Linzii Vs. Commissioner of Customs - Court Judgment

Excerpt:
1. after examining the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed of at this stage. accordingly, after dispensing with predeposit and allowing the appellant's application for early hearing of the appeal, we proceed to deal with the appeal.2. the appellants had exported a consignment of cotton fabrics to commonwealth of dominica under a shipping bill filed under depb scheme.due to some reason, the consignment was recalled and bill of entry dated 19.10.2004 was filed for its clearance claiming the benefit of customs notification no. 158/95 dated 14.11.1995. the assessment was done accordingly. later on, when the department, in a letter, demanded full duty on the re-imported goods in the wake of noncompliance with the conditions of the above notification, the assessee raised an alternative claim for the benefit of notification no. 94/96-cus dated 16.12.96 (as amended). the claim of the assessee was under sl. no. 1(d) of the table annexed to the notification. under this entry, it was enough for the assessee to pay the amount of central excise duty not paid. so much of the basic customs duty (bcd) (section 12 of the customs act), additional customs duty (acd) (section 3 of the customs tariff act) and special customs duty (scd) (section 68(1) of the finance (2) act, 1996) as was in excess of such amount of central excise duty was exempt under the above notification. the original authority, in adjudication of the dispute, passed the following order. (i) i hold that assessment of bill of entry number 349342 dated 19.10.2004 under customs re-import notification no. 158/95 dated 1.11.1995 is snot in order and the assessment is regularized by extending customs notification 94/96 dated 16.12.1996 read with section 20 of the customs act, 1962 for the subject re-import. (ii) i demand an amount of rs. 84,011/- being the customs duty payable for the re-import of goods. (iii) i order that the amount of rs. 22,000/- encashed by enforcing bank guarantee and deposited vide customs receipt no. 9154 dated 6.3.06 against the above demand. (iv) i demand interest at the rate of 15% on the total amount of rs. 84,011/- from the date of clearance of the goods.3. after considering the submissions of both sides, we find that the export in this case had been made under depb scheme. the fact that the sale proceeds were not collected by the party and consequently there was no realization of foreign exchange would not detract from this position. in other words, the export should be one to be considered to have been made under depb scheme. consequently, sl. no. 2a in the table annexed to notification no. 94/96-cus gets attracted. the relevant entry is reproduced below: amount of central excise duty leviable at the time and place of importation of goods plus amount of drawback of excise duties allowed at the time of exports, subject to the condition that the importer produces a duty entitlement passbook before the proper officer of customs for debit of an amount equal to the amount of duty entitlement passbook scheme (depb) credit which was permitted by the government of india in the ministry of commerce for the products exported at the time of export of the consignment which is re-imported.it is not in dispute that the goods had originally been cleared from factory under bond for export. such bond had been executed in terms of rule 19 of the central excise rules, 2001. again it is not in dispute that, in the wake of recall of the goods by the exporter, they became liable to pay central excise duty on the goods in terms of the bond.the above notification, at sl. no. 2a, purported to enforce this liability in respect of goods exported under depb scheme. the exemption under the notification was in respect of customs duties amounting to whatever was in excess of the central excise duty leviable on the goods at the time and place of importation of the goods. it appears from the records that this central excise duty was quantified at rs. 84,011/- for recovery, though it was wrongly mentioned as customs duty in the order-in-original. it is submitted by ld. consultant for the appellants that an amount of rs. 22,000/- has already been recovered by the department by way of encashment of bank guarantee towards the above demand. the appellants are liable to pay the balance amount.4. the lower authorities have also demanded interest on the amount of rs. 84,011/- at the rate of 15% from the date of clearance of the goods. however, the provision of law under which interest has been demanded is not discernible from the order of the original authority.ld. commissioner (appeals), in the impugned order, has cited section 47 of the customs act in the context of demanding interest. we find that this provision enables customs authorities to levy interest on duty of customs and not on any duty of excise. the amount of rs. 84,011/- is a duty of excise and no interest can be charged thereon under any provision of the customs act.5. in the result, the appeal gets disposed of with a direction to the appellants to pay the balance amount of excise duty without interest within a reasonable period. the impugned order will stand modified to this effect.

Judgment:
1. After examining the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed of at this stage. Accordingly, after dispensing with predeposit and allowing the appellant's application for early hearing of the appeal, we proceed to deal with the appeal.

