JUDGMENT
Jeet Ram Kait, Member (T)
1. This appeal is directed against Order-in-Appeal No. C. Cus. 542/2002 by which the Ld. Commissioner (Appeals) did not find any infirmity in the decision of the lower authority to charge interest from the date of return of bill of entry after the assessment on 23.3.2001.
2. The brief facts of the case are that M/s. South India Corporation Agencies Limited, (SICAL) [hereinafter referred to as the importer] had imported 2 numbers of Ship Unloaders of 2000 T/H capacity of handling coal for North Chennai Thermal Power Station of TNEB, Chennai. On 24.1.2001 M/s. SICAL had initially submitted an application for Project Import Contract Registration to the Assistant Commissioner of Customs, Group VI, Chennai and filed bill of entry No. 003912 dated 8.2.2001. M/s. SICAL requested the Assistant Commissioner of Customs to register the above-said contract under Power Generation Project claiming benefit of Customs Notification No. 16/2000 Sl. No. 337 (iv) under CTH 98.01 with concessional rate of duty. Alongwith this letter which was addressed by M/s. SICAL to the Assistant Commissioner of Customs Group VI, Chennai, they also enclosed the application in prescribed form in duplicate alongwith project bond in duplicate, letter of indemnity, essentiality certificate from Secretary to Government, Energy Department, Govt. of Tamilnadu, Chennai. The Secretary to the Govt. of Tamilnadu, Department of Energy also wrote a letter to the Collector of Customs, Chennai vide his letter No. 520/B2/2001-I dated 19.1.2001 intimating that TNEB has placed purchase orders with M/s. SICAL for supply of two numbers ship unloaders of 2000 T/H capacity alongwith maintenance spares at a cost of US $ 10,734,000. The said company has to import and supply the above items, to Tamilnadu Electricity Board for the scheme relating to coal handling system of Tamilnadu Electricity Board at North Chennai Thermal Power Station. They had also informed that since these items are importable under free importability and these do not figure in the negative list no import licence is required. The Secretary to the Govt. of Tamilnadu also informed that they are covered under heading 98.01 of the CTA as applicable for power generation project as per Govt. of India, Ministry of Finance, Department of Revenue Notification No. 54/97 Customs, dated 5.6.97 and, therefore, they are entitled for concessional customs duty under “power generation project”. He further informed that the TNEB had approached the Energy Department of Govt. of Tamilnadu, Chennai for concessional rate of customs duty certificate for import of 2000 T/H capacity and maintenance spares and supplies. In view of the above facts the Secretary to the Govt. of Tamilnadu, Energy Department intimated the Collector of Customs, Chennai that the items covered in the list are certified to be eligible for assessment for concessional rate of customs duty under heading 98.01 of CTA “Power Generation Project”. After receipt of this letter on 19.1.2001, M/s, SICAL vide their letter dated 24.1.2001 requested the Assistant Commissioner of Customs, Group-VI, Chennai to register the above-said contract under ‘Power Generation Project’ vide Customs Notification No. 16/2000 Sl. No. 337 to enable them to avail concessional rate of duty. However, the case of the revenue is that the importer’s agent was informed on 13.3.2001 that for registration of Project Import Contract, the formal contract alongwith the project report of the contract and other relevant documents were required. Meanwhile, the importer’s request for assembling the two ship unloaders which were brought under SKD condition, at the time of import, pending assessment was considered favourably and they were allowed to assemble the same under Preventive supervision. Subsequently on 23.3.2001, as the importer failed to produce the required documents as agreed on 13.2.2001, even after a gap of 40 days, the Bill of Entry was assessed on merits under CTH 8428.90 with 25% BCD + 10% SC + 16% CVD + 4% SAD as against the concessional rate of duty at the rate of 5% BCD + 10% SC + 16% CVD + 4% SAD which was claimed by the appellant-importer in terms of Notification 16/2000 Sl. No. 337 (iv) under CTH 98.01. After the bill of entry was assessed on merit under CTH 8428.90 unilaterally by the customs the same was returned to the importer on 25.3.2001.
3. On receipt of the Bill of Entry on 25.3.2001, M/s. SICAL vide their letter Ref: SICAL: C&F: 2000 dated 26.3.2001 wrote to the Deputy Commissioner of Customs, Group VI, Chennai that at the outset they would like to register their protest for assessment of the bill of entry made on merits, as they had already submitted to the customs department relevant documents including sponsorship letter signed by the Secretary to the Govt. of Tamilnadu, who is the competent authority to issue the certificate. They further submitted that no reason has been given by the customs to reject their claim, as they had already pointed out that this was a unique contract under B.O.T. scheme and should not have been treated as like any other project. They further submitted that in the assessment, customs department has charged 10% surcharge on the basic duty of 25% under customs tariff heading 8426.19 in spite of the fact that surcharge is exempted under Notification No. 61/2000. They therefore requested the department to re-assess the bill of entry without levying surcharge. In the penultimate para they requested the department to register their protest once again that they are not accepting the assessment on merit even without surcharge and requested the department to review their assessment and render justice. Letter No. 520/B2/2001-I dated 19.1.2001 written by the Secretary, to the Govt. of Tamilnadu, Energy Department to the Collector of Customs, Customs House, Chennai and letter by SICAL vide their letter No. CF 4557 dated 24.1.2001 and Letter No. Ref: SICAL: C&F: 2000 dated 26.3.2001 are extracted herein below for ready reference:
Energy Department
Secretariat Chennai-9
Letter No. 520/B2/2001-I dt. 19.1.2001
From
Thiru Lal Rawat Sailo, IAS,
Secretary to Government
To
The Collector of Customs
Customs House
Rajaji Salai, Chennai:-1(we)
Sir
Sub. Issue of Concessional rate of customs duty certificate of the import of 2 Nos. Ship unloaders 2000T / H Capacity against TNEB Specification No. Superintending Engineer / E / D NCTPS – 147 — External Coal Handling system at Ennore Port / North Chennai Thermal Power Station -Regarding.
Ref.: 1) From the Chief Engineer / Projects Tamil Nadu Electricity Board, Br. No. S.E. /E/ T&H / P / E2/ A3/ FCUS / D. 73 / 2001 DT. 18.1.2001.
I am to state that the Tamil Nadu Electricity Board has placed purchase orders with South India Corporation (Agencies Ltd.) Chennai for supply of two numbers ship unloaders of 2000 T/H capacity alongwith maintenance spares at a cost of US $10.734,000. The said company has to import and supply the above items to Tamil Nadu Electricity Board, Chennai for the scheme relating to Coal Handling System of Tamil Nadu Electricity Board, at North Chennai Thermal Power Station.
2. It is informed that the Company has quoted in US $ 10,734,000 and no import licence is required since these items are importable under free importability and these do not figure in the negative list of imports. As such they are covered under heading 98.01 of Customs Tariff Act as applicable for power generated projects as per Government of India, Ministry of Finance, Department of Revenues’s Notification No. 54/97 Customs, dt 5.6.97 and are, therefore, entitled for Concessional customs duty under “Power generation project”.
3. The Tamil Nadu Electricity Board, has, therefore, approached this department for concessional rate of customs duty certificate for import of two numbers ship unloaders 2000 T/H capacity and maintenance spares and supplies.
4. In view of the above, the items covered in the list as enclosed duly are certified to be eligible for assessment for concessional rate of customs duty under head No. 98.01 of CTA “Power Generation Project”.
Yours faithfully
(Sd/-)
Secretary to Government
Copy to:
The Chief Engineer Projects. Tamil Nadu Electricity Board, Chennai-2
South India Corporation Agencies Limited
Rathi Building, IV Floor
No. 98 (Old No. 69),
Armenian Street
Chennai-600 001.
Logistics Division CF 4557 24.1.2001 The Assistant Commissioner of Customs Group VI. Custom House Chennai-600001. Dear Sir,
Sub.: Import of 2 Nos. Ship Unloaders of 2000 T/H Capacity in SKD Condition with Maintenance Spares and Supplies per ex, M.V. DOCK EXPRESS V. 10 arriving at Ennore Port vide B/L No. DOCK01DE106493 a dt. 6.1.2001 – Project Registration to avail the benefit of Concessional duty under CTA 9801 – under Customs Notification No. 16/2000 Sl. No. 337 – Power Generation Project (North Chennai Thermal Power Station).
We are importing 2 Nos. Ship Unloaders of 2000 MT. per Hour capacity from Samsung, Korea. These are meant for TNEB Project for coal handling facility in its North Chennai Thermal Power Station.
These Unloaders are required for handling the coal for North Chennai Thermal Power Station at Ennore for TNEB. Each unloader is capable of discharging 2000 MTs. Per Hour, using both the unloaders 40,000 to 50,000 MTs. of Coal can be discharged per day. These two unloaders are being erected as a part of TNEB project for its coal-handling requirement for the above-mentioned Power Station.
