Sony India Pvt. Ltd vs The Union Of India , Through The ...
2018 Latest Caselaw 353 Bom

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           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                   CIVIL APPELLATE JURISDICTION


                      WRIT PETITION NO. 13839 OF 2017

 Sony India Pvt. Ltd.
 A company incorporated under 
 the Companies Act, 1956 
 having its registered office at 
 A-18, Mohan Co-operative Industrial 
 Estate, Mathura Road, 
 New Delhi-110044                                              ... Petitioner

           Vs.

 1.        The Union of India through the
           Secretary, Ministry of Finance,
           Department of Revenue, 
           North Block, New Delhi - 110 001.

 2.        The Directorate of Revenue Intelligence
           Nhava Sheva Unit, 1st Floor,
           Port Users Building (PUB)
           Nhava Sheva, Uran,
           Raigad - 400707.

 3.        The Customs, Central Excise and
           Service Tax Settlement Commission,
           Additional Bench, 6th Floor, 
           Plot No.C-24, Utpad Shulk Bhavan, 
           Bandra-Kurla Complex, 
           Bandra (East), Mumbai - 400 051.                    ... Respondents

                                ......
 Mr. V. Sridharan, Senior Advocate a/w Mr. Jas Sanghavi i/by  
 M/s. PDS Legal for the Petitioner.
 Mr. Pradeep Jetly for the Respondents.
                                ......




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                               CORAM : S. C. DHARMADHIKARI &
                                           SMT. BHARATI H. DANGRE, JJ.

DATE : JANUARY 12, 2018.

ORAL JUDGMENT (PER S. C. DHARMADHIKARI, J.) :

1. By this Petition under Article 226 of the Constitution of

India, the petitioner is seeking following two reliefs:-

"(a) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioners case and after going into the validity and legality thereof quash and set aside the Impugned Letter of F.No.DRI/MZU/NS/ENQ-102/2014/3322 dated 10.4.2017 issued by Respondent No.2 thereby demanding payment of interest from the Petitioners and Impugned Letter dated 30.11.2017 issued by Respondent No.3 thereby dismissing the Miscellaneous Application filed by the Petitioners as non- maintainable;

(b) that this Hon'ble Court be pleased to issue a Writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ, under Article 226 of the Constitution of India ordering and directing that: (i) interest is not payable in cases of provisionally assessed Bills of Entry, when the complete differential duty has been paid prior to the finalization of the assessment and (ii) Respondent No.3 has power to issue clarifications, even after passing of Final Order under Section 127C(5) of the Customs Act, 1962;"

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2. The consequential prayer is of a writ of mandamus or any

other writ or direction in the nature thereof, directing the

respondents, their servants, officers and agents to refrain from

recovering interest on the differential duty of Rs.79,65,52,147/-

paid in respect of the provisionally assessed Bills of Entry in

pursuance of the impugned letter dated 10th April, 2017 issued by

the 2nd respondent.

3. Since extensive arguments have been canvassed and

affidavits are placed on record, we proceed to admit this Petition.

4. We dispose it of by consent of both sides by this order. Thus,

Rule. Respondents waive service. By consent, Rule is made

returnable forthwith.

5. We should note a few facts necessary to deal with the rival

contentions.

6. The petitioners are a company registered under the

Companies Act, 1956, now, the Companies Act, 2013. The 1 st

respondent is the Union of India and the 2 nd respondent is the

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Directorate of Revenue Intelligence (DRI) which is functional in

terms of one of the statutes involved, namely, the Customs Act,

1962. The 3rd respondent is the Settlement Commission set up

under Section 127B of the Customs Act, 1962.

7. The petitioners are inter alia engaged in import and trading

of various electronic equipments, including television sets. The

relevant period is April 2011 to February 2015. The petitioners

were importing television sets of various sizes and models

manufactured by M/s. Sony, Malaysia.

8. At the time of import, the petitioners claimed the benefit of

concessional rate/exemption from Basic Customs Duty under a

notification, details of which are mentioned in paragraph 7 of the

Petition. It is claimed that certain Rules were framed so as to give

effect to an agreement on the comprehensive economic

cooperation between India and Association of Southeast Asian

Nations. The petitioners state that exemption was available

subject to they producing certificates of origin certifying that 35%

value addition has been undertaken in Malaysia.

