Order Date – 30 November 2023

Patires: M/s. Indian Oil Corporation Ltd Vs The Commissioner of Customs

Facts –

• The Appellant, M/s. Indian Oil Corporation Ltd, was imposed with interest under section 28AB on a demand confirmed under Section 28(2) of the Customs Act 1962, for differential duty.
• It was contended by the appellant that Section 28AB of the Customs Act, 1962 as it stood is relevant only for recovery of interest on duty payable under Section 28 of the Customs Act, 1962 and not against finalisation of provisional assessments. Section 18 will be applicable in such case. However since the assessments are finalised prior to the amendment of section 18 ie. before 13.7.2006, demand of interest under Section 28AB is not applicable.

Issue –

• Whether interest under section 28AB of the Customs Act, 1962 is applicable on finalisation of the assessments?

Order –

• The Tribunal observed that the is no longer res integra as it has been settled by various decisions that in all cases of provisional assessment finalised on or after the amendment to Section 18 i.e.,on or after 13.7.2006 interest is applicable on finalisation of the assessments.
• Further the Tribunal relied on the decision of the Hon’ble Gujarat High Court in the case of Commissioner of Customs (Preventive) vs. Goyal Traders where it was held that “In the present case, we find that prior to introduction of sub-section (3) of Section 18 of the Act in the present form, there was no liability to pay interest on difference between finally assessed duty and provisionally assessed duty upon payment of which the assessee may have cleared the goods. It was only with effect from 13-7-2006 that such charging provision was introduced in the statute. Upon introduction therefor such provision created interest liability for the first time w.e.f. 13-7-2006.”
• Thus it was held that since the assessments are finalised prior to the above amendment i.e., before 13.7.2006, the question of interest does not arise. Accordingly, the impugned order is set aside and the appeal is allowed.