Ennore Port is having two berths constructed for handling coal and these Unloaders shall be erected in berth No. 1. Coal will be brought to this Port by Panamax Size Gearless Vessels of 65,000 to 70,000 DWT capacity each. The coal from the ships berthed in the Jetty will be unloaded using these two unloaders and will be fed in to one of the belt conveyors located at the berth. These two canveyors will convey the coal upto the stockpile area of North Chennai Thermal Power Station and storage area for Ennore Thermal Power Station.
South India Corporation (Agencies) Limited
Leelavathi Building, IV Floor
New No. 98 (Old No. 69), Armenian Street
Chennai – 600 001
LOGISTICS DIVISION
Necessary dust suppression system has been provided in each unloader to prevent the dust….. (illegible) at the time to unloading operation. The unloaders are also filled with necessary interlocking system so that the unloader will stop in case any one of the conveyors is tripped due to unforeseen circumstances of belt feed is locked. This enables…… (illegible) movement of cargo to Power Station.
This facilitates of the continuous supply of coal for Power Generation, by the Thermal Plants of TNEB.
Hence, we request you to register the above-said contract under “Power Generation Project vide Customs Notification No. 16/2000 Sl. No. 337 in order to avail concessional rate of duty.
In this connection the following are enclosed:
1. Application form in duplicate.
2. Project Bond in duplicate.
3. Letter of indemnity.
4. Essentiality Certificate from Secretary to Government, Energy Department, Government of Tamilnadu, Chennai.
Thanking you
Yours sincerely
For South India Corporation (Agencies) Limited
Vice President (Logistics)
South India Corporation (A) Ltd.
Building V Floor
68, (Old No. 69), Armenian Street
Chennai- 600 001
Ref: SICAL: C&F: 2000 Dt. 26.3.2001
The Dy. Commissioner of Customs
Group VI,
Chennai Custom House,
Chennai
Dear Sir,
Sub.: m.v. DOCK EXPRESS V, 10 – Bill of entry No. 003912 dt. 8.2.2001 -Assessment made on Merit.
At the outset we would like to register our protest for assessment of the Bill of entry made on Merit. We have already submitted to you relevant documents including sponsorship letter signed by the Secretary to the Tamilnadu Government, the competent authority to issue this certificate. No reason has been given by customs to reject our claim. We have already pointed out that this is a unique contract under B.O.T. Scheme. This should not be treated like any other project.
In the assessment, which you have made, you have charged 10% surcharge on the basic duty of 25% under customs tariff heading 8426.19 Surcharge is exempted under Notification No. 61/2000. Hence, we request you to kindly reassess the Bill of entry without levying surcharge.
This request could not be construed as our acceptance for assessing under “on Merit”.
By this letter, we register our protest once again that we are not accepting the assessment on merit even without surcharge also.
We now request you to review your assessment and render justice.
Thanking you
Yours faithfully
For South India Corporation (A) Ltd.,
Joint General Manager
4. Meanwhile, after having a meeting with the Collector of Customs, Chennai they gave a detailed write up alongwith necessary annexures justifying their stand on seeking concessional rate of duty and requested for favourable order. In the write up they intimated that TNEB has thermal power stations at 3 locations in Tamil Nadu namely, Mettur, Tuticorin and Chennai, The majority of the linkage of coal for the Tamil Nadu thermal power stations are from mines in prissa and small portions from the mines in Eastern states. In Chennai there are two power stations of Tamil Nadu Electricity Board located at Attipattu (North Chennai) and Ennore. Presently coal brought from Orissa and Eastern states are physically unloaded at Chennai Port and then the entire coal is transported to the power generating plants located at North Chennai and Ennore by wagons. The existing system is totally outdated, prohibitively costly and also causing enormous pollution to the entire city area of Chennai. It was in this background a feasibility report was prepared to improve power generation at the two power plant of Tamil Nadu Electricity Board located at Chennai. The feasibility report indicated that any modernization of the power plants would basically involve total recasting of the existing system of movement of coal from the port to the power plants. There was also tremendous emphasis that any improvement in the system of movement of coal to the generating plants must involve a total pollution control management. With the view to achieve improvement in the coal handling system, for the Chennai generating plants located at North Chennai and Ennore, Tata Consulting Engineers were appointed as the Technical advisors in this regard. The Tata Consulting Engineers submitted a report providing installation of complete pollution free coal handling system for the two generating plants located at Chennai. The main recommendation of the technical consultant was to provide a modern pollution free coal handling system at Ennore port.
The repot (sic, report) also provided that the present system of manual coal handling has tremendous limitations in terms of port facilities and speed of loading – unloading of coal for the use of generating systems. The technical report also mentioned that a modern coal handling system should be integrated with the new Ennore port being developed near Chennai. On this basis of the technical report, a global tender was called for installation of high speed coal handling system with totally pollution free movement It was found that the system consists of two parts of major equipments. The first part consisted of coal evacuation units in the form of ship unloaders and the second part, a conveyor system which will convey the coal unloaded from the ships directly to the power generating plants. It was also found that the conveyor equipments. If fabricated in India, will save considerable cost and foreign exchange. Based on this fact, the conveyor system was fabricated through Mecon, a public sector company. This system provides a linkage for the unloaded coal from the ships to generating plants through a completely covered system of conveyors. While the conveying system was installed by Mecon, the unloaders were imported from Samsung, Korea. The conveyors have already been erected and are waiting for linkage for imported unloaders. The coal unloaders were imported in the month of February 2001. The customs have done the assessment of these unloaders in March. During the process of bill of entry, the department was informed that these coal unloaders are part of the modernization programme for the power generation plant located at Ennore and North Chennai. Their technical advisors were of the opinion that the imported unloaders which were part of the coal conveying system are entitled to a concessional duty in terms of Notification No. 17/2001 either in terms of Entry No. 236 or Entry No. 368 of the above notification. However, the customs had assessed the bill of entry under Chapter 84 unjustifiably denying the benefit of concessional rate in terms of Notification No. 17/2001. The above issues were clarified to the Collector of Customs and they pleaded that as per their existing contract with TNEB they have only taken into account on the basis of the technical advise for the concessional rate of duty and any denial of this benefit will make the entire modernisation programme unviable. Govt. of India has evolved a policy of implementing major infrastructure and power generation plants in BOT (Build, Operate and Transfer) format. Following the recommendations of the Govt. of India, TNEB also actively considered to implement the coal conveying system to generating plants on a BOT pattern. In terms of this policy, tenders were invited by TNEB and the BOT for the coal unloading and conveyor system for generating plants was awarded to a consortium consisting of SICAL, Samsung of Korea and Global International of Korea. The very nature of BOT is to be distinguished from BOOT (Build, Operate, Own and Transfer). Unlike BOOT in a BOT format the ownership remains with the tenderers namely TNEB.
BOT does not involve surrendering of ownership or any equipment installation at any stage to the operating agencies. Even if the contract is terminated the equipment remains with the ownership and custody of TNEB. BOT is the most recommended method of Government implementing the modernization of their infrastructure systems as otherwise both the Central and State Governments can ill afford huge investment required for modernization and improvements of infrastructure. After making a detailed submissions in their write-up, in the concluding para they prayed that the import of the two unloaders for the modernization of the Chennai generating plants may be extended the benefit of concessional rate of duty in terms of Entry No. 236 of Notification No. 17/2001. They further submitted that the only condition required for eligibility of the above entry is a recommendation letter from the concerned Secretary of the State. In this connection, they submitted that the recommendation letter of the Secretary, Energy Department, Tamilnadu has been duly filed alongwith bill of entry. They further submitted that the unloaders are definitely part of the power generating plants located at Ennore and North Chennai. Without timely and adequate movement of coal, none of the generating systems will be able to function. The imported equipment are in terms of moderanisation programme being implemented on advice of suitable technical consultants. They believe that they have satisfied every parameter required in terms of Notification 17/2001 and the import equipment are definitely entitled for concessional rate of duty. In the detailed write up it was also submitted that the imported equipment are waiting for clearance for more than two months and incurring heavy demurrages and other associated cost. Further for want of this equipment, the modernization programme of TNEB in respect of the above two generating plants are also getting delayed involving tremendous loss not only to TNEB but also for the entire state. Considering the huge public interest involved in the matter, they requested an expeditious finalization of the above imports by extending the benefits of Notification No. 17/2001.
5. On receipt of this detailed write up dated 24.5.2001, the Commissioner of Customs vide his letter F. No. S.Misc.15/2001 Gr.6 dated 19.6.2001 informed M/s. SICAL, Chennai, that they had submitted the following documents:
a. Sponsoring Authority Letter No. 520/B2/2001-I dated 19.2.2001 issued by the Secretary, Energy Department, Govt. of Tamilnadu.
b. List of attestation of the importable items duly attested by the Secretary, Energy Department, Govt. of Tamilnadu.
c. Copy of contract between M/s. TNEB and M/s. SICAL
For considering their request they requested them to submit the following further documents for considering their claim:
a. Certificate from the Chief Engineer of Tamilnadu State Electricity Board certifying that the scheme for renovation or the modernization, as the case may be, of such power plant has been approved.
b. Recommendation letter by an officer not below the rank of a Secretary in the State Government concerned dealing with the subject of Power or Electricity recommends the grant of aforesaid exemption to the goods for such scheme.
c. Project report for renovation or modernization, as the case may be.