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9. We are not concerned with the later disputes and issues for

the simple reason that certain investigations resulted in the show

cause notice dated 25th April, 2016 being issued calling upon the

petitioners to show cause as to why:

i. Payment of differential duty amounting to Rs.290,91,27,182/- should not be demanded and recovered from the Petitioners under Section 28 of the Customs Act, 1962 along with interest under Section 28AA;

ii. The differential duty amounting to Rs.79,65,52,147/- should not be demanded and recovered from the Petitioners under Section 18(2) of the Customs Act, 1962 along with interest under Section 18(3);

iii. Rs.300,00,00,000/- deposited by the Petitioners during investigations, should not be appropriated against the differential duty and interest payable;"

Thus, as per the show cause notice, differential duty and

interest demands were raised against the petitioners with respect

to both, finally assessed Bills of Entry as well as provisionally

assessed Bills of Entry, but total duty demanded, according to the

petitioners, is 370,56,79,329/-.

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10. The petitioners claimed that in order to show their

bonafides, they deposited Rs.300,00,00,000/- prior to the issuance

of the show cause notice itself. After the show cause notice was

issued and duly received, the petitioners deposited

Rs.70,56,79,329/- towards differential duty demanded and

Rs.114,54,59,876/- towards interest payable on the differential

duty demanded under Section 28AA of the Customs Act, 1962.

11. The petitioners then approached the respondent no.3-

Commission and sought settlement of the issues and disputes

under the show cause notice dated 25 th April, 2016. The

petitioners claim that in their application, they clearly stated that

they have paid the following sums:

Amount paid Paid towards Rs.370,56,79,329/- Differential duty demanded in respect of the finally assessed Bills of Entry and the Provisionally assessed Bills of Entry.

Rs.114,54,59,876/- Interest in respect of the differential duty paid with regard to the finally assessed Bills of Entry.

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12. It is stated that this application was accepted by the 3 rd

respondent and it was listed for hearing on 14 th December, 2016.

The contention is that the 2nd respondent, before, during or after

the hearing, did not allege that complete or full payment of

interest has not been paid by the petitioners. After the proceedings

concluded, the Commission made the following order:

"8.1 Customs Duty: The differential Customs duty is settled at Rs.370,56,79,329/-. Applicant had deposited Rs.300.00 crores during investigation and paid the balance amount subsequently. The deposit of Rs.300.00 crores and balance amount paid subsequently are appropriated towards their duty liability. As the applicant has already paid the entire duty, no further liability subsists on this account. The duty settled herein includes differential duty of Rs.79,65,52,147/- payable by the applicant on the 187 Bills of Entry provisionally assessed which now stand finally assessed as proposed in the SCN.

8.2 Interest: The applicant have deposited Rs.1,14,54,59,876/- towards interest which is directed to be appropriated. The Revenue is directed to verify the applicable interest on the settled amount and balance if any payable by the applicant, should be deposited by the applicant within 30 days of the receipt of this order.

8.3 Penalty: (i) The Bench imposes a penalty of Rs.32,00,00,000/- (Rupees Thirty-two crores only) on the applicant M/s Sony India P. Ltd. and grants immunity to them from penalty in excess of this amount.

(ii) The Bench imposes a penalty of Rs.50,00,000/- (Rupees Fifty lakhs only) on the co-applicant Shri K.Hibi and grants immunity to him from penalty in excess of this amount.

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(iii) The Bench imposes a penalty of Rs.30,00,000/- (Rupees Thirty lakhs only) on the co-applicant Shri Sanjay Bhargava and grants immunity to him from penalty in excess of this amount.

(iv) The Bench imposes a penalty of Rs.20,00,000/- (Rupees Twenty lakhs only) on the co-applicant Shri Jiro Anagaki and grants immunity to him from penalty in excess of this amount.

The above penalties should be paid by the applicant/co- applicants within 30 days of receipt of this order.

8.4 Redemption Fine: The goods valued at Rs.6016,56,43,121/- are held liable to confiscation. However, since the same are not available for confiscation, no redemption fine is imposed.