2. The appellants had exported a consignment of cotton fabrics to Commonwealth of DOMINICA under a Shipping Bill filed under DEPB Scheme.

Due to some reason, the consignment was recalled and Bill of Entry dated 19.10.2004 was filed for its clearance claiming the benefit of customs Notification No. 158/95 dated 14.11.1995. The assessment was done accordingly. Later on, when the Department, in a letter, demanded full duty on the re-imported goods in the wake of noncompliance with the conditions of the above Notification, the assessee raised an alternative claim for the benefit of Notification No. 94/96-Cus dated 16.12.96 (as amended). The claim of the assessee was under Sl. No. 1(d) of the table annexed to the Notification. Under this entry, it was enough for the assessee to pay the amount of Central Excise duty not paid. So much of the Basic Customs Duty (BCD) (Section 12 of the Customs Act), Additional Customs Duty (ACD) (Section 3 of the Customs Tariff Act) and Special Customs Duty (SCD) (Section 68(1) of the Finance (2) Act, 1996) as was in excess of such amount of Central Excise duty was exempt under the above Notification. The original authority, in adjudication of the dispute, passed the following order.

(i) I hold that Assessment of Bill of Entry Number 349342 dated 19.10.2004 under customs re-import Notification No. 158/95 dated 1.11.1995 is snot in order and the assessment is regularized by extending Customs notification 94/96 dated 16.12.1996 read with Section 20 of the Customs Act, 1962 for the subject re-import.

(ii) I demand an amount of Rs. 84,011/- being the Customs duty payable for the re-import of goods.

(iii) I order that the amount of Rs. 22,000/- encashed by enforcing Bank Guarantee and deposited vide Customs Receipt No. 9154 dated 6.3.06 against the above demand.

(iv) I demand interest at the rate of 15% on the total amount of Rs. 84,011/- from the date of clearance of the goods.

3. After considering the submissions of both sides, we find that the export in this case had been made under DEPB Scheme. The fact that the sale proceeds were not collected by the party and consequently there was no realization of foreign exchange would not detract from this position. In other words, the export should be one to be considered to have been made under DEPB Scheme. Consequently, Sl. No. 2A in the table annexed to Notification No. 94/96-Cus gets attracted. The relevant entry is reproduced below: Amount of Central Excise duty leviable at the time and place of importation of goods plus amount of drawback of excise duties allowed at the time of exports, subject to the condition that the importer produces a Duty Entitlement Passbook before the proper officer of Customs for debit of an amount equal to the amount of Duty Entitlement Passbook Scheme (DEPB) credit which was permitted by the Government of India in the Ministry of Commerce for the products exported at the time of export of the consignment which is re-imported.

It is not in dispute that the goods had originally been cleared from factory under bond for export. Such bond had been executed in terms of Rule 19 of the Central Excise Rules, 2001. Again it is not in dispute that, in the wake of recall of the goods by the exporter, they became liable to pay Central Excise duty on the goods in terms of the bond.

The above Notification, at Sl. No. 2A, purported to enforce this liability in respect of goods exported under DEPB Scheme. The exemption under the Notification was in respect of customs duties amounting to whatever was in excess of the Central Excise duty leviable on the goods at the time and place of importation of the goods. It appears from the records that this Central Excise duty was quantified at Rs. 84,011/- for recovery, though it was wrongly mentioned as customs duty in the Order-in-Original. It is submitted by ld. Consultant for the appellants that an amount of Rs. 22,000/- has already been recovered by the Department by way of encashment of Bank Guarantee towards the above demand. The appellants are liable to pay the balance amount.

4. The lower authorities have also demanded interest on the amount of Rs. 84,011/- at the rate of 15% from the date of clearance of the goods. However, the provision of law under which interest has been demanded is not discernible from the order of the original authority.

Ld. Commissioner (Appeals), in the impugned order, has cited Section 47 of the Customs Act in the context of demanding interest. We find that this provision enables customs authorities to levy interest on duty of customs and not on any duty of excise. The amount of Rs. 84,011/- is a duty of excise and no interest can be charged thereon under any provision of the Customs Act.

5. In the result, the appeal gets disposed of with a direction to the appellants to pay the balance amount of excise duty without interest within a reasonable period. The impugned order will stand modified to this effect.