They also made it clear that if they do not submit the above-mentioned necessary documents within 15 days on receipt of this letter their request for seeking re-assessment under cover of Cus. Notification No. 17/2001 Sl. No. 236 may not be considered on merit and the case will be proceeded against for delay in clearance.
7. The appellants were informed as can be seen from the facts narrated in the Commissioner (Appeals) order, that on 26.3.2001 the Bill of Entry was again assessed allowing the exemption from 10% surcharge and they were also informed that the concessional rate of basic customs duty is available to all goods for renovation or modernization of a power generation plant [other than captive power generator plant] provided the importer fulfills condition 41 of the notification which in their case requires that “an officer not below the rank of the Chief Engineer of the concerned State Electricity Board or State Power Utility certifies that the scheme for renovation or moderniation as the case may be and such power plant has been approved and an officer not below the rank of a Secretary in the State Government concerned dealing with the subject of power or electricity recommends, in each case, the grant of the aforesaid exemption to the goods for such scheme”. The importers were informed that the required certificates from the Chief Engineer of Tamil Nadu State Electricity Board and recommendation letter from an officer not below the rank of a Secretary in the State Government concerned dealing with the subject of Power or Electricity should be produced for considering their request. Again vide letter dated 3.7.2001 and 27.8.2001, the importer sought for further time to produce the required documents. Finally on 30.4.2002, the importer again submitted a certificate vide Letter No. 1406/B2/2002-4 dated 30.4.2002 issued by Thiru R. Rathinasamy, I.A.S. Secretary to the Govt. Energy Department, Tamil Nadu recommending extension of the benefit of notification and sought for re-assessment with concessional rate of duty. This letter is extracted herein below:
Energy (B2) Department
Secretariat, Chennai-9
Letter No. 1406/B2/2002-4 Dated 30.4.2002
From
Thiru R. Rathinasamy, I.A.S.
Secretary to Government.
To
The Commissioner of Customs,
Custom House
Chennai-1 (W.E.)
Sir
Sub.: Issue of Concessional rate of Customs Duty certificate for the import of 2 Nos. Ship Unloaders 2000 T/H/Capacity against Tamil Nadu Electricity Board Specification No. Superintending Engineer/E/D/NCTPS-147 - External Coal Handling System at Ennore Port/North Chennai Thermal Power Station-Regarding.
Ref.: 1. From the Vice President (Logistics) South India Corporation (Agencies) Limited. Chennai Letter Dated 15th February, 2001.
2. From the Member (Generation) TNEB Letter No. SE/E/T&H/P/F2/A3/F.CUS/D 5/02 Dated 18.3.2002
I am directed to state that the Tamil Nadu Electricity Board Chennai has placed purchase orders with M/s. South India Corporation (Agencies) Limited. (SICAL) Chennai for supply of 2 Nos. Ship Unloaders of 2000 T/H capacity alongwith maintenance spares at a cost of US $ 10,734,000. The said Company has to import and supply the above items to Tamil Nadu Electricity-Board, Chennai for the Scheme relating to Coal Handling System of Tamil Nadu Electricity Board at North Chennai Thermal Power Station.
2. It is informed that the Company has quoted in US $ 10,734/500 and no import license is required since these items are importable under free importability and these do not figure in the negative list of imports. Since this is covered under Modernisation work approved and carried out for North Chennai Thermal Power Station they are eligible for assessment for concessional rate of duty under Entry 210 of Notification No. 16/2000.
3. The Tamil Nadu Electricity Board has already approached this Department for concessional rate of customs duty certificate for import of two numbers ship unloaders 2000 T/H Capacity and maintenance spares and supplies.
4. In view of the above, I am to state that the items covered in the list as endorsed are duly Certified to be eligible for assessment for concessional rate of Customs Duty under Entry No. 210 of Notification No. 16/2000.
Yours faithfully
(Sd/-)
Secretary to Government
The request of the importer was considered by the Department and the bill of entry was again re-assessed extending the benefit of customs Notification 16/2000 vide Sl. No. 210 with 5% BCD + 16% CVD + 4% SAD. However based upon the Board’s Circular No. 64/2000, the importer was directed to pay the interest from the date of original assessment i.e. 26.3.2001 and the interest was calculated as per the Notification No. 34/2000 – Cus. (N.T.) dated 10.5.2000. The assessment of goods by the proper officer was made on 14.5.2002 extending the benefit of Notification No. 16/2000 Sl. No. 210 and Bill of Entry was handed over to SICAL and insisting for collection of interest from 29.3.2001 till date of payment of duty on the Bill of Entry No. 003912 dated 8.2.2001. On 14.5.2002 itself M/s. SICAL made payment of duty and also paid a sum of Rs. 3.65 crores as interest on the re-assessed amounts for the period from 29.3.2001 to 13.5.2002 to avoid further demurrage and to complete the project within the stipulated period.
7. However, aggrieved by this order of the Deputy Commissioner the appellants filed an appeal before the Commissioner (Appeals) and in the grounds of appeal it was stated by the appellant that the Deputy Commissioner, Group 6, has misinterpreted the provisions of Section 47 (2) and erred in ordering, the collection of interest from 29.3.2001, although, the Deputy Commissioner of Customs, Group 6 had ordered for re-assessment of Bill of Entry No. 003912 dated 8.2.2001 granting benefit under Sl. No. 210 vide Notification No. 16/2000 dated 1.3.2000.
8. Ld. Commissioner (Appeals) did not accept their appeal and recorded the following findings which are extracted herein below:
“I have carefully gone through the records of the case and the submissions made by the appellant.
The issue for decision in this appeal, is whether for purposes of determining interest liability under Section 47(2) of the Customs Act, 1962 ‘the date on which the bill of entry is returned’ to the importer for payment of duty would be the date of return of bill of entry after original assessment i.e. 28.3.2001 or the date of return after ‘reassessment’ based on certificates submitted i.e. 14.5.2002 and consequently whether the amount of Rs. 3,65,03,967 paid by the appellant towards interest is liable to be refunded to them. As per Section 2(2) of the Customs Act, 1962 “assessment” includes provisional assessment, re-assessment and any order of assessment in which the duty assessed is ‘Nil’. Re-assessment under Section 17(4) of the Customs Act and reads as follows;
“Notwithstanding anything in this section, imported goods or export goods may, prior to the examination or testing thereof, be permitted by the proper officer to be assessed to duty on the basis of the statements made in the entry relating thereto and the documents produced and the information furnished under Sub-section (3); but if it is found subsequently on examination or testing of the goods or otherwise that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act, be re-assessed to duty”.
The re-assessment envisaged, therefore, is only with regard to a situation where examination or testing of the goods or any other circumstance reveals that facts declared in the bill of entry and relevant for the assessment, are not true and calls for a re-assessment. It is not the case here that the goods after examination/testing were found to be contrary to the declaration. Nor is there anything on record to show that there was any other discrepancy in the declaration warranting re-assessment. Section 17(4) clearly provides an avenue for the department to rectify the assessment i.e. reassess based on the truth of the declaration and further states that this re-assessment would be without prejudice to any other action which may be taken under the Act, the reference being evidently to any penal action with regard to the false declaration. It cannot, therefore, be conceived that the re-assessment of the bill of entry on 13.5.2002 which was done in circumstances quite outside those covered by Section 17(4) would qualify as reassessment under Section 2(2) of the Customs Act and the appellant’s claim on this account is, therefore, not legally sustainable. Now, to determine what exactly is the import duty for purposes of Section 47(1) it would be well to go through the sequence of events in this case.
The sequence of events show that the importer’s request for the benefit of project import assessment under Notification No. 16/2000 (Sl. No. 337) could not be considered as the importer failed to produce the requisite documents for registration of the project as required under the Project Import Regulations, 1986. After giving reasonable time for production of the documents, the department finally assessed the goods on merits and returned the bill of entry for payment of duty on 25.3.2001. The assessment for the purpose of Section 17(2) was complete at this stage. The final assessment under CTH 8428.90 on merits was, therefore, in order and the course open to the importer, if aggrieved, was to file an appeal against that decision, which was not done. Instead, the entire proceedings thereafter took a bizarre turn, quite outside the realm of legality, where the importer continued with efforts to obtain the requisite certificates and on procuring the certificates from the State Govt. they were extended the benefit of exemption. This virtually amounted to re-opening of the original assessment done on 25.3.2001 which is contrary to law. It is pertinent that the requisite documents for availing the exemption were, in fact, not available or produced at the time of original assessment as null and void. The re-opening of the assessment without legal sanction does not make the original assessment null and void and the original assessment is, therefore, legally valid. “Duty” means duty of customs leviable under the Act. By the appellant’s own argument, “levy” includes assessment and, therefore, for purposes of Section 47(1) the duty referred to is the duty originally assessed under Section 17(2) on 25.3.2001 since the subsequent ‘re-assessment was not an assessment as defined under Section 2(2) of the Customs Act, 1962.