8.5 Prosecution: Subject to payment of dues as adjudged above, full immunity from prosecution under Customs Act, 1962 is granted to the applicant/co-applicants so far as this case is concerned.

9. The above immunities to the applicant/co-applicants are granted under Section 127H(1) of the Act. Their attention is also invited to the provisions of sub-section (2) and (3) of Section 127H ibid. This order shall be void and immunities withdrawn if the Bench, at any time finds that the applicant had concealed any particular material from the Commission or had given false evidence or had obtained this order by fraud or misrepresentation of facts.

10. This order settles the case of the applicant and Co- applicants herein only. The Adjudicating authority is free to take action against the other Noticees to the Show Cause Notice as per law.

11. A copy of this order is given to the applicant/co- applicants and Jurisdictional Commissioner for their use in the implementation of this order. No one should use this order in any other manner or for any other purpose without the written permission of the Commission."

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13. Mr. Sridharan, learned Senior Counsel appearing on behalf

of the petitioners would submit that this order finalizes the

assessment of provisionally assessed Bills of Entry. There is

nothing in the order which would indicate that any interest in

respect of the same is payable. The petitioners have paid the

penalty adjudged and reported compliance of the same to the 3 rd

respondent. Thus, the final order dated 2 nd March, 2017 issued by

the 3rd respondent was complied with.

14. It is the complaint of the petitioners that after this order was

issued and duly implemented, the impugned communication has

been received.

15. The impugned communication, copy of which is at annexure

"A" (page 23 of the paper book), reads as under :

"F.No.DRI/MZU/NS/ENQ-102/2014/3322 Date-10.04.2017.

To, M/s. Sony India Pvt. Ltd.

A-31, Mohan Cooperative Ind. Area Mathura Road, New Delhi-110044

Gentlemen,

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Sub- Order No.27/FINAL ORDER/CUS/KNA/2017 dated 02.03.2017 passed by the Hon'ble Settlement Commission, Mumbai-Reg.

Please refer to the above Final Order dated 02.03.2017 passed by the Hon'ble Settlement Commission, Additional Bench, Mumbai on an application filed by you and other applicants.

2. Pay orders submitted towards the penalties imposed on you and other applicants were deposited in the Govt. Treasury at JNCH vide TR-6 Challans dated 29.03.2017 and original copy of the said challans are enclosed.

3. Attention is drawn to para 8.2 of the said order wherein a direction was given by the Hon'ble Settlement Commission to the department to verify the applicable interest payable. It is found that interest of Rs.114,54,59,876/- paid, was payable on the differential duty arising out of the bills of entry finally assessed at the time of clearances. Interest on the differential duty of Rs.79,65,52,147/- payable on provisionally assessed 187 bills of entry has not been paid. Vide the impugned order dated 02.03.2017, those 187 bills of entry have been order finally assessed.

4. It is, therefore, requested that deposit the interest payable of the differential duty of Rs.79,65,52,147/- on the provisionally assessed 187 bills of entry, as provided under Sub-Section 3 of the Section 18 of the Customs Act, 1962.

Yours Sincerely,

Sd/-

                                                          (Dr UMAIR MIR)
                                                         DEPUTY DIRECTOR,
     Encl- as above                                      DRI, NHAVA SHEVA.

Copy for information to:- The Senior Investigating Officer, Settlement Commission, Customs, Central Excise & Service Tax, Additional Bench, Mumbai."

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16. It is this communication which is challenged on several

grounds. It is contended that the petitioners paid the duty

alongwith interest before filing the application seeking settlement.

No interest was admitted and paid by the petitioners for the duty

demanded in respect of the provisionally assessed Bills of Entry.

This is clear from Sr. No.10 of the form of application filed before

the Settlement Commission at pages 161 and 162 of the paper

book. By relying upon the language of Section 127B(1) of the

Customs Act, 1962 and the first proviso (c) thereto, it is urged

that any applicant before the Settlement Commission is required

to deposit the additional amount of customs duty accepted by him

alongwith interest due as condition precedent. Only then the

application can be admitted before the Settlement Commission.

The Settlement Commission admitted the application by order

dated 16th September, 2016. The Commission disposed of this

application by order dated 2nd March, 2017. There is no challenge

by the Revenue to this order of the Settlement Commission.

