The government via amendments to the Finance Bill, 2024 has made several provisions of the Customs Act now applicable on other duties levied on import of goods, such as countervailing duty (CVD), I-GST and GST compensation cess. This is being done to ensure that traders pay interest and penalty on non-payment of the additional import duties in all cases, which wasn’t the case earlier, say experts.
These duties–covered under the Customs Tariff Act, 1975–are levied on many imported goods, in addition to the Basic Customs Duty (BCD).
In certain judicial precedents, the levy of interest and penalty on additional duties payable under the Customs Tariff Act, had been set aside on the grounds that there is no enabling provision under customs law to recover the same for non-payment or delayed payment of duties. This argument will no longer be available to the traders anymore, experts say.
The amendments to the Finance Bill, 2024 ensure that all aspects of the Customs Act relating to determination of the rate of duty, “assessment, non-levy, short-levy, refunds, exemptions, interest, recovery, appeals, offences, and penalties” are applicable to such additional duties.
Moreover, similar amendments have been proposed to the Central Excise Tariff Act, 1985 in order to make sure that the provisions of the Central Excise Act, 1944 are applicable to the additional duties (such National Calamity Contingent Duty, Special Additional Excise Duty, Road & Infrastructure Cess, Agriculture Infrastructure & Development Cess), for the same purpose.
Yogesh Kale, executive director, Nangia Andersen said that the amendments seek to create “sufficient machinery provisions” regarding levy and recovery of the said additional duties.
Jitendra Motwani, partner, Economic Laws Practice, however, pointed that it is a settled position in law that substantive provisions are to be applied prospectively unless there is an express intention to apply the same retrospectively. “It would be interesting to see the view that will be taken by the revenue authorities with regards to this,” he added.
“The current amendment corrects an anamoly pointed out by the judgement of Mahindra and Mahindra in Bombay High Court. This amendment brings in all the sections including levy of interest and penalty of Customs act applicable on import related IGST and compensation cesses,” noted Bipin Sapra, Tax Partner, EY India.