B.V. Jewels Vs Union of India (Bombay High Court)
Bombay High Court held that demand of interest under section 28AA of the Customs Act is statutory and operates automatically hence there is no need of any show cause notice or a formal demand for the same.
Facts- The petitioner is a partnership firm engaged in the manufacturing and exporting of gold and jewellery studded with diamonds and precious stones. The respondents issued a show cause notice u/s. 28 and 124 of the Customs Act alleging a shortage of stock of diamonds imported after taking into account the exports effected, resulting evasion in customs duty to substantial extent. The respondents seized diamonds and capital goods on the grounds that they were liable for confiscation. Post adjudication, demands in the show cause notice were confirmed. CESTAT confirmed the duty demand.
The main contention of the petitioner is that despite of discharging the entire liability under the CESTAT’s order, the respondents are refusing to de-seal and release the petitioner’s factory on the ground the petitioner is liable to pay an additional amount of approximately Rs. 31 Crores towards interest liability.
Conclusion- The Court in Sales Tax Officer, Sector I, Kanpur & Anr. Vs. M/s. Dwarika Prasad Sheo Karan Dass. and Haji Lal Mohd. Biri Works Vs. State of U.P. held that the liability to pay interest is automatic and arises by operation of law. It was further observed that the Sales Tax officer did not need to specify the amount of interest in the recovery certificate. The Court held that the assessing authority was not even required to serve a fresh notice upon the dealer.