Further, the Revenue filed a report dated 20 th October, 2016

before the Settlement Commission accepting that the petitioners

deposited interest of Rs.114,54,59,876/- payable on the

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differential duty. The only liberty that was reserved by the

Revenue pertains to any discrepancy found in the calculation of

this sum of interest. The Revenue did not report any such

calculation or computation error. Thus, there was no discrepancy

in the calculation of interest.

17. It is clear from the provisions of the Act, and particularly

Section 127H(1) of the Customs Act, 1962 that the Settlement

Commission has power only to grant immunity from penalty and

prosecution for any offence under the Customs Act, 1962. It has

no power to grant immunity from payment of any duty or interest.

Albeit, the Settlement Commission in regard to the case before it,

can exercise all the powers of the Customs Officers and that is

clear from the language of Section 127F(1). Mr. Sridharan would

submit that the settled position in law is that the Commission has

to pass an order in accordance with the provisions of the Customs

Act, 1962 and in that regard he relied upon Section 127C(5)of the

Customs Act, 1962. The Commission cannot direct payment of

interest which is not payable under the Customs Act, 1962. Mr.

Sridharan, therefore, would submit that no interest was payable

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by the petitioners on the differential duty in respect of the

provisionally assessed Bills of Entry. The provisionally assessed

Bills of Entry were finalized by the Settlement Commission

pursuant to the order dated 2nd March, 2017 and the Revenue

appropriated the duty already paid. The Commission did not pass

any order directing the petitioners to pay interest. There was

never any waiver of interest directed by the Commission either.

Thus, both the Settlement Commission and the 2nd respondent

clearly understood that no interest is payable by the petitioners on

the differential duty consequent upon the final assessment thereof

pursuant to the order dated 2 nd March, 2017 of the Settlement

Commission. It is in these circumstances, Mr. Sridharan would

submit that the impugned communication is ex facie erroneous

and illegal. The 2nd respondent is taking advantage of para 8.2 of

the order of the Settlement Commission in seeking to reopen the

case by contending that the petitioners are liable to pay interest

on the differential duty found payable on finalization of the Bills

of Entry by the Settlement Commission.

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18. Alternatively and without prejudice, it is argued that if by

para 8.2 of the order of the Settlement Commission it purports to

direct the payment of interest on the differential duty on account

of finalization of the assessment of 187 Bills of Entry, then, the

petitioners are entitled to challenge that order to that extent in

this Court.

19. For all these reasons, he would submit that the Writ Petition

be allowed.

20. Mr. Sridharan has relied upon the language of Section 18 of

the Customs Act, 1962 and Section 28AA of that Act. He also

brings to our notice the relevant portions of the amendments

brought to the Customs Act, 1962. He invites our attention to a

document styled as 'Budget Changes 2016-2017', which is nothing

but an extract from the Government of India, Ministry of Finance

(Department of Revenue), Central Board of Excise and Customs,

New Delhi's communication enlisting the changes in Customs and

Central Excise Law and rates of duty proposed through the

Finance Bill, 2016.

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21. Finally, Mr. Sridharan would heavily rely upon the

observations in the judgment of this Court to which one of us

(Shri S. C. Dharmadhikari, J.) was a party, rendered in the case of

CEAT Limited vs. Commissioner of Central Excise & Customs,

Nashik, reported in 2015 (317) Excise Law Times 192 (Bom.).

He would submit that the Revenue brought a Special Leave

Petition to challenge this judgment and order which Special Leave

Petition has also been dismissed by the Hon'ble Supreme Court.

22. On the other hand, Mr. Jetly appearing for the respondents,

particularly respondent nos. 1 and 2, relies upon the affidavit-in-

reply to this Petition. He would submit that it is correct that the

Settlement Commission passed an order on 2nd March, 2017.

However, the petitioners had not paid any interest on the

differential duty of Rs.79,65,52,147/- arising out of the

finalization of the provisionally assessed 187 Bills of Entry vide

the impugned order of the Settlement Commission. Though the

finalization comes under the order of the Settlement Commission,

the payment of interest which is statutorily payable, was not done.

