2004 (96) ECC 522 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-B

Shri V.K. Agrawal, Member (T) and Shri P.G. Chacko, Member (J)

Jindal Steel & Power Ltd.

Versus

CCE, Raipur

Appeal No. E/1886-1887/2003-B

[Arising out of Order-in-Appeal No. 113-114/RPR-I/2003 dated 30.4.2003 of the Commissioner of Customs (Appeals), Chhattisgarh].

Final Order No. 202-203/2004-B, dt. 3.3.2004, Certified on 5.3.2004

Import

Capital goods -- Bonded goods were got transferred to private customs bonded warehouse -- Goods were assessed provisionally and were permitted such warehousing for one year specifying simultaneously that no interest was payable for the first six months. While the goods were still in the bonded warehouse, Section 61(2)(ii) was amended as per Clause 106 of the Finance Act, 2001, whereby the interest-free period was reduced from six months to thirty days. Whether the interest-free period of six months applicable under the pre-amendment provision of Section 61(2)(ii) to the goods warehoused prior to 1.6.2001 is curtailed by the amendment under Clause 106 of Finance Act, 2001 read with the above Notification? There is force in the arguments of the counsel for the appellants. The Circular No. 62/99-Cus dated 17.9.99 was issued in clarification of Notification No. 30/99-Cus (NT) dated 12.5.99 which provided for a graded scale of interest in respect of goods warehoused under Section 61(1)(b) of the Customs Act, which remained in warehouse beyond 6 months from the date of warehousing. After consulting the Ministry of Law, the Board clarified that the interest as revised under Notification No. 30/99-Cus (NT) dated 12.5.99 was applicable in respect of goods warehoused prior to the said date but only from the expiry of six months or 12.5.99 whichever is later. Significantly, in respect of goods warehoused prior to 12.5.99 the revised interest rate was not made applicable for a period of six months from the date of warehousing. This rule of prospective operation appears to be equally good in respect of Notification No. 23/2001-Cus (NT).

Refund

The payment of duty against the said ex-bond Bills of Entry had been realised on 1.5.2001 but the refund of interest thereon was claimed on 4.12.2001 only. The party did not raise the plea of provisionality of assessment before the lower authorities to resist the bar of limitation provided under Section 27 of the Customs Act. Now, they have raised a different ground based on Explanation II to Section 27(1). The decision of the Commissioner (Appeals) to reject the refund claim as time-barred for want of evidence of payment under protest is not under challenge. The decision of the lower appellate authority is sustained.

PRESENT :

Shri L.P. Asthana, Adv. for the appellants.

Shri Vikas Kumar, SDR for the respondent.

Cases Cited :

1. Bangalore Wire Rod Mills v. UOI, 1992 (61) ELT 37 (Kar) (Distinguished)............ [Para 2]

2. Collector of Customs & Central Excise v. J.K. Synthetics Ltd.,
1991 (35) ECC 57 (T) (Relied on)............................................................ [Paras 2 & 6]