The appellant has also contended that there was no ‘failure’ on their part to pay the ‘import duty’ as per Section 47(1). Once the bill of entry was finally assessed and returned on 25.3.2001, the appellant was legally obliged to pay the duty and clear the goods. But instead of doing so, they sought time to obtain requisite documents for availing of an exemption they believed they would become entitled to on production of these certificates. This is nothing but non-performance and breach of obligation amounting to failure. Since the import duty assessed is that determined as per original assessment it would also follow that the ‘date on which the bill of entry is returned for payment of duty’ would be the date on which the bill was originally assessed and returned i.e. 25.3.2001, and, therefore, the interest liability has to be reckoned from the date. The indulgence shown by the department in allowing the importer time produce certificates required for the exemption and allowing them the benefit of exemption one year later does not take away the legal sanctity of the original assessment. Since the importer failed to pay the import duty assessed, in terms of Section 47(2) they are liable to pay the interest, notwithstanding the fact they were allowed to pay duty at the concessional rate on a subsequent date.
As regards the rate of interest applicable, the period for which the interest charged is what would determine the rate applicable i.e. the period of delay in payment of duty is on and prior to 13.5.2002 and since the duty was paid on 13.5.2002 the rate of interest applied for the period 29.3.2001 to 13.5.2002 is the rate of 24% in terms of Notification No. 16/2000 (N.T.) which prevailed during that time and Notification 28/2002 dated 13.5.2002 would apply only to the period after that date.
In view of the above, I find no infirmity in the decision of the lower authority to charge interest from the date of return of bill of entry after the assessment on 23.3.2001.
The appeal is, accordingly, rejected”.
9. From the order of the Commissioner (Appeals) it would be found that she has agreed with the order of the Deputy Commissioner that is to say the lower adjudicating authority who charged interest from the date of return of the bill of entry after the unilateral assessment on 23.3.2001. She also held that re-assessment under the Customs Act is permitted only under Section 17(4) of the Customs Act and not under Section 2(2) of the Act since subsequent ‘re-assessment’ was not an assessment as defined under Section 2(2) of the Customs Act, 1962.
10. Appearing on behalf of the appellants, Shri Habibullah Basha, Sr. Counsel submitted that they had imported 2 numbers of ship unloaders of 2000 T/H capacity of handling coal for North Chennai Thermal Power Station of TNEB, Chennai. On 24.1.2001, the appellant had initially submitted an application for Project Import Contract Registration to the Assistant Commissioner of Customs, Group 6, Chennai and filed bill of Entry No. 003912 dated 8.2.2001. In order words, they had requested the Assistant Commissioner of Customs, Gr. 6, Chennai to register them for project import and allow concessional rate of duty. This letter dated 24.1.2001 was filed with the Assistant Commissioner and subsequently they filed bill of entry No. 003912 dated 8.2.2001. The appellant had requested the Assistant Commissioner of Customs to register the above-said contract under ‘Power Generation Project’ vide customs Notification No. 16/2000 vide Sl. No. 337 to enable them to avail concessional rate of duty. Alongwith this letter dated 24.1.2001 which was addressed by M/s. SICAL to Assistant Commissioner of Customs, Gr. 6, Chennai they enclosed an application in the prescribed form (in duplicate), project bond in duplicate, letter of indemnity, essentiality certificate from Secretary to Government, Energy Department, Govt. of Tamilnadu, Chennai. He further submitted that the Secretary, Govt. of Tamilnadu, Department of Energy had written a letter to the Collector of Customs vide his letter No. 520/B2/2001-I dated 19.1.2001 intimating that TNEB has placed purchase orders with M/s. SICAL for supply of two numbers of ship unloaders of 2000T/H capacity alongwith maintenance spares at a cost of US $ 10,734,000. The said company had to import and supply the above item to the TNEB for the scheme relating to coal handling system of Tamilnadu Electricity Board at North Chennai Thermal Power Station.
The appellant had also informed the customs authorities that since these, items are importable under free importability and these do not figure in the negative list no import licence is required. The Secretary to the Govt. of Tamilnadu informed that they are covered under heading 98.01 of the CTA as applicable for power generation project as per Govt. of India, Ministry of Finance, Department of Revenue Notification No. 54/97 Customs, dated 5.6.97 and, therefore, they are entitled for concessional customs duty under ‘Power Generation Project’. Giving details of all the facts, the then Secretary to the Govt. of Tamilnadu, Energy Department intimated the Collector of Customs, Chennai vide his letter dated 19.1.2001 that the items covered in the list as endorsed duty are certified to be eligible for assessment for concessional rate of customs duty under heading 98.01 of CTA ‘Power Generation Project’; Simultaneously, after the receipt of this letter from the Secretary to the Govt. of Tamilnadu, Energy Department on 19.1.2001, M/s. SICAL vide their letter dated 24.1.2001 requested the Assistant Commissioner of Customs, Group 6, Chennai to register the above-said contract under ‘Power Generation Project’ vide customs Notification No. 16/2000 Sl. No. 337 to enable them to avail concessional rate of duty. He further submitted that on receipt of the unilaterally assessed bill of entry on 25.3.2001, M/s. SICAL vide their letter Ref: SICAL: C&F: 2000 dated 26.3.2001 wrote to the Deputy Commissioner of Customs, Group VI, Chennai that at the outset they would like to register their protest for assessment of the bill of entry made on merits, as they had already submitted to the customs department relevant documents including sponsorship letter signed by the Secretary to the Govt. of Tamilnadu, who is the competent authority to issue the certificate. The appellants had further submitted to the customs authorities that no reason has been given by the customs to reject their claim, as they had already pointed out that this was unique contract under B.O.T. scheme and should not have been treated as like any other project.
The appellant also represented to the customs that in the assessment customs department has charged 10% surcharge on the basic duty of 25% under customs tariff heading 8426.19 in spite of the fact that surcharge is exempted under Notification No. 61/2000. Ld. Sr. Counsel pointed out that the appellants had requested the department to re-assess the bill of entry without levying surcharge and in the penultimate para of their letter dated 26.3.2001 they requested the department to register their protest once again that they are not accepting the assessment on merit even without surcharge as exempted and requested the department to review their assessment and render justice. He further submitted that to satisfy the department, the appellant had a meeting with the Collector of Customs, Chennai and gave him a detailed write up alongwith necessary annexures justifying their stand to seek concessional rate of duty and register them as “Power Generation Project” and allow them the concessional rate of duty vide customs Notification No. 16/2000 under Sl. No. 337. In spite of all these letters from the Secretary to the Govt. of Tamilnadu, Energy Department as well as detailed write tip, they were not registered under the ‘power generation project’ and the matter was kept pending by the customs authorities for a very long period.
11.1. Ld. Sr. Counsel further pointed out that on receipt of this detailed write
up dated 24.5.2001, the Commissioner of Customs vide his letter F. No. S. Misc.
15/2001 Gr. 6 dated 19.6.2001 informed M/s. SICAL, Chennai, that they had submitted the following documents only:
a. Sponsoring Authority Letter No. 520/B2/2001-1 dated 19.2.2001 issued by the Secretary, Energy Department, Govt. of Tamilnadu.
b. List of attestation of the importable items duly attested by the Secretary, Energy Department, Govt. of Tamilnadu,
c. Copy of contract between M/s. TNEB and M/s. SICAL.
Whereas for considering their request they (the Customs Authorities) requested the appellants to submit the following further documents:
a. Certificate from the Chief Engineer of Tamilnadu State Electricity Board certifying that the scheme for renovation or the modernisation, as the case may be, of such power plant has been approved.
b. Recommendation letter by an officer not below the rank of a Secretary in the State Government concerned dealing with the subject of Power or Electricity recommending the grant of aforesaid exemption to the goods for such scheme.
c. Project report for renovation or modernization, as the case may be.