That is how the communication was issued. The petitioners had

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responded to that communication by their reply dated 1 st May,

2017. Thereafter, the Directorate of Revenue Intelligence

communicated with the Settlement Commission on the issue and

requested for a clarification in that regard. A communication was

received from the office of the Settlement Commission on 19 th

June, 2017, informing that there are provisions under Section

127C(9) read with Section 127K, Section 127J and 127H(2) of the

Act, which are self explanatory, and appropriate action may be

taken as deemed fit. It is in these circumstances, it is submitted

that there is nothing erroneous or illegal about the

communication. Once the language of the statute is clear,

enunciating particularly the power to recover interest, then all the

more, the Petition should not be entertained. It is clear that the

reliance placed on the decision of this Court and that of the

Hon'ble Supreme Court is misplaced. They were rendered in

different facts and circumstances. For these reasons, Mr. Jetly

would submit that the Petition be dismissed.

23. For properly appreciating these contentions, it would be

necessary to refer to the impugned letter. We have already

reproduced it in the foregoing paragraphs. This letter refers to the

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final order of the Settlement Commission dated 2nd March, 2017

on the application of the petitioner and the other applicants. This

communication also refers to the receipt of the pay orders towards

penalties imposed on the petitioner and the other applicants and

the deposit thereof in the Government Treasury. The

communication relies upon para 8.2 of the order of the Settlement

Commission wherein a direction was given by the Settlement

Commission to the Revenue to verify the applicable interest

payable. The communication says that the interest of

Rs.114,54,59,876/- paid, was payable on the differential duty

arising out of the Bills of Entry finally assessed at the time of

clearances. Interest on the differential duty of Rs.79,66,52,147/-

payable on provisionally assessed 187 Bills of Entry has not been

paid. True it is that by the order of the Settlement Commission,

the 187 Bills of Entry have been finally assessed. It is, therefore,

the request of the Revenue that the petitioner should deposit the

interest payable on the differential duty of Rs.79,65,52,147/- on

the provisionally assessed 187 Bills of Entry and in that regard it

refers to Section 18(3) of the Customs Act, 1962. Pertinently, this

communication from the Deputy Director on behalf of the

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Directorate of Revenue Intelligence, Nhava Sheva Unit refers to

the order of the Settlement Commission dated 2nd March, 2017 as

an impugned order. We do not see anybody has impugned this

order at least on the date of issuance of this communication dated

10th April, 2017. This is a clear pointer to what the Revenue

understands that order to be and its complaint thereagainst. For

that purpose, if we refer the proceedings before the Settlement

Commission, it would be clear that the Commission had before it,

the application of the petitioner. The application of the petitioner

prayed for the following reliefs:

"a) accept the amount of Rs.370,56,79,329/- as submitted above along with applicable interest of Rs.114,54,59,876/- and admit & settle the application filed by the Applicant;

b) grant waiver of penalty leviable under the Customs Act in full;

c) to direct the Common Adjudicating Authority, namely the Additional Director General (Adjudication), Directorate of Revenue Intelligence, Mumbai, not to proceed further with the subject matter including passing of adjudication order till the final disposal of this settlement application;

d) to provide immunity to the Applicant from prosecution under the Customs Act and under any other applicable laws;

           e)      grant a personal hearing; and





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           f)      pass   such   order   or   such   other   order/s   as   may   be

deemed fit and proper in the facts and circumstances of the case."

24. It is evident that all the facts and circumstances, as are set

out in the show-cause notice, are extensively referred by the

Settlement Commission in its final order including the allegations

therein. The issue or dispute was noted with all the details. The

Commission, in paragraph 2.28, makes a reference to the goods

imported under the Bills of Entry as detailed in annexures A-1,

B-1, C-1, D-1 and E-1 of the show cause notice and observes that

they have been assessed provisionally for the reasons as discussed

elsewhere in the show cause notice. The assessment thereof is

required to be finalized under Section 18(2) of the Customs Act,

1962 after denying the benefit of Notification No. 46/2011 dated

1st June, 2011 to duty as indicated in Column (o) of the said

annexures. Consequently, differential duty in respect of these

imports as detailed in the above annexures, totally amounting to

Rs.79,65,52,147/- is payable by the petitioner under the

provisions of Section 18(2) of the Customs Act, 1962. The

Commission then summarizes the computation and calculations in

relations to the demand at internal page 14 of its order.

