Mangalore chemicals & Fertilizers Ltd Vs ACIT (ITAT Bangalore)
ITAT Bangalore held that interest due to delayed payment of custom duty is deductible u/s 37 of the Act as it is an accretion to the main payment and not a penalty and accordingly allowable as deduction.
Facts- During the course of reassessment proceedings, it was noticed that for the purpose of manufacture of Fertilizers, the assessee company imports some of the raw materials, on which the assessee Company has to pay customs duty depending on the classification of the raw material. Based on the certain classification of the material, the assessee company had already paid customs duty, which was debited to purchase account in the normal course. There was notice from the Customs Authorities, stating that the payment of customs duty by the assessee was on wrong classification and accordingly the excess amount was claimed by the Customs Authorities. The matter was taken up to the Customs and Central Excise Settlement Commission. Based on reclassification, the settlement commission, Chennai bench vide order dated 19.03.2015 held that the Appellant company had misclassified the three imported consignments with an intention to evade payment of countervailing duty. Further, it was held that this act of the assessee exhibited certain amount of dishonesty and ordered the assessee to pay additional customs duty of Rs.1,40,87,305/- and interest of Rs. 1,25,46,377/-. Over and above, the additional Customs Duty and interest, the penalty of Rs.9,00,000/- was also levied by the Settlement Commission.
