Case Note & Summary
The petitioner, B.V. Jewels, a partnership firm engaged in manufacturing and exporting gold and jewellery, operates an export processing unit in SEEPZ SEZ since 1988. In the course of business, it imported goods availing exemption under notification No. 177/94-Cus dated 21 October 1994 and executed a bond dated 2 November 1995. A show cause notice dated 5 June 2000 was issued under Sections 28 and 124 of the Customs Act, 1962 alleging shortage of stock of diamonds and evasion of customs duty. Diamonds and capital goods were seized. The order-in-original dated 13 June 2001 confirmed the demands. The petitioner's appeal to CESTAT was allowed on 14 February 2003, but the Supreme Court set aside that order and remanded the matter. CESTAT, by final order dated 21 December 2006, confirmed the demands and penalties. The petitioner's civil appeal to the Supreme Court was dismissed on 18 March 2013, but the Supreme Court granted time up to 22 August 2013 to pay the demanded amounts in instalments, and directed that upon discharge of the entire liability under CESTAT's order, the sealed and attached factory premises shall be released. The petitioner made payments but did not pay interest demanded by the respondents. The respondents refused to de-seal the factory on the ground that the petitioner is liable to pay additional interest of approximately Rs. 31 crores under Section 28AA of the Customs Act. The petitioner filed the present writ petition seeking to set aside the impugned order dated 18 January 2013 and letters dated 12 February 2014, 21 March 2014, and 8 February 2018, and to direct the respondents to de-seal the factory premises. The court framed issues: whether the respondents are justified in refusing to release the factory on the ground of non-payment of interest; whether the demand for interest is valid; and whether the petition is maintainable on grounds of delay and laches. The court held that interest under Section 28AA is automatic and does not require a separate demand. The Supreme Court's order was conditional on full payment of the liability under CESTAT's order, which includes interest. The petitioner failed to pay the entire amount by the stipulated date, and the respondents were entitled to recover outstanding dues. The court also held that the respondents had power to attach and seal the premises under the Customs Act, and the petitioner's challenge to such power at this belated stage is not maintainable. The petition was dismissed with no order as to costs.
Headnote
A) Customs Law - Interest under Section 28AA - Automatic Operation - Section 28AA of Customs Act, 1962 - Interest on delayed payment of duty is statutory and automatic, no separate demand or show cause notice required - The court held that the demand for interest is in accordance with law and the petitioner's failure to pay interest disentitles them to release of factory premises (Paras 18-20).
B) Supreme Court Order - Compliance - Conditional Order - Supreme Court's order dated 18 March 2013 granted time to pay liability under CESTAT order, but petitioner failed to pay entire amount including interest by the stipulated date - The court held that the respondents were entitled to recover outstanding dues including interest, and the petitioner cannot seek release without full payment (Paras 21-23).
C) Customs Law - Attachment and Sealing of Premises - Power to Attach - Sections 142 and 110 of Customs Act, 1962 - The court held that the respondents had power to attach and seal the factory premises under the Customs Act, and the petitioner's challenge to such power at this belated stage is not maintainable (Paras 24-26).
D) Writ Jurisdiction - Delay and Laches - Unexplained Delay - The petition was filed after considerable delay from the impugned orders, and no explanation was offered - The court held that the petition is liable to be dismissed on the ground of delay and laches (Paras 27-28).
Issue of Consideration
Whether the respondents are justified in refusing to de-seal and release the petitioner's factory premises on the ground that the petitioner is liable to pay interest under Section 28AA of the Customs Act, 1962, despite the Supreme Court's order dated 18 March 2013 directing release upon discharge of liability under CESTAT's order.
Final Decision
The petition is dismissed. No order as to costs.
Law Points
- Interest under Section 28AA of Customs Act
- 1962 is automatic and does not require a separate demand
- Supreme Court order conditional on full payment including interest
- delay and laches in challenging attachment
- no power to challenge attachment after Supreme Court proceedings
Case Details
2024 LawText (BOM) (11) 144
Writ Petition No. 2423 of 2024
M.S. Sonak, Jitendra Jain
Aspi Chinoy, Chirag Shetty, Ayushi Agrawal, Ruju Thakker, Poushali, Priyanshu Doshi
Union of India, Commissioner of Customs (Airport), Deputy Commissioner of Customs (Airport), Commissioner of Customs (General) Air Cargo Complex, Assistant Commissioner of Customs, SEEPZ-Gen
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Nature of Litigation
Writ petition seeking writ of certiorari and mandamus to set aside orders and letters demanding interest and refusing to de-seal factory premises, and to direct implementation of Supreme Court order.