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25. In paragraph 3 of its order, the Commission refers to the

submissions of the applicants. Then, at internal page 17 (running

page 199) para 4, the Settlement Commission holds that these

applications were allowed to be proceeded under Section 127B of

the Customs Act, 1962 by orders of the Commission dated 16 th

September, 2016. Then, the Commission refers to the report of

20th October, 2016 filed on behalf of the Revenue and in which

the Revenue says that the applicant Company has paid entire duty

of Rs.370,56,79,329/- demanded in the show cause notice. They

have also paid an amount of Rs.114,54,59,876/- towards interest

payable on the said differential duty amount. Paragraph 5.1 of the

order of the Settlement Commission reads as under :

"5.1 The applicant company has paid the entire duty of Rs.370,56,79,329/- demanded in the show cause notice. They have also paid an amount of Rs.114,54,59,876/- towards interest payable on the said differential duty amount. The interest so paid by the applicant prima facie appears to be correctly paid. However, any discrepancies found in the calculation will follow the natural course of intimation to the Hon'ble Commission, separately."

26. Then, the Settlement Commission makes a reference to the

report and says that the DRI has no objection to the settlement of

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the applicants' case subject to the following :

(a) confirmation of entire amount of differential duty with interest;

(b) imposition of appropriate penalty and personal penalty, and

(c) any other order as the Settlement Commission may deem fit.

27. Then, the pleas raised by the parties are noted. After para 8,

the operative order of the Commission reproduced above has been

passed. Thus, the Bench takes note of the fact that the parties like

the petitioners have cooperated with it and made a true and

complete disclosure of their liabilities and the Commission is

inclined to settle their cases under Section 127C(5) of the

Customs Act, 1962 by granting partial immunity from penalties in

the terms noted in its operative order.

28. We cannot pick one sentence from the operative order, and

particularly in paras 8.1 and 8.2 and read it in isolation. On the

customs duty, the Commission says that it has settled it at

Rs.370,56,79,329/-. The petitioner has deposited Rs.300.00 crores

during investigation and paid the balance amount subsequently.

The deposit of Rs.300.00 crores and balance amount paid

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subsequently are appropriated towards the duty liability. As the

petitioner has already paid the entire duty, according to the

Commission, no further liability subsists on this account. The

pertinent observations of the Commission are that the duty settled

includes differential duty of Rs.79,65,52,147/- payable by the

petitioner on the 187 Bills of Entry provisionally assessed which

now stand finally assessed as proposed in the show cause notice.

29. As far as the interest is concerned, the petitioner has

deposited Rs.114,54,59,876/- towards interest and that is also

directed to be appropriated. The Revenue was directed to verify

the applicable interest on the settlement amount and balance, if

any, payable by the petitioner, should be deposited by the

petitioner within 30 days of receipt of that order.

30. Pertinently, Revenue does not do anything in order to verify

the applicable interest on the settled amount and balance, if any,

payable by the petitioner.

31. The direction in paras 8.1 and 8.2 of the operative order has

to be noted and reconciled with para 5.1 of the order of the

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Settlement Commission which we have reproduced above. Thus,

the differential duty was computed in the above sum. The interest

also, which has been paid, was directed to be verified. The

Revenue in the report had already indicated that this figure prima

facie appears to be correct. Any discrepancy found in the

calculation will follow the natural course of intimation to the

Commission separately. Pertinently, the Revenue made no

communication with the Commission intimating discrepancy in

the calculation. Thus, the calculation and computation was

directed to be verified. We do not see any substantive issue, and

particularly of the nature highlighted in the impugned

communication/letter, could have been surviving for adjudication

after such comprehensive order of the Commission. The impugned

letter does not refer to any computation or calculation error but

purports to raise a substantive demand. That is something which

we do not find to be permissible and sustainable in the given facts

and circumstances.

