (6) SCC 479 would only be squarely applicable to the case on hand, wherein the Hon'ble Apex Court had held that only when there is substantive provision for payment of interest alone, the demand of penalty or interest could be levied. Therefore, he would submit that the order impugned before us would have to be set aside and consequently, the impugned communication issued by the second respondent would also have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in setting aside the demand of interest was that there was no statutory provisions in the Customs Act for demand of interest. The Tribunal had relied upon the decision of the Settlement Commission in the cases of Rajshri Plastiwood Limited reported in 2001 (130) ELT 295 and Philips (India) Limited Vs CC. Mumbai reported in 2001 (137) ELT 697 to come to such a conclusion. In that context, he would submit that the Hon'ble Apex Court in the case of Rexnold Electronics and Controls Limited (referred supra) had held that even if the demand of interest under the Customs Act is not traceable to any statutory provision, when a bond had been executed by the company and the demand of interest is based upon the bond, then such a demand of interest is a valid demand and in that regard it had set aside the order of Settlement Commission by holding that the Settlement Commission did not have jurisdiction to waive the amount of interest payable under the bond. 10. He would further submit that the demand of interest under the Customs Act by the Customs authority on the basis of the bond executed in its favour is different from the demand made by the respondent under the Indemnity cum Gua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended, they would be liable to pay the difference in customs duty. In fact, their challenge to the demand of customs duty had become final, as the appellant had not initiated any further action against the order passed by the Appellate Tribunal. As per the bond that had been executed before the customs authority, they were liable to pay 24% of interest. The same had been set aside by the Appellate Tribunal by holding that there is no statutory provision for such a condition. It is not known whether the Department had preferred any further proceedings against the order. 15. Be that as it may, the issue involved in this lis does not arise out of the bond that had been executed by the appellant company in favour of the Customs authorities. The lis had arisen out of an Indemnity cum Guarantee Bond that had been executed by the appellant at the time of grant of licence that is on 04.01.1993. The relevant clause under the said agreement, for better appreciation of the facts is extracted hereunder:- "... h) that in the event of his default in meeting the aforesaid obligations/ conditions, he shall pay an amount equal of 24% interest per annum on the amount of duty saved from the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Department on the basis of the bond executed by the company. The Hon'ble Apex Court had held that the appellant company therein having evaded from payment of the duty, which it was bound to pay is also liable to pay the interest in the terms of the bond executed by it. In fact the Hon'ble Apex Court had held that the Settlement Commission only had a jurisdiction to waive a statutory interest, but not an interest that had been demanded on the basis of the bond executed by the company there in. 19. Further, in this case as we have arrived at a finding that what had been demanded was a penalty for not fulfilling an obligation which had been quantified to be equal to 24% of interest per annum of the difference in customs duty. The contentions raised by the learned counsel for the appellant that the respondents are not entitled to charge any interest on the difference in customs duty would have to fall. 20. The learned counsel for the appellant had vehemently contended that such a clause under the bond itself would have to be held to be a void condition which in our considered view is without any merits. Learned Single Judge had traced the said clause to Rule 6(2)(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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