11.2. Ld. Sr. Counsel submitted that the documents asked by the department vide their letter dated 19.6.2001 were already with them and all the details were mentioned in the letter of the Secretary to the Govt. of Tamilnadu, Energy Department who had recommended for the grant of aforesaid exemption to the goods for such scheme and he had written a detailed letter No. 520/B2/2001-I dated 19.1.2001. He further submitted that, all these formalities were complied by them on 24.1.2001 itself and the appellant had initially submitted an application for project import contract registration to the Assistant Commissioner of Customs, Gr. 6, Chennai and filed bill of Entry No. 003912 dated 8.2.2001. They had also requested to register the contract under the ‘Power General Project’ vide customs Notification No. 16/2000 Sl. No. 337 to enable them to avail concessional rate of duty. The customs authorities never responded to any of their correspondences and never asked for any further documents. It was only when they had met the Collector of Customs, Chennai and gave him a detailed write up alongwith necessary annexures justifying their stand of seeking concessional rate of duty and requested for favourable order, the Customs authorities vide their letter dated 19.6.2001 asked to produce various certificates and project reports, etc. Once again on 30.4.2002, the importer submitted a certificate vide Letter No. 1406/B2/2002-4 dated 30.4.2002 issued by the Secretary to the Govt. of Tamilnadu, Energy Department, recommending extension of the benefit of notification and sought for re-assessment with concessional rate of duty. This letter dated 30.4.2002 is already extracted in para 6 supra of this order. The request of the importer-appellant was ultimately considered by the department and the bill of entry was again re-assessed extending the benefit of Customs Notification No. 16/2000 vide Sl. No. 210 with 5% BCD + 16% CVD + 4% SAD. However, the appellant-importer was directed to pay interest from the date of original assessment and the interest was calculated as per Notification No. 34/2001 (N.T.) dated 10.5.2000. The assessment of goods by the proper officer was made only on 14.5.2002 extending the benefit of Notification No. 16/2000 Sl. No. 210 and bill of entry was handed over to SICAL, the appellant-importer. As they wanted to clear the goods in view of the urgency, on 14.5.2002 itself the appellant made payment of duty and also Rs. 3.65 crores as interest on the re-assessed goods for the period from 29.3.2001 to 13.5.2002 under protest, in continuation of the protest which was with the department vide their letter SICAL dated 20.6.2001.
In view of the fact that they have been claiming right from the beginning that they had imported these two numbers of ship unloaders of 2000 T/H capacity of handling coal for North Chennai Thermal Power Station of TNEB, Chennai for Power Generation Project and therefore charging of interest from them from the date of original assessment i.e. 26.3.2001, which was done unilaterally without considering their request for registration of the Project Import Contract and without allowing them exemption of customs duty vide Customs Notification Sl. No. 337 of Notification No. 16/2000. He, therefore, submitted that the interest has been paid by them under protest and the same is required to be refunded to them inasmuch as they had been asking for concessional rate of duty as Project Import Contract Registration under ‘Power Generation Project’ from the time of filing of Bill of Entry as they had informed the customs authorities at the time of filing of bill of Entry No. 003912 dated 8.2.2001 their import as project under B.O.T. scheme and, therefore, no interest could be charged from them from the date of original assessment which was done unilaterally on merit and not as power generation project, by allowing the concessional rate of duty. He therefore submitted that no interest can be charged from them as the reassessment was done on 14.5.2002. But since they had made payments on 14.5.2002 itself that is to say on the same date i.e. on the date, the proper officer made the assessment, they are not required to pay any interest and whatever they have paid is required to be refunded to them.
10.3. As regards, the findings of the Ld. Commissioner (Appeals) that re-assessment can only be done under Section 17(4), the learned Senior Advocate submitted that this view of the Commissioner is not correct because it is not a case where they had withheld any information or it was a case of misdeclaration as can be seen from the provisions of Section 17(4) of the Customs Act. A perusal of the provisions of Section 17(4) would indicate that if subsequently on examination or testing of the goods or otherwise it is found that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act be re-assessed to duty. Therefore, the findings of the Commissioner that re-assessment is permitted only under Section 17(4) of the Customs Act (even in a normal case where all the information furnished is found true) is not correct. The re-assessment in their case has been done under Section 2(2) read with Section 47(1) & (2) of the Customs Act. He further submitted that the department has not gone in appeal against the re-assessment and since the issue envisages re-assessment under Section 2(2) of the Act and since the customs have re-assessed the goods on 13.5.2002 and the appraising officer has marked it as ‘RE-ASSESSED’, as can be seen from the Bill of Entry. The duty becomes finally payable after re-assessment and interest is payable after expiry of the date of re-assessment as the original assessment has been reversed by giving benefit of exemption which was delayed by the customs authorities, in spite of the fact that right from the beginning and at the time of filing of bill of entry they had informed the customs authority that they are importing these 2 numbers of ship unloaders of 2000 T/H capacity of handling coal for North Chennai Thermal Power Station as Power Generation Project and which was in the knowledge of the department and were also informed by the competent authority i.e. Secretary to the Govt. of Tamilnadu, Energy Department that this is power generation project and is meant for Tamilnadu Electricity Board under B.O.T. Scheme. Therefore, the original assessment is not valid in view of the re-assessment done on 13.5.2002, and duty has been paid by the appellant on 13.5.2002 i.e. on the date of re-assessment itself. They were not required to pay any interest and this interest amount of Rs. 3.65 crores is, therefore, required to be refunded to them, argues the learned Senior Counsel.
12. Appearing on behalf of the revenue, Smt. Bhaghya Devi, SDR relied on the para-wise comments sent from the Office of the Commissioner of Customs, Sea Port, Chennai vide Ref. No. F. No. M/49/2003 dated 3.7.2003 which are reproduced herein below:
II Parawise Comments
PARA No.:
(1) Not correct, sweeping remarks, without any substance or material facts, Refer to specific comments in I above (Para I of Special comments) Orders passed by Commissioner (A) is in accordance with the Customs law.
(2) & (4) &
also (11)
Not acceptable in view of the detailed analysis in the Spl. Comments (1) also above; Commissioner (A) is correct and she had correctly interpreted the customs law.
It is a fact, that the statutory term “Reassessment” occurs (only) in Sub-section (4) of CA 62 and not in any other section of the Act, including Section 47 in particular, which is under consideration here. Hence Commissioner Appeal is correct in holding that “reassessment” is permitted only in Section 17(4) of CA 62 and not under any other Section/Circumstances in the Customs Act; when the definition in Section 2(2) of CA 62, specifies the terms “assessment”, “reassessment” separately, how both can be treated to be the same for all sections, which refers to “Assessment” only, and in particular Section 17(1), even after the amendment in F.A. 1991 & 1995 (Interest).
(3) Sub-section (4) of Section 17 provides a remedy by way of “reassessment” in cases of misdeclarations, apart from taking penal action. But in any other section of the Act, such a remedy by way “Reassessment” is not at all provided, and in Section 47 of CA 62 in particular, which has a provision to collect interest on delayed payment of duty from December 1991 (Finance Act 91) with powers to Board for waiver of such interest (In Finance Act, 1995).
Since definition of the term “assessment”, specifies, (in Section 2(2)), ‘assessment’ and “reassessment”, separately the later (reassessment) can be resorted to, only in cases where the term “reassessment” (reassessed) occurs; Such a term occurs in Sub-section (4) of Section 17 but not in Section 47 (1) of the Act. Therefore the Appellant cannot thrust the term “Reassessment” in Section 47, which is not in existence there, thereby to avoid interest, under Section 47, read with the well conceived orders of Board, issued in Consultation with Ministry of Law vide Board’s Circular 64/2000, wherein a procedure of collection of ‘Interest’ under Section 47 of CA 62, had been duly prescribed, wherever ‘reassessment’ is permitted /warranted.
The position would have been quite different from the legal as well as Revenue (Interest) angle, had the term “Reassessment” (reassessed) was – also incorporated in Section 47 [Besides the term “Assessment” (assessed)], when Section 47 as amended in F.A. 1991(1)(Dec., 1991) to levy/charge, “Interest” for delayed payment of duty (Beyond 2 days). There fore, Commissioner (A) is correct in holding that “reassessment” under Section 47 of CA 62 is not permissible since, ‘Revenue’ implications sets in.
(4) The contention of the Appellant, that the findings of Commissioner(A) that “re-opening of original assessment done on 25.3.2001 by extending the benefit of exemption Notification 16/2000 on the basis of Certificate obtained and produced by appellant, subsequent to the original assessment is contrary to law”, is not an acceptable to us; It is a correct legal position; clearly brought out by Commissioner(A); The Appellant’s own admission/acceptance in his para 5 regarding the established practice may also be referred to; (i.e.) Reassessment [except Section 17(4) of CA 62] is not permissible in the Act; and it is a matter of practice followed in Custom Houses to avoid inconvenience to the trade; But, how could established practice continue to hold the field, even after introducing the Interest clause in Section 47(1) of CA 62 (F.A. 1991) to construe the terms “Assessment” and “reassessment” as the same, and give an exemption (suo-moto by the Department), to the “interest clause” that would accrue, wherever it arises on account of “reassessment”. Then what about the last proviso to Section 47 (Powers of Board), if Department itself could waive the interest:, How it is legally permissible when Revenue Implications sets in?
Therefore, specific orders were issued by Board in Consultation with Law Ministry vide Circular 64/2000, by prescribing a procedure, that has to be followed, to protect the Revenue (on account of Interest) due to Government, and at the same time, to provide facility to the importers/traders at large, by following the “Best pragmatic Course” without impairing revenue or any undue ‘disturbance’ to the existing/practice/procedure of ‘reassessment’.
Accordingly; while D.C. Customs did agree to reassess the Bill of Entry he did order to collect interest Rs. 3,65,03,967 in accordance with orders of Board/Law Ministry, which was rightly upheld by Commissioner (A); Therefore, there is no infirmity in the orders of Commissioner(A), and it is in accordance with Customs Law (Section 47 in particular), in all forms/force.