32. We do not see how we can be called upon in such

circumstances to decide any wider question or a larger issue. All

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that we are concerned with is the sustainability of the impugned

communication. We find that once the final order of the

Commission has been accepted by both sides, particularly by the

Revenue, and not challenged, could the Revenue have, after

appropriation and adjustment in terms of this final order, called

upon the petitioner to pay interest on the differential duty payable

on provisionally assessed 187 Bills of Entry. If that was the

remaining or the outstanding issue, the Commission would have

notified the same during the course of its proceedings. Section 18

of the the Customs Act, 1962 has been relied upon. Section 18 of

the said Act is to be found in Chapter V titled as "Levy of, And

Exemption From Customs Duties". Section 18 follows Sections 12

to 17 which refer to 'dutiable goods', 'duty on pilferred goods',

'valuation of goods', 'date for determination of rate on duty and

tariff valuation of imported goods', 'date for determination of rate

of duty and tariff valuation of export goods' and importantly,

Section 17 titled as 'Assessment of duty'.

33. By Sub-section (1) of Section 17, it is stated that an

importer entering any imported goods under Section 46, or an

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exporter entering any export goods under Section 50, shall, save

as otherwise provided in Section 85, self assess the duty, if any,

leviable on such goods. Then, the proper officer may verify the

self-assessment of such goods and for this purpose, examine or

test any imported goods or export goods or such part thereof as

may be necessary. Prior to the substitution of Sub-section (3)

w.e.f. 31st March, 2017 by the Finance Act, 2017, it was clarified

that the proper officer may require the importer, exporter or any

other person, for verification of self-assessment under Sub-

section(2), to produce any contract or broker's note etc., or any

document whereby the duty leviable on the imported goods or

export goods, as the case may be, can be ascertained, and to

furnish any information required for such ascertainment which is

in his power to produce or furnish, and thereupon, the importer,

exporter or such other person shall produce such document or

furnish such information. Where the self-assessment is correct, the

question does not arise, but when it is not done correctly, then the

proper officer, without prejudice to any other action which may be

taken under the Customs Act, 1962, re-assess the duty leviable on

such goods. Then follows the eventuality of re-assessment and

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that is set out by Sub-sections (5) and (6) of Section 17. Thus, any

disagreement with the self-assessment or any contravention of the

self-assessment by the importer in such reassessment necessitates

passing of a speaking order within the time stipulated by Sub-

section (5). By Sub-section (6), the consequences of not doing re-

assessment or not passing a speaking order have been set out.

Then, there is an explanation appearing in this Section.

34. Section 18 deals with provisional assessment of duty and

opens with a non-obstante clause. That is, where the importer or

the exporter is unable to make self-assessment under Sub-section

(1) of Section 17 and makes a request in writing to the proper

officer for assessment, or where the proper officer deems it

necessary to subject any imported or exported goods to any

chemical or other test, or where the importer or exporter has

produced all the necessary documents and furnished full

information but the proper officer deems it necessary to make

further inquiry, or where necessary documents have not been

produced or information has not been furnished and the proper

officer deems it necessary to make further inquiry, then the proper

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officer can direct that the duty leviable on such goods be assessed

provisionally and if the importer or exporter, as the case may be,

furnishes such security as he deems fit for the payment of

deficiency, if any, between the duty as may be finally assessed or

reassessed, as the case may be, and the duty provisionally

assessed. Thus, the deficiency in the duty as may be finally

assessed or reassessed, as the case may be, and the duty

provisionally assessed has to be cleared by furnishing security. The

consequences of final assessment and the re-assessment are set

out in Sub-section (2) and then follows Sub-section (3) which has

been inserted by the Act 29 of 2006 with effect from 13 th July,

2006. There, the liability to pay interest arises and on any amount

payable to the Central Government, consequent to the final

assessment order or re-assessment order under Sub-section (2), at

the rate fixed by the Central Government under Section 28AB

from the first day of the month in which the duty is provisionally

assessed till the date of payment thereof. We need not refer to

Section 28AB for what we find is that this route has not been

taken in this case. The show cause notice was issued and that, as a

whole, went for settlement before the Settlement Commission.

