Legal principle

Once a Settlement Commission's final order settles a case, everything payable, including duty and interest, is subsumed in that order, and the Revenue cannot thereafter demand fresh interest on differential duty without challenging the unchallenged final order in substantive proceedings.

Court decision

The petition succeeded on the limited issue: the Court made the rule absolute by quashing the impugned DRI letter dated 10.04.2017 and commanded the Revenue not to act in furtherance of it, holding that on these facts the Revenue could not demand interest on the differential duty after the concluded settlement; there was no order as to costs. No decision is recorded on the Commission's power to clarify after a Section 127C(5) final order.

Facts

Sony India imported television sets manufactured by M/s. Sony, Malaysia (April 2011 to February 2015), claiming concessional basic customs duty under a notification giving effect to the India-ASEAN comprehensive economic cooperation agreement, conditional on certificates of origin certifying 35% value addition in Malaysia. Following DRI investigation, a show cause notice dated 25.04.2016 proposed differential duty of Rs.290,91,27,182 under Section 28 with interest under Section 28AA (finally assessed Bills of Entry) and differential duty of Rs.79,65,52,147 under Section 18(2) with interest under Section 18(3) (187 provisionally assessed Bills of Entry), plus appropriation of Rs.300 crore deposited during investigation. The petitioners paid the balance duty and Rs.114,54,59,876 towards interest under Section 28AA and applied for settlement under Section 127B. By final order dated 02.03.2017 the Settlement Commission settled duty at Rs.370,56,79,329 (including the Rs.79,65,52,147 on the provisionally assessed Bills of Entry), appropriated the interest deposit subject to Revenue verification of any balance, imposed penalties and granted immunity under Section 127H(1). Thereafter DRI, by letter dated 10.04.2017, demanded interest on the Rs.79,65,52,147 differential duty on the provisionally assessed Bills of Entry, which the Commission declined to treat as non-compliance of its order.

Key provisions

• Section 18, Customs Act, 1962 — Provisional assessment of duty
• Section 127C(5), Customs Act, 1962 — Procedure on receipt of an application under Section 127B
• Section 28AA, Customs Act, 1962 — Interest on delayed payment of duty
• Section 127H(1), Customs Act, 1962 — Power of Settlement Commission to grant immunity from prosecution and penalty
• Section 127B, Customs Act, 1962 — Application for settlement of cases
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 3, Customs Act, 1962 — Classes of officers of customs