Case Note & Summary
The Union of India, through the Controller of Stores, Central Railway, filed a writ petition challenging an order-in-original dated 5 July 2006 and subsequent demand notices issued by the Commissioner of Customs (Imports), Mumbai, claiming differential duty and interest. The petitioner had already paid the differential duty but contested the interest component. The goods in question were imported by the Railways in 1986-1987 under the Project Import Regulations, 1986, and were provisionally assessed to customs duty under heading 9801 with concessional rates. The final assessment was made in 2006, and the differential duty was paid. The petitioner argued that at the time of import, there was no provision for interest on delayed payment of duty under the Customs Act, 1962. Section 28AA, which provides for such interest, was introduced by the Finance Act, 1995, with effect from 26 May 1995. Since the import was completed in 1986-1987, the petitioner contended that no interest could be charged. The respondent Commissioner argued that interest was payable from the date of final assessment. The Court, relying on the decision in Commissioner of Central Excise v. Dev Ashish, held that Section 28AA does not have retrospective effect and cannot apply to imports completed before its enactment. The Court allowed the petition, quashing the demand for interest.
Headnote
A) Customs Law - Interest on Delayed Payment of Duty - Section 28AA of the Customs Act, 1962 - Retrospective Operation - The issue was whether interest could be charged on differential duty for goods imported in 1986-1987, before Section 28AA was introduced with effect from 26 May 1995. The Court held that since the import was completed prior to the enactment of the provision, no interest could be levied, as the provision does not have retrospective effect. (Paras 1-5)
Issue of Consideration
Whether interest on delayed payment of differential customs duty can be levied under Section 28AA of the Customs Act, 1962, in respect of goods imported in 1986-1987, i.e., prior to the introduction of the said provision.
Final Decision
The petition is allowed. The demand for interest on differential duty is quashed.
Law Points
- Interest on delayed payment of customs duty cannot be charged for imports completed before the enactment of Section 28AA of the Customs Act
- 1962
- which was introduced with effect from 26 May 1995 by the Finance Act
- 1995.