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The Revenue verified the contents of that application in the

backdrop of the show cause notice and submitted its report. In

that report, it communicated its agreement with the figures and

calculations, albeit prima facie, but reserving a limited liberty. The

Commission was allowed to proceed on these lines and even the

Commission proceeded accordingly. Once the dispute or the issues

were settled by the Commission in terms of the order and with the

operative directions, which only granted or reserved a limited

liberty in the Revenue, then, in the facts and circumstances of this

case, we see no justification for the Revenue now demanding

interest on the differential duty. Everything that was payable,

including duty and interest, is subsumed in the order of the

Commission. That is clear, according to us, and there was never

any ambiguity or error noted in the same. What we find

interesting is, in response to this Petition, it is in the affidavit-in-

reply that the Revenue refers to the communication. The Revenue,

namely the Directorate of Revenue Intelligence, addresses a

communication to the Assistant Commissioner, Customs and

Central Excise Settlement Commission, Additional Bench,

Mumbai. There, it makes reference to the impugned letter and

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with a copy marked to the Commission. After it refers to all the

operative directions, the Commission's attention is invited to Sub-

section (3) of Section 18. In para 4.2.1 of this communication, the

Revenue says that the 187 Bills of Entry assessed provisionally,

have now stood finally assessed under the impugned order of the

Settlement Commission. Though the petitioner has paid

differential duty of Rs.79,65,52,147/- on the provisionally

assessed 187 Bills of Entry, they have not paid interest on the said

differential duty. Once again, the Commission's attention was

invited to Section 18(3). The Revenue says that in compliance of

the order of the Commission, by office letter dated 10 th April,

2017, the petitioner was requested to pay the interest on the said

differential duty arising out of the provisionally assessed Bills of

Entry. Then, the response of the petitioner to this communication

is set out. It is expressly stated in para 5.1 that the petitioner seeks

assistance and takes shelter of the decision of this Court in the

case of CEAT Ltd. (supra) and its stand that the interest provision

under the Customs Act, 1962 was similarly worded to the interest

provision under the Central Excise and no interest can be charged

on such differential duties which are prior to finalization of the

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provisional assessment. However, in the opinion of the Revenue,

there are decisions to the contrary. It is in these circumstances

that the Revenue says that though the petitioner has paid the

differential duty before the final assessment, but that does not

absolve them from paying interest on the same. The payment of

differential duty before final assessment is the choice of the

petitioner and hence, it is required to pay interest for the period

from the first day of the month succeeding the month in which the

duty is provisionally assessed till the date of payment thereof.

However, despite being informed by the Revenue/Department,

that interest has not been paid. That is stated to be a non-

compliance of the order of the Settlement Commission and it was

requested to therefore withdraw the immunities granted to the

petitioner. Yet, the communication says that the Settlement

Commission should do the needful as all the above circumstances

have been brought to its notice. A decision should be taken by the

Settlement Commission and duly communicated.

35. From the record, it is apparent that the Settlement

Commission did not agree with this stand of the Revenue for, on

19th June, 2017, it communicated that the provisions of the

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Customs Act, particularly in relation to the powers of the

Commission, are clear and self explanatory. The Revenue was told

to take appropriate action at its end.

36. It is in these circumstances that we do not see how the

Revenue, when being in receipt of such communication from the

Commission, could have pursued the action in terms of the

impugned letter dated 10th April, 2017. The Revenue knew where

it stands and in the scheme of the law. If it has not raised the

contentions in the affidavit-in-reply or in the communication to

the Settlement Commission during the proceedings or post its

final order dated 2nd March, 2017, then, in the facts and

circumstances of this case, it is alone to be blamed. It must blame

itself if it has not conducted the proceedings before the

Commission in the manner demanded by the statute or its report

or its conduct of the proceedings was deficient in any

manner. In the Petition challenging the impugned

communication / letter dated 10th April, 2017 at the instance of

the petitioner, the Revenue cannot call upon this Court to

undertake an exercise which stands concluded by the final

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order of the Settlement Commission dated 2nd March, 2017. More

so, when the said final order is not challenged by the Revenue in

substantive proceedings.

37. As a result of the above discussion, we find that the Petition

succeeds on this limited issue. That is why we have not entered

into any larger controversy. Rule is made absolute by quashing the

impugned letter dated 10th April, 2017 and the Revenue is

commanded not to act in furtherance thereof. In the

circumstances, there would be no order as to costs.

(SMT. BHARATI H. DANGRE, J.) (S. C. DHARMADHIKARI, J.)