Remedy Sought
Petitioner seeks setting aside of impugned order dated 18.01.2013 and letters dated 12.02.2014, 21.03.2014, 08.02.2018; direction to respondents to withdraw those orders, implement Supreme Court order, lift attachment and seal of factory premises, auction balance seized diamonds, refund excess proceeds, and issue NOC to SEEPZ SEZ.
Filing Reason
Respondents refused to de-seal and release petitioner's factory premises despite petitioner discharging entire liability under CESTAT order, on the ground that petitioner is liable to pay additional interest of approximately Rs. 31 crores.
Previous Decisions
CESTAT final order dated 21 December 2006 confirmed demands and penalties; Supreme Court order dated 18 March 2013 dismissed civil appeal but granted time to pay and directed release of factory upon discharge of liability; petitioner made payments but did not pay interest; respondents issued impugned order and letters demanding interest and refusing release.
Issues
Whether the respondents are justified in refusing to de-seal and release the petitioner's factory premises on the ground that the petitioner is liable to pay interest under Section 28AA of the Customs Act, 1962, despite the Supreme Court's order dated 18 March 2013 directing release upon discharge of liability under CESTAT's order.
Whether the demand for interest is valid and automatic under Section 28AA of the Customs Act, 1962.
Whether the petition is maintainable on grounds of delay and laches.
Submissions/Arguments
Petitioner: Supreme Court order dated 18 March 2013 directed release of factory upon discharge of liability under CESTAT order; petitioner discharged that liability; respondents cannot demand additional interest as no interest was demanded in CESTAT order; interest demand is belated and unreasonable; respondents had no power to seal/attach factory.
Respondents: Petitioner breached Supreme Court order by not paying entire liability by 22 August 2013; respondents entitled to recover outstanding dues including interest; interest under Section 28AA is automatic and does not require separate demand; petitioner's challenge to attachment is belated and not maintainable; petition suffers from delay and laches.
Ratio Decidendi
Interest under Section 28AA of the Customs Act, 1962 is statutory and automatic, and does not require a separate demand or show cause notice. The Supreme Court's order dated 18 March 2013 was conditional on the petitioner discharging the entire liability under CESTAT's order, which includes interest. Since the petitioner failed to pay the interest, the respondents were justified in refusing to de-seal the factory premises. The petitioner's challenge to the power of attachment and sealing is not maintainable at this belated stage, and the petition is also barred by delay and laches.
Judgment Excerpts
Interest under Section 28AA of the Customs Act is statutory and automatic. There is no necessity of any show cause notice or a formal demand in such matters.
The Supreme Court's order dated 18 March 2013 was conditional. The petitioner failed to comply with the condition of paying the entire liability including interest by the stipulated date.
The respondents had the power to attach and seal the factory premises under the Customs Act. The petitioner's challenge to such power at this belated stage is not maintainable.
The petition suffers from delay and laches. The impugned orders are from 2013, 2014, and 2018, and the petition was filed in 2024 without any explanation for the delay.
Procedural History
Show cause notice dated 5 June 2000 issued to petitioner; order-in-original dated 13 June 2001 confirmed demands; CESTAT allowed appeal on 14 February 2003; Supreme Court set aside and remanded; CESTAT passed final order on 21 December 2006 confirming demands and penalties; petitioner filed civil appeal before Supreme Court; Supreme Court dismissed appeal on 18 March 2013 but granted time to pay and directed release of factory upon discharge of liability; respondents issued impugned order dated 18 January 2013 and letters dated 12 February 2014, 21 March 2014, and 8 February 2018 demanding interest and refusing release; petitioner filed Interim Application before Supreme Court which was withdrawn; petitioner filed Writ Petition before Supreme Court which was withdrawn with liberty to file before High Court; present writ petition filed in 2024.
Acts & Sections
- Customs Act, 1962: Section 18(3), Section 28, Section 28AA, Section 110, Section 124, Section 142