(6) This para is not relevant to the issue here (Refund of Interest); Further
(7) The appellant is provoking the department as well as Commissioner (A), as to
(8) Why the higher assessment (on merits) was not made in this case, though he himself fought for the “Concessional Project rate of duty” (tooth & nail) and successfully got it finally, on producing the approval of the State Government, after more than a year of initial assessment; (i.e.) In effect, the Appellant (himself) questioning the department and also Commissioner(A), as to why the merit rate of duty was not ordered/confirmed in his case (Negative Approach)!! In other words, it is not known, why Appellant himself should strive to say that assessment on merits, (Higher rate of duty) would have been the right course. (Not the Concessional project rate finally allowed to him) to sustain his weak case of refund of Interest, though he may be aware that such refund of interest is not at all permissible; The Appellant also goes to the extent of saying, that Commissioner (A) had also erred in not exercising his powers under Section 128A(3) of CA 62 (for raising a demand against the appellant for the differential duty), though Appellant himself is fully aware, that this is not the point/issue of Appeal to Commissioner(A), which concerns only with the issue on “Interest paid” for Rs. 3,65,03,967, and not the differential “duty” aspect. Thus the Appellant is not only trying to side track the issue, but he is also traversing beyond the scope of the orders in “Order-in-Original” and in ‘Order-in-Appeal’. This is a clear case of “Negative approach” of the Appellant with an attempt to sustain his unsustainable point concerning “Interest clause”.
(8 again & 9 also 12) The important point which the Appellant had failed to appreciate is, that; the terms “duty”, “assessment” (Import duty — assessed hereon) “Return of B.E” specified in Section 47 of CA 62, all refer to the first/original assessment only; Since, there is no. statutory term “Reassessed/Reassessment” in Section 47, it cannot be construed that any subsequent return of the B.E. would again stand for “Return of B.E.” for purposes of the “Interest clause” under Section 47 of CA 62; (i.e.) since Section 47 does not statutorily refer to “Reassessment/Reassessed”, question of reckoning the “Return of B.E.” on subsequent occasions, does not arise. B.E. returned originally is only relevant for Section 47; Therefore, Boards orders are correctly applicable and accordingly applied by the department, and rightly upheld by Commissioner (A) in accordance with the existing provisions of Customs law, by accepting the said Orders of Board. (Section 151 A of CA 62).
(9) Yes, there had been a failure on the part of the Appellant in payment of duty immediately after the original assessment (March 2001); (i.e.) when once the B.E. had been assessed and returned to him (March 2001) the assessee should have discharged his liability (so assessed) immediately and cleared the goods immediately by avoiding payment of “Interest” also; Further, under the provisions of Section 48 of CA 62, imported (landed) goods shall be cleared within 30 days. But in this case, there has been delay in clearance (after original assessment). But in this case, as admitted by Appellant, the required approval of the State Government was furnished nearly after one year and two months, after the original assessment; The Appellant had thus violated this legal obligations under Section 47 of CA, 62 and incidentally with Section 48 of CA 62 also. In this connection, detailed analysis in para 2 of the “special comments” (1) above may be referred to; Had the Appellant discharged merit rate of duty immediately by paying duty under Protest he could have now applied and got refund also (Based on orders of State Government procured after a year) without any liability to Interest under Section 47, since he would have already complied with his obligation under Section 47 by paying merit rate of duty immediately (within 2 days — by avoiding interest) and thereby this problem (seeking refund of Interest now) would no (sic, not) have arisen at all. However, the Department did await for the documents, though there was undue delay in furnishing the same, to extend the benefit of the project rate of duty (by reassessment) (in lieu of the originally assessed merit rate) by unduly awaiting for documents (Being an activity on behalf of State Government) and the appropriate Board’s orders, were duty/correctly extended/allowed in this case, by agreeing for reassessment, at the project rate of duty (on the basis of the approval of State Government), and at the same time by recovering the “Interest” as per the aforesaid orders of Board, which has to be necessarily followed in this case (Board’s orders are binding on the Department vide Section 151A and also as per the verdict of Hon’ble S.C. and other courts), and also held to be the correct legal course, as per the orders of Commissioner (A).
So, when Board’s order for “reassessment” was allowed in this case to the favour of the importer, the same orders warranting collection of interest, as per the procedure set in therein, cannot be disregarded or given a “go-by” (i.e.) Reassessment, though not allowed, it was allowed on the basis of orders of board; when the Board’s orders were allowed, necessarily instructions therein regarding manner of collection of interest has to be followed.
(10) Not correct/Not acceptable.
The case law cited (Law Lexicon Reprint edition 1987-By Ramanatha Iyer) by Appellant, virtually supports the Department’s action (only); it is only against the contention of Appellant (not in his favour).
In this case, the failure to comply with the obligation cast on the Appellant, to discharge his immediate duty liability on merits, (Section 47) (based on the original assessment in March ’01) is not an inevitable necessity, because he had to pay it (within two days of the assessment) as per Customs Law (Section 47 to be considered with Section 48 also) to avoid interest liability under Section 47(2). At the same time he had a rightful/legal remedy also (In Section 27 of CA 62) by paying the merit rate of duty “under Protest” to get back the refund of duty (Difference between merit rates and project rates) on obtaining the required approval of the State Government, which he did furnish to customs after more than one year of the original assessment; Thus, the case law cited by him does support the case of Department only and not that of the Appellant.
Since the statutory term “Reassessed/Reassessment” is not finding an ‘entry’ in Section 47 of CA 62, the benefit of interest (liability) also could not be extended in this case;
Reassessment to “duty” here stands differentiated from the “Interest” liability on reassessment in terms of Board’s orders in Circular 64/2000 (with the appl. of Law Ministry), and therefore there cannot be any mix up as attempted by Appellant. The project rate of duty, (i.e.) former allowed to Appellant, is one based on ‘documents’ to the satisfaction of the Department, and the later (interest on delayed payment of duty) is one to be statutorily collected in this case, due to the absence of the terms “Reassessed/Reassessment” in Section 47 of CA 62, which a term occurs only in Section 17(4) of CA 62 in consideration of the definition in Section 2(2) of CA 62 and not elsewhere, and due to the fact that provisions of Section 47 of CA 62, as it stands now, could only statutorily mean the first/original assessment/and not any subsequent reassessments/subsequent return of B/E.
(11) Not correct, Refer to comments against para 2 (above) also, Section 47 of CA 62, refers to ‘duty’ as well as “Assessment” (assessed) but not reassessment (reassessed) also. Therefore, the contention of the Appellant here is not only complete but also incorrect, since the Appellant purposely omits to refer to the actual term (Assessment/assessed) which is only finding an entry in Section 47 of CA 62. The case law cited [State of Orissa ELT 2001 (115) (SC)] is not also relevant to this case, as the case law relates to determination of amount of tax (duty) to be levied, whereas here, the issue is related to “Delayed payment of Interest” (not duty).
(12) Appellant himself accepts in this para that there can be only one date for return of the B/E but argues that date shall be the date of reassessment (May ’02 in this case) and not the date of original assessment (March ’01 in this case); But this is a totally misconceived contention with no reasoning/justification/authority/pragmatic considerations whatsoever; It is not as if every B/E requires reassessment. Only in peculiar cases like this (under reference), reassessment is warranted. Reassessment is only a rare occurrence; Therefore, it is not proper for the Appellant to hold that Interest liability under Section 47 would not arise in cases of ‘Reassessments’ (Reassessed to duty). Therefore, the correct position is that the date on which the B/E was “originally returned” after the first/original assessment and not the subsequent date or dates of return, is relevant date of determining interest liability under Section 47, since this Section envisages “one time assessment” only and not many a time “Reassessment/Reassessed”. Therefore, Board’s instructions permitting reassessment in Circular No. 64/2000 (with appl. of Ministry of Law) to adopt the procedure of collection of interest was therefore followed to allow the lower project rate of duty and also as per instructions therein (Circular 64/2000). Comments against para 8 and 9 (including 12) may also kindly be referred to;
(13) (Repetition by Appellant of para 12, hence the comments here may also be somewhat repetitive)
The remarks of the Appellant here also is totally misconceived contention with no reasoning/justification/authority/pragmatic considerations, whatsoever; It is not as if every B/E requires reassessment. Only in peculiar cases like this (under reference), reassessment is warranted. Therefore, it is not proper for the Appellant to hold that interest liability under Section 47 would not arise in cases of ‘Reassessments’ (Reassessed to duty). This is because there is no statutory entry as “Reassessment/Reassessed” in Section 47(1) to lend legal support to the Appellants contention here that date of return after reassessment, would be the date of return of B/E for determining the interest liability.
So, when Board’s orders are followed for reassessment, interest liability, as per the procedure/manner of collection sets in, and it was duly followed by Department.