3. P. Mahendran & Ors. v. State of Karnataka & Ors., AIR 1990 SC 405 (Relied on) [Paras 2 & 6]

4. Siganporai Brothers v. UOI, 1993 (66) ELT 606 (Bom) (Distinguished)................ [Para 3]

5. UOI v. Bangalore Wire Rod Mills, 1996 (54) ECC 133 (SC) (Relied on)................ [Para 2]

Per : P.G. Chacko

The appellants had imported capital goods for their factory of Raigarh (Chhattisgarh). On arrival of the goods at Mumbai, they filed Bills of Entry (Warehousing) and got the bonded goods transferred to their private customs-bonded warehouse at Raigarh. The proper officer of Customs assessed the goods provisionally and made orders permitting such warehousing for a period of one year [as per Section 61(1)(b) of the Customs Act] and specifying that no interest was payable for the first six months of this period. Section 61(2)(ii) had, at that time, provided for payment of interest for the period beyond six months. While the goods were still in the bonded warehouse, Section 61(2)(ii) was amended as per Clause 106 of the Finance Act, 2001, whereby the above interest-free period was reduced from six months to thirty days. This amendment was made with effect from 1.6.2001 vide Clause 106 ibid read with Notification No. 23/2001-Cus. (N.T.) dated 22.5.2001. For clearance of the goods from warehouse for home consumption, the appellants filed ex-bond Bills of Entry. These Bills of Entry were provisionally assessed and, accordingly, the appellants paid customs duty with interest thereon for the period from 1.6.2001 till the date of payment of duty. The appellants filed applications for refund of Rs. 15,448 and Rs. 15,88,699 claiming that these amounts had been paid in excess of the interest payable under Section 61(2)(ii) (as amended) of the Act. The Assistant Commissioner of Bilaspur Central Excise Division (exercising jurisdiction over the private bonded warehouse of the appellants) rejected the refund claim of Rs. 15,448 as per order dated 6.3.2002. By a separate order dated 5.12.2001 on the refund claim of Rs. 15,88,699, he disallowed the claim to the extent of Rs. 13,35,094 and allowed the rest. Aggrieved by these orders, the party preferred appeals to the Commissioner (Appeals). The appellate authority had three issues before it : (a) whether the appellants were entitled to have interest-free period of six months in respect of the goods warehoused prior to 1.6.2001; (b) which of these dates -- the date of presentation of cheque alongwith TR-6 challan to the bank or the date of credit of amount into Govt. account -- should be taken to be the date of payment; (c) whether the refund claim of Rs. 101 against two ex-bond Bills of Entry (Nos. 5 and 6 dated 19.9.2000) was hit by time-bar. The Commissioner (Appeals) decided in favour of the appellants on the second issue and against them on the other two issues. The appellants are before us on the latter issues vide (a) and (c) above.

2. We have heard both sides and considered their submissions. Ld. Counsel, Shri L.P. Asthana, for the appellants has argued that, as Notification No. 23/2001 expressly gave prospective effect from 1.6.2001 to the amendment of interest-free period of warehousing under Section 61(2)(ii) of the Act, the amended provision has no application to goods warehouse prior to 1.6.2001. It is a well settled rule of construction that every statute or statutory rule is prospective unless it is expressly, or by necessary implication, made to have retrospective effect. Unless there are words in the statute or in the rule showing the intention to affect existing rights, the rule must be held to be prospective as held by the Hon'ble Supreme Court in the case of P. Mahendran & Ors. v. State of Karnataka & Ors., AIR 1990 SC 405. According to Ld. Counsel, the ruling of the Apex Court is equally applicable to a statutory Notification like the one cited above. Counsel has argued that it is the law in force on the date of warehousing that would apply to the goods and accordingly Section 61(2)(ii) prior to its amendment under the Finance Act, 2001 should be made applicable, in which event no interest on duty would be payable for six months' from the date of warehousing where such date is prior to 1.6.2001. The right to keep the goods warehoused for six months without liability to pay interest on duty was acquired on the date of deposit of the goods in warehouse, which was prior to 1.6.2001, and the right so acquired could not be affected by the amendment of law made with prospective effect. In this connection, Counsel has relied on the Tribunal's decision in Collector of Customs & Central Excise v. J.K. Synthetics Ltd., 1991 (35) ECC 57 (T) : 1991 (56) ELT 236. Reliance has also been placed on the Karnataka High Court's decision in Bangalore Wire Rod Mills v. UOI, 1992 (61) ELT 37 (Kar), wherein the imported goods were entered for warehousing prior to the 13.5.1983 amendment of Section 61 of the Customs Act and both sides agreed that the amended provision was not applicable to such goods. It has also been pointed out that the decision of the High Court was upheld by the Supreme Court in UOI v. Bangalore Wire Rod Mills, 1996 (54) ECC 133 (SC) : 1996 (83) ELT 251 (SC). Ld. Counsel has also relied on CBEC's Circular No. 62/99-Cus dated 17.9.99.

