At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai
By, THE HONORABLE JUSTICE: RAMESH NAIR
By, MEMBER AND THE HONORABLE JUSTICE: RAJU
For Petitioner: R.G. Sheth and Pinkey Jagwani, Advocates And For Respondents: S.J. Sahu, Asstt. Commr. (AR)
1. This rectification of mistake application have been filed by M/s. Plastrulon Processors Ltd. In respect of Order No. A/93653/2016/CB, dated 4-11-2016.
2. The Ld. Counsel pointed out that in the said order applicant had relinquished the title to goods lying with Customs under Section 60 of th
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e Customs Act, 1962. Relying on the decision of Hon'ble High Court of Karnataka in the case of Commissioner of Customs v. 12 Technologies Software Pvt. Ltd : 2007 (217) E.L.T. 176 (Kar.), the demand of duty was set aside. However in para 5.3 of the said order demand of interest was upheld relying on the decision of Hon'ble Apex Court judgment in the case of Kesoram Rayon v. Commissioner of Customs, Calcutta : 1996 (86) E.L.T. 464 (S.C.).
Ld. Counsel pointed out that the said reliance was misplaced as the said order of Hon'ble Apex Court the word interest was not with reference to the duty liability. He relied on the Circular No. 42/2003-Cus., dated 20-5-2003 wherein following has been observed:
"It may be recalled that Section 68 of the Customs Act, was amended in Budget 2003, to incorporate the following proviso, -
"Provided that the owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish his title to the goods upon payment of rent, interest, other charges and penalties that may be payable in respect of the goods and upon such relinquishment, he shall not be liable to pay duty thereon."
2. While it is clear that upon relinquishment of the title of the goods, the importer gains a freedom from liability to pay duty thereon, there appears to be some confusion in the field, whether such freedom also extends to the 'interest accrued on the said duty till the date of such relinquishment'. The confusion appears to have generated from the word 'interest' appearing in the text of the proviso.
3. In this regard it is clarified that the word 'interest' appearing in the said proviso, does not relate to 'interest accrued on the said duty till the date of such relinquishment' but relates to interest on other dues such as warehouse charges, rent etc."
3. Learned AR resisted the said application.
4. We have considered the contention of the applicant. We find that the order dated 4-11-2016 misconstrued the term 'interest' appearing in the judgment of Hon'ble Apex Court in the case of Kesoram Rayon however the term 'interest' in the said decision does not relate to the interest on duty but on the other charges. This is so as when the demand itself has been set aside there cannot be recovery of interest. In view of above, there is an apparent error in the order dated 4-11-2016. The para 5.3 and para 6 are substituted by following:
"Para 5.3. Since the demand of duty has been set aside there is no question of recovery of interest.
Para 6. The appeal is consequently allowed".
5. The rectification of mistake application is allowed on above terms