Prayer:
The humble and honest prayer of the Department to the Tribunal is, that the action of the Department in having collected interest Rs. 3,65,03,967 is correct in law, and based on the orders of Board (issued in Consultation with Ministry of law) in Circular 64/2000 and therefore, it was rightly accepted and upheld by Commissioner (A). Hence, there is no case for any refund of the amount of Rs. 3,65,03,967, and accordingly the Department prays Hon’ble Tribunal to consider rejection of the Appellant, as there is no case for any refund in this case, as per Customs las (sic).
SDR also relies on the findings given by the Ld. Commissioner (Appeals) and also emphasises the Board’s Circular No. 64/2000 – Cus. dated 26.7.2000.
13. In counter Ld. Sr. Counsel Shri Habibulla Basha submitted that Appellate Tribunal (CEGAT) undoubtedly functions as a Court within the limits of its jurisdiction as held in para 8 of the Apex Court judgment rendered in the case of UOI v. Paras Laminates (P) Ltd., 1990 (30) ECC 38 (SC) : 1990 (49) ELT 322 (SC) and being a quasi-judicial authority the circular issued by the CBEC, though helpful in administration of provisions of Act and the Rules are not given the status of an authoritative interpretation of entries made in statute and such circulars are not binding on the quasi-judicial authorities like CEGAT as held by the Tribunal in the case of Sanghi Filaments Pvt. Ltd. v. CCE, Hyderabad, 1996 (87) ELT 683. He therefore submitted that the Board’s circular is required to be ignored. He further submitted that the Board’s Circular No. 64/2000-Cus. dated 26.7.2000 is clarificatory and has applicability in cases where bill of entry for certain imports which were assessed provisionally denying the benefit under EPCG scheme when the EPCG licence was neither obtained nor produced at the time of assessment by the importer. Further the importer did not clear the goods and subsequently only after the importer got the EPCG licence and submitted to the customs and the goods were cleared by the importer in that case. In a situation of this type, the bill of entry was re-assessed alongwith the benefit of EPCG scheme thus reducing the duty liability on the importer and the importer paid the duty so assessed and it was in a situation of this type that the Board had clarified that the interest in cases similar to as cited would be payable on the re-assessed amount for the period 2 days after the date of original assessment till the date of payment of duty. Whereas this is a case where they had produced the letter No. 520/B2/2001-I dated 19.1.2001 from the sponsoring authority i.e. Secretary to the Govt. of Tamilnadu, Energy Department. They had imported these 2 ship unloaders for ‘power generation project’ and were entitled for concessional rate of duty under SL.No. 337 of Notification No. 16/2000. They had produced all the requisite, documents to the Commissioner, who had admitted in his letter F.No. S. Misc. 15/2001 Gr. 6 dated 19.6.2001 that they had submitted the following documents:
a. Sponsoring Authority Letter No. 520/B2/2001-I dated 19.1.2001 issued by the Secretary, Energy Department, Govt. of Tamilnadu.
b. List of attestation of the importable items duly attested by the Secretary, Energy Department, Govt. of Tamilnadu.
c. Copy of contract between M/s. TNEB and M/s. SICAL.
It was only to cover up the delay on the part of customs that the following further documents were asked to be produced:
a. Certificate from the Chief Engineer of Tamilnadu State Electricity Board certifying that the scheme for renovation or the modernization, as the case may be, of such power plant has been, approved.
b. Recommendation letter by an officer not below the rank of a Secretary in the State Government concerned dealing with the subject of Power or Electricity recommends the grant of aforesaid exemption to the goods for such scheme.
c. Project report for renovation or modernization, as the case may be.
All these documents, specifically the letter from the sponsoring authority and copy of contract between M/s. TNEB and M/s. SICAL, etc. were already on record with the customs and were sufficient documents to allow them the benefit of concessional rate of duty and allow the clearance of the goods. The goods were unnecessarily kept by the customs and goods were assessed on merit at a normal rate without giving concession of duty which were their right to get the conessional rate of duty and as the goods were used for power generation project. He further submitted that it is a case of re-assessment within the meaning of Section 2(2) where it has been defined that “assessment” includes provisional assessment, reassessment and any order of assessment in which the duty assessed is NIL. Ld. Sr. Counsel further submitted that since assessment includes re-assessment and it is boldly written on the bill of entry as ‘REASSESSED’, they could be asked to pay the interest only after two days of non-payment of duty from the date of re-assessment as that was the date of assessment, because they were allowed the concessional rate of duty and their contract was registered as ‘project import’. It is in this situation, the Board circular is not at all applicable to them. They should therefore be refunded the amount which they have been made to pay under protest as they wanted to clear the imported items immediately for completion of the power generation project. The assessment on merit originally was unilateral and arbitrary decision of the customs authorities and they cannot be asked to pay interest in such a situation. He therefore submitted that as they were not required to pay any interest and the incidence of this interest has been borne by them and this has not been passed on to any other person, they should be ordered to sanction the refund of the interest recovered illegally from them.
14. We have carefully gone through the case records and the submissions made by both the sides and notice that the appellant-importer have imported 2 numbers of ship unloaders of 2000 T/H capacity of handling coal for North Chennai Thermal Power Station of TNEB, Chennai. On 24.1.2001, the appellant had initially submitted an application for Project Import Contract Registration to the Assistant Commissioner of Customs, Group 6, Chennai and filed bill of entry No. 003912 dated 8.2.2001. In other words, they had requested the Assistant Commissioner of Customs, Gr. 6, Chennai to register them for project import and allow concessional rate of duty. This letter dated 24.1.2001 was filed with the Assistant Commissioner and subsequently they filed bill of entry No. 003912 dated 8.2.2001. The appellant had requested the Assistant Commissioner of Customs to register the above-said contract under ‘Power Generation Project’ vide Customs Notification No. 16/2000 vide Sl. No. 337 to enable them to avail concessional rate of duty. Alongwith this letter dated 24.1.2001 which was addressed by M/s. SICAL to Assistant Commissioner of Customs, Gr. 6, Chennai they enclosed an application in the prescribed form (in duplicate), project bond in duplicate, letter of indemnity, essentiality certificate from Secretary to Government, Energy Department, Govt. of Tamilnadu, Chennai. It is also noticed that the Secretary, Govt. of Tamilnadu, Department of Energy had written a letter to the Collector of Customs vide his letter No. 520/B2/2001-I dated 19.1.2001 intimating that TNEB has placed purchase orders with, M/s. SICAL for supply of two numbers of ship unloaders of 2000 T/H capacity alongwith maintenance spares at a cost of US $ 10,734,000. The said company had to import and supply the above item to the TNEB for the scheme relating to coal handling system of Tamilnadu Electricity Board at North Chennai Thermal Power Station. The appellant had also informed the customs authorities — that since these items are importable under free importability and these do not figure in the negative list no import licence is required. The Secretary to the Govt. of Tamilnadu informed that they are covered under heading 98.01 of the CTA as applicable for power generation project as per Govt. of India, Ministry of Finance, Department of Revenue Notification No. 54/97 Customs, dated 5.6.97 and, therefore, they are entitled for concessional customs duty under ‘Power Generation Project’. Giving details of all the facts, the then Secretary to the Govt. of Tamilnadu, Energy Department intimated the Collector of Customs, Chennai vide his letter dated 19.1.2001 that the items covered in the list as endorsed duty are certified to be eligible for assessment for concessional rate of customs duty under heading 98.01 of CTA ‘Power Generation Project’. Simultaneously, after the receipt of this letter from the Secretary to the Govt. of Tamilnadu, Energy Department on 19.1.2001, M/s. SICAL vide their letter dated 24.1.2001 requested the Assistant Commissioner of Customs, Group 6, Chennai to register the above-said contract under ‘Power Generation Project’ vide Customs Notification No. 16/2000 Sl. No. 337 to enable them to avail concessional rate of duty. It is also noticed that on receipt of the unilateral assessed bill of entry on 25.3.2001, M/s. SICAL vide their letter Ref: SICAL: C&F: 2000 dated 26.3.2001 wrote to the Deputy Commissioner of Customs, Group VI, Chennai that at the outset they would like to register their protest for assessment of the bill of entry made on merits, as they had already submitted to the customs department relevant documents including sponsorship letter signed by the Secretary to the Govt. of Tamilnadu, who is the competent authority to issue the certificate. It is also noticed that the appellants had further submitted to the customs authorities that no reason has been given by the customs to reject their claim, as they had already pointed out that this was unique contract under B.O.T. scheme and should not have been treated as like any other project. The appellant also represented to the customs that in the assessment customs department has charged 10% surcharge on the basic duty of 25% under customs tariff heading 8426.19 in spite of the fact that surcharge is exempted under Notification No. 61/2000. It is also noticed that the appellants had requested the department to re-assess the bill of entry without levying surcharge and in the penultimate para of their letter dated 26.3.2001 they requested the department to register their protest once gain (sic, again) that they are not accepting the assessment on merit even without surcharge as exempted and requested the department to review their assessment and render justice. It is also noticed that to satisfy the department, the appellant had a meeting with the Collector of Customs, Chennai and gave him a detailed write up alongwith necessary annexures justifying their stand to seek concessional rate of duty and register them as “Power Generation Project” and allow them the concessional rate of duty vide Customs Notification No. 16/2000 under Sl. No. 337. In spite of all these letters from the Secretary to the Govt. of Tamilnadu, Energy Department as well as detailed write up, they were not registered under the ‘power generation project’ and the matter was kept pending by the customs authorities for a very long period. It is also noticed that on receipt of this detailed write up dated 24.5.2001, the Commissioner of Customs vide his letter F. No. S. Misc. 15/2001 Gr. 6 dated 19.6.2001 informed M/s. SICAL, Chennai that they had submitted the following documents only:
a. Sponsoring Authority Letter No. 520/B2/2001-I dated 19.1.2001 issued by the Secretary, Energy Department, Govt. of Tamilnadu.
b. List of attestation of the importable items duly attested by the Secretary, Energy Department, Govt. of Tamilnadu.
c. Copy of contract between M/s. TNEB and M/s. SICAL.
