Circular No. 750/66/2003-Central Excise
26th September, 2003
F. No. 387/285/W/2003-JC
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Subject: – Award of interest by the Tribunal
Commissioner of Customs (EP), Mumbai has brought to Board’s notice the Tribunal’s judgment in the case of M/s. Akai Impex Ltd. vs Commissioner of Customs, Mumbai [reported in 2003 (156) ELT 700 (Tri-Mumbai)]. In the said case, goods imported under the DEEC Scheme and cleared against advance licenses, without payment of duty, in terms of the provisions of Notification 204/92-Cus were sold by the importer without utilising the imported material in export production, as required in terms of the Notification conditions. In the Show Cause Notice issued, apart from duty, interest @ 24% p.a. was also demanded. However, on adjudication, while the Commissioner confirmed the demand of duty, regarding interest, Commissioner observed that the demand of interest cannot be sustained as there is no provision under the Customs Act, 1962 under which interest can be demanded. Order of Commissioner was reviewed by the Board and appeal before the CEGAT was filed, for recovery of interest, relying on the Hon’ble Supreme Court’s judgment in the case of Agricultural & Processed Food Products vs Oswal Agro Furane Ltd. [1996 (85) ELT 3(SC)]. Party also filed against confirmation of demand and imposition of penalty by the Commissioner.
Appeal of the party as well as of the Department have been decided by the Tribunal vide their above order. While dismissing the appeal of the party, Tribunal has dismissed the appeal of the Department also, inter-alia holding that the Supreme Court’s judgment does not lay down any ratio generally applicable and the order was obviously passed in exercise of powers conferred on it by Article 142 of the Constitution ; that the Tribunal being a creature of Statue, the exercise of its functions cannot go beyond the limits of Statue and that in the absence of any provision in the Customs Act, 1962 at the relevant time, for the levy of interest, they do not have powers to order payment of interest by the importer.
In this regard, it may kindly be recalled that in some cases of refund of pre-deposits, Tribunal has in the past ordered for payment of interest also by the Department despite their being no specific provision in the Statute. In some such cases, appeals have been filed before the Hon’ble Supreme Court. It is possible that in some similar cases Reference Applications / Appeals may have been filed by the Commissionerates before the jurisdictional High Courts and some similar cases may also be coming up for hearing before the Tribunal. It is therefore, requested that whenever any such case involving claim for interest comes up for hearing before the Tribunal or the Courts, where there is no specific provision in the law for payment of interest, the said judgment of the Tribunal may be cited to defend the case of the Department.
It is therefore, requested that this judgment may please be brought to the notice of all the Commissioners under your charge for necessary action at their end. CDR may kindly bring this judgment to the notice of all the Joint CDRs / SDRs / JDRs for defending such cases before the Tribunal.
Sungita Sharma
Director (Review)
