The Customs, Excises, and Service Taxes Appellate Tribunal (CESTAT), Chandigarh Bench ruled that the Customs Department failed to issue Show Cause Notice for recovery of Custom Duty, so the issue of admissibility of interest and its rates does not arises.
The respondent, M/s. Overseas Warehousing P.Ltd. was appointed as Custodian responsible for the receipt, storage, delivery, dispatch or otherwise handling of imported goods and export of goods in terms of section 45 of the Customs Act, 1962. One importer, namely, M/s. Golden Enterprises filed two bills of entry declared to be Pressed Distillate Oil.
A case was booked by DRI and the said imported goods were detained, seized, and confiscated. After prolonged litigation finally, the matter was decided against the department. Detention Certificate was issued by the department under Regulation 6(1) (l) of Handling of Cargo in Customs Area Regulations, 2009 for waiver of ground rent or demurrage for the period the goods remained detained, seized, and confiscated.
COC was granted by the proper officer for the delivery of the impugned goods to M/s. Golden Enterprises. Subsequent to grant of COC by the department the respondent demanded ground rent from the importer for the period the goods were lying in CFS in spite of issuance of detention of/waiver certificate under Regulation 6 (1) (l) of Handling of Cargo in Customs Area Regulations, 2009 for waiver of ground rent or demurrage.
Department vide letters asked the appellant not to third party liability with specific directions to follow the provisions of Section 48 of Customs Act, 1962.
Aggrieved against the refusal of the department to aggressively pursue the matter of waiver of detention/demurrage and the refusal of the custodian to accept the detention certificate, M/s. Golden Enterprises o filed Civil Writ Petition before High Court. During the pendency of the said petition, the respondent disposed of goods. The importer moved a contempt petition before the High Court upon which the High Court took a very strong view in the matter. The High Court vide order to consider the refund of duty paid by the petition along with interest on the declared value of the seized goods way back in 2013.
For complying with the directions of the High Court the department froze the bank account of the respondent against which he filed a writ petition. High Court vide its order directed the respondent to put Rs.25 lakhs in escrow account and the department will determine the question of admissibility of interest and its rate, if any, after adjudicating the recovery of duty from the respondent after giving the opportunity of hearing.
The sole contention of the Revenue is that the demand of interest against the respondent as per direction of High Court vide order. It is the contention of the Revenue that the importer has deposited duty way back in 2013 but could not enjoy, therefore, the respondent liable to pay duty and interest from 2013.
The coram of Ashok Jindal said that there was no goods in question were in the custody of the custodian in terms of section 47 of the Act then the duty is payable by the custodian but no such notice has been issued to the respondent by the appellant to determine the liability on the respondent. Moreover, it is fact on record that the appellant has enjoyed duty paid way back in 2013 on the goods in question.
The CESTAT observed that the question mark on the person who has received duty, who can duty, who is liable to pay interest thereon and duty has been enjoyed by the appellant themselves how can demand interest from the respondent without determining liability.
“The Revenue’s appeal is only an abuse of process of law as the adjudicating authority has determined duty liability against the respondent. The duty has been enjoyed by the appellant themselves how can demand interest from others. Therefore, I do not find any infirmity in the impugned order and the same is upheld,” the CESTAT while dismissing the revenue’s appeal said.
Subscribe Taxscan Premium to view the Judgment
Support our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