Whereas for considering their request they requested the appellants to submit the following further documents:
a. Certificate from the Chief Engineer of Tamilnadu State Electricity Board certifying that the scheme for renovation or the modernisation, as the case may be, of such power plant has been approved.
b. Recommendation letter by an officer not below the rank of a Secretary in the State Government concerned dealing with the subject of Power of Electricity recommending the grant of aforesaid exemption to the goods for such scheme.
c. Project report for renovation or modernization, as the case may be.
It is also noticed that the documents asked by the department vide their letter dated 19.6.2001 were already with them and all the details were mentioned in the letter of the Secretary to the Govt. of Tamilnadu, Energy Department who had recommended for the grant of aforesaid exemption to the goods for such scheme and he had written a detailed Letter No. 520/B2/2001-I dated 19.1.2001. It is also noticed that all these formalities were complied by them on 24.1.2001 itself and the appellant had initially submitted an application for project import contract registration to the Assistant Commissioner of Customs, Gr. 6, Chennai and filed bill of Entry No. 003912 dated 8.2.2001. They had also requested to register the contract under the ‘Power General Project’ vide Customs Notification No. 16/2000 Sl. No. 337 to enable them to avail concessional rate of duty. The customs authorities never responded to any of their correspondences and never asked for any further documents. It was only when they had met the Collector of Customs, Chennai and gave him a detailed write up alongwith necessary annexures justifying their stand of seeking concessional rate of duty and requested for favourable order, the Customs authorities vide their letter dated 19.6.2001 asked to produce various certificates and project reports, etc. Once again on 30.4.2002, the importer submitted a certificate vide Letter No. 1406/B2/2002-4 dated 30.4.2002 issued by the Secretary to the Govt. of Tamilnadu, Energy Department, recommending extension of the benefit of notification and sought for re-assessment with concessional rate of duty.
The request of the importer-appellant was ultimately considered by the department and the bill of entry was again re-assessed extending the benefit of Customs Notification No. 16/2000 vide Sl. No. 210 with 5% BCD + 16% CVD + 4% SAD. However, the appellant-importer was directed to pay interest from the date of original assessment and the interest was calculated as per Notification No. 34/2001 (N.T.) dated 10.5,2000. The assessment of goods by the proper officer was made only on 14.5.2002 extending the benefit of Notification No. 16/2000 Sl. No. 210 and bill of entry was handed over to SICAL, the appellant-importer. As they wanted to clear the goods in view of the urgency, on 14.5.2002 itself the appellant made payment of duty and also Rs. 3.65 crores as interest on the re-assessed goods for the period from 29.3.2001 to 13.5.2002 under protest, in continuation of the protest which was with the department vide their letter SICAL C&F/2000 dt. 26.3.2001. In view of the fact that they have been claiming right from the beginning that they had imported these two numbers of ship unloaders of 2000 T/H capacity of handling coal for North Chennai Thermal Power Station of TNEB, Chennai for Power Generation Project and, therefore, charging of interest from them from the date of original assessment i.e. 26.3.2001, which was done unilaterally without considering their request for registration of the Project Import Contract and without allowing them exemption of customs duty vide Customs Notification Sl. No. 337 of Notification No. 16/2000 is not legal & proper. It is also noticed that the interest has been paid by them under protest and the same is required to be refunded to them inasmuch as they had been asking for concessional rate of duty as Project Import Contract Registration under Tower Generation Project’ from the time of filing of Bill of Entry as they had informed the customs authorities at the time of filing of bill of entry No. 003912 dated 8.2.2001 their import as project under B.O.T. scheme and, therefore, no interest could be charged from them from the date of original assessment which was done unilaterally on merit and not as power generation project, by allowing the concessional rate of duty. It is also noticed that no interest can be charged from them as the re-assessment was done on 14.5.2002. But since they had made payments on 14.5.2002 itself that is to say on the same date i.e. on the date, the proper officer made the assessment, they are not required to pay any interest and whatever they have paid is required to be refunded to them. As regards, the findings of the Ld. Commissioner (Appeals) that re-assessment can only be done under Section 17(4), it is noticed that this view of the Commissioner is not correct because it is not a ease where they had withheld any information or it was a case of mis-declaration as can be seen from the provisions of Section 17(4) of the Customs Act. A perusal of the provisions of Section 17(4) would indicate that if subsequently on examination or testing of the goods or otherwise it is found that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act be re-assessed to duty. Therefore, the findings of the Commissioner that re-assessment is permitted only under Section 17(4) of the Customs Act (even in a normal case where all the information furnished is found true) is not correct. The re-assessment in their case has been done under Section 2(2) read with Section 47(1) & (2) of the Customs Act. It is further noticed that the department has not gone in appeal against the re-assessment and since the issue envisages re-assessment under Section 2(2) of the Act and since the customs have re-assessed the goods on 13.5.2002 and the appraising officer has marked it as ‘RE-ASSESSED’, as can be seen from the Bill of Entry. The duty becomes finally payable after re-assessment and interest is payable after expiry of 2 days from the date of re-assessment as the original assessment has been reversed by giving benefit of exemption which was delayed by the customs authorities, in spite of the fact that right from the beginning and at the time of filing of bill of entry they had informed the customs authority that they are importing these 2 numbers of ship unloaders of 2000 T/H capacity of handling coal for North Chennai Thermal Power Station as Power Generation Project and which was in the knowledge of the department and they were also informed by the competent authority i.e. Secretary to the Govt. of Tamilnadu, Energy Department that this is power generation project and is meant for Tamilnadu Electricity Board under B.O.T. Scheme. Therefore, the original assessment is not valid in view of the re-assessment done on 13.5.2002, and duty has been paid by the appellant on 13.5.2002 i.e. on the date of re-assessment itself. They were not required to pay any interest and this interest amount of Rs. 3.65 crores is, therefore, required to be refunded to them.
15. As regards the Board’s Circular No. 64/2000-Cus. dated 26.7.2000, this circular is clarificatory and has applicability in cases where bill of entry for certain imports which were assessed provisionally denying the benefit under EPCG scheme when the EPCG licence was neither obtained nor produced at the time of assessment by the importer. Moreover, the importer had not cleared the goods and subsequently, only after the importer got the EPCG licence and submitted it to the customs authorities, the goods were cleared by the importer. In that case bill of entry was re-assessed alongwith the benefit of EPCG scheme thus reducing the duty liability on the importer and the importer paid the duty so assessed and it was in a situation of this type that the Board had clarified that the interest in cases similar to as cited would be payable on the re-assessed amounts for the period 2 days after the date of original assessment till the date of payment of duty. Whereas in this case they had produced the Letter No. 520/B2/2001-I dated 19.1.2001 from the sponsoring authority i.e. Secretary to the Govt. of Tamilnadu, Energy Department and had informed the customs authorities that these two ship unloaders are being imported for power generation project and they are entitled for concessional rate of duty under Sl. No. 337 of the Notification No. 16/2000. Moreover, they had produced all the requisite documents to the Commissioner who had admitted vide his Letter F. No. S.Misc. 15/2001 Gr. 6 dated 19.6.2001 the receipt of the
a. Sponsoring Authority Letter No. 520/B2/2001-I dated 19.1.2001 issued by the Secretary, Energy Department, Govt. of Tamilnadu.
b. List of attestation of the importable items duly attested by the Secretary, Energy Department, Govt. of Tamilnadu.
c. Copy of contract between M/s. TNEB and M/s. SICAL.
Therefore, the fact in the Board’s Circular No. 64/2000-Cus. dated 26.7.2000 and the fact in this case are clearly distinguishable and are not applicable to the facts of this case. We are, therefore, of the considered opinion that the Board’s Circular No. 64/2000-Cus. dated 26.7.2000 is not applicable to the facts of this case, since assessment (which includes re-assessment) was done only on 13.5.2002 under Section 2(2) of the Customs Act, 1962 by giving concession under Notification No. 16/2000-Cus. and since duty was paid by them on 13.5.2002 itself, they were not required to pay any interest. Therefore, an amount of Rs. 3.65 crores paid as interest by them under protest is required to be refunded to them and we order accordingly. Hence, the appeal is allowed with consequently relief.