3. Ld. DR has argued that any vested right in relation to the warehoused goods was only the right to keep the goods without payment of duty and that any interest-free period of warehousing was no substantive right at all. The latter aspect was procedural only, according to Ld. DR. He has also cited the Bombay High Court's decision in Siganporai Brothers v. UOI, 1993 (66) ELT 606 (Bom). With regard to the refund claim of Rs. 101 rejected as time-barred, Ld. DR has submitted that the claim was made admittedly beyond six months for the date of payment of interest and that there is no evidence of the payment having been made under protest. The claim was, therefore, time-barred under Section 27 of the Customs Act.

4. We have given careful consideration to the submissions. Section 61(2)(ii) of the Customs Act, as amended by Clause 106 of the Finance Act, 2001, reads as under:

"(2) Where any warehoused goods --

(i)

..............................................

(ii)

specified in sub-clause (b) of sub-section (1), remain in a warehouse beyond a period of 30 days, interest shall be payable at such rate or rates not exceeding the rate specified in section 47, as may be fixed by the Board, on the amount of duty payable at the time of clearance of the goods in accordance with the provisions of section 15 on the warehoused goods, for the period from the expiry of the said 30 days till the date of payment of duty on the warehoused goods".

Prior to the amendments, the interest-free period of warehousing was 6 months. The amendment was brought into force by Notification No. 23/2001-Cus (NT) which provided that the amendment would be effective from 1.6.2001. The question before us is whether the Notification had retrospective effect. To be precise with reference to the facts of the case, the question is whether the interest-free period of six months applicable under the pre-amendment provision of Section 61(2)(ii) to the goods warehoused prior to 1.6.2001 is curtailed by the amendment under Clause 106 of Finance Act, 2001 read with the above Notification.

5. The original and first appellate authorities have held that the interest-free warehousing period of 30 days was applicable to all goods which were in warehouse as on 1.6.2001 or were warehoused after the date. According to the appellants, in respect of the goods warehoused prior to 1.6.2001, the interest-free period of six months under the pre-amendment provision of Section 61(2)(ii) alone would apply. For illustration, if any goods were warehoused on 15th May, 2001, it would be entitled to remain warehoused without interest on duty till 14th November, 2001 and interest would be leviable in respect of such goods only from 15th Nov., 2001. This, in our understanding, is what is meant by the plea of prospective operation of the amended provision of Section 61(2)(ii) (supra). We find much force in this argument of the counsel for the appellants inasmuch as it is well-supported by some of the decisions cited by him and Circular No. 62/99-Cus dated 17.9.99 of the CBEC has virtually accepted the above prospective operation of law. The said Circular was issued in clarification of Notification No. 30/99-Cus (NT) dated 12.5.99 which provided for a graded scale of interest in respect of goods warehoused under Section 61(1)(b) of the Customs Act, which remained in warehouse beyond 6 months from the date of warehousing. After consulting the Ministry of Law, the Board clarified that the interest as revised under Notification No. 30/99-Cus (NT) dated 12.5.99 was applicable in respect of goods warehoused prior to the said date but only from the expiry of six months or 12.5.99 whichever is later. Significantly, in respect of goods warehoused prior to 12.5.99 the revised interest rate was not made applicable for a period of six months from the date of warehousing. This rule of prospective operation appears to be equally good in respect of Notification No. 23/2001-Cus (NT).

6. In the case of J.K. Synthetics (supra), the question arose whether, in respect of goods imported and warehoused prior to 13.5.1983 (the date on which Section 61 was amended to provide for payment of interest), any interest was payable at all. After examining Section 61(2) as amended as on 13.5.1983, this Tribunal found that there was nothing in the amendment to indicate that it was to operate with retrospective effect. It was accordingly held that the provision would have to be interpreted in the light of the generally accepted principle of statutory construction that every statute was prima facie prospective unless it was expressly or by necessary implication given retrospective operation. The Tribunal further noted that "it is also well accepted that every statute which takes away or impairs vested rights acquired under existing laws, or which creates a new obligation or imposes a new duty, must be presumed to be intended not to have retrospective effect. Fiscal legislation imposing liability is governed by the normal presumption of prospectivity." In this view, in respect of the goods imported and warehoused prior to 13.5.83, the Tribunal applied Section 61 as it stood on the date of warehousing. Accordingly, it was held that the importer had no liability to pay interest. Following the ratio of J.K. Synthetics (supra), we hold that, insofar as interest liability in the instant case is concerned, Section 61(2)(ii) as it stood prior to 1.6.2001 should be made applicable to the goods warehoused prior to the said date. Accordingly, the interest-free warehousing period of six months in full will be available to the goods warehoused prior to 1.6.2001. We have no doubt in our mind that any different view on the point will militate against the Hon'ble Supreme Court's ruling in P. Mahendran's case (supra). Para-5 of the Apex Court's judgment states the relevant ruling as under:

