Insight Diagnostic Oncological And Research Institute PVT. LTD. And Anr vs. The Union Of INDIA Thru Secretary, Ministry Of Finance , Dept. Of Revenue And Ors

Held

The Court held that Section 28AB of the Customs Act, 1962, and Notification No.47/1996-CUS (NT) could not be applied retrospectively to the petitioners' case. The Court noted that these provisions were not in existence at the time of import (1989-1990) and that Section 28AB(2) explicitly stated it would not apply to cases where duty became payable before the assent of the Finance (No.2) Bill, 1996. The Court respectfully agreed with the Delhi High Court's view in *Diwan Chand Satya Pal Aggl. Imaging Research Centre Vs. Union of India* that Section 28AB could not be invoked if it did not exist at the time of import. Furthermore, the Court found that the demand for interest under Section 28AB was invalid because the mandatory pre-conditions were not met. Specifically, no notice under Section 28(1) was issued, which would require allegations of collusion, wilful misstatement, or suppression of facts. Consequently, the proper officer had not determined the amount of duty or interest due as required by Section 28(2). The Court concluded that since the conditions for issuing a notice under Section 28 were not fulfilled, the question of determining any duty payable under Section 28(2) and consequently any interest under Section 28AB did not arise. The Rule was made absolute, and the petition was disposed of.

Facts

The petitioners imported medical equipment in 1989 and 1990, claiming exemption from customs duty under Notification No.64/88-CUS, supported by certificates from the Directorate General of Health Services (DGHS). In 1997, DGHS withdrew these certificates. Consequently, in 1998, the imported equipment was seized, and a show cause notice was issued for confiscation and penalty. The confiscation order in 2003 also directed payment of customs duty, which the petitioners paid along with a penalty, but they did not redeem the confiscated goods. In 2015, the Deputy Commissioner