"5. It is well settled rule of construction that every statute or statutory Rule is prospective unless it is expressly or by necessary implication made to have retrospective effect, Unless there are words in the statute or in the Rules showing the intention to affect existing rights the rule must be held to be prospective. If a Rule is expressed in language which is fairly capable of either interpretation it ought to be construed as prospective only. In the absence of any express provision or necessary intendment the rule cannot be given retrospective effect except in matter of procedure. The amending Rule of 1987 does not contain any express provision giving the amendment retrospective effect nor there is anything therein showing the necessary intendment for enforcing the Rule with retrospective effect. Since the amending Rule was not retrospective, it could not adversely affect the right of those candidates who were qualified for selection and appointment on the date they applied for the post, moreover as the process of selection had already commenced when the amending Rules come into force. The amended Rule could not affect the existing rights of those candidates who were being considered for selection as they processed the requisite qualifications prescribed by the Rules before its amendment moreover construction of amending Rules should be made in a reasonable manner to avoid unnecessary hardship to those who have no control over the subject matter."

7. Counsel has relied on the judgments rendered by the Karnataka High Court and the Supreme Court in the case of Bangalore Wire Rod Mills (supra). The reliance is particularly on the following observation contained in para-6 of the High Court's judgment:

"It is common ground that as far as the present case is concerned, the amended sub-section (1) of Section 61, is not applicable, for the reason the goods were entered for warehousing prior to the amendment of sub-section (1) of Section 61."

We note that, in the said case, prospective operation of Section 61(1) as amended w.e.f. 13.5.1983 was accepted by both the assessee and the Revenue. The substantive issue considered by the High Court and the Apex Court was whether the interest liability in respect of warehoused goods should be determined with reference to Section 59(1)(b) or with reference to Section 61(2) as, in that case, the department had issued a demand-notice in terms of Section 59(1)(b). It was held that the date from which interest had to be paid on duty on warehoused goods should be determined with reference to the demand notice issued under Section 59(1)(b) and not with reference to Section 61(2). In the instant case, admittedly, no such demand-notice was issued by the department to recover interest from the appellants and therefore the ratio of Bangalore Wire Rod Mills will have no application. Ld. SDR has cited the Bombay High Court's judgment in Siganporia Bros. (supra), wherein the constitutional validity of Section 61(2) was held. We have not been able to find anything in this judgment which has any relevance to the issue which we have considered.

8. On the question whether the claim for refund of interest amount of Rs. 101 relating to the goods covered by the relevant Bills of Entry dated 19.9.2000 is time-barred, we note that the payment of duty against the said ex-bond Bills of Entry had been realised on 1.5.2001 but the refund of interest thereon was claimed on 4.12.2001 only. Now show-cause notice was issued to reject the claim. However, neither before the Tribunal nor before the lower authorities have the appellants contended that the claim could not be rejected without issuing show-cause notice. We find no material on record which indicates that the party raised the plea of provisionality of assessment (as raised in these appeals) before the lower authorities to resist the bar of limitation provided under Section 27 of the Customs Act. What they pleaded before the Commissioner (Appeals) was that they had paid the duty and interest under protest and, therefore, the refund claim was not hit by limitation by virtue of the second proviso to Section 27(1). Before us, they have raised a different ground based on Explanation II to Section 27(1). In any case, the decision of the Commissioner (Appeals) to reject the refund claim as time-barred for want of evidence of payment under protest is not under challenge. Therefore, we sustain this decision of the lower appellate authority.

9. In the result, the impugned order is set aside except in respect of the refund claim of Rs. 101 and these appeals are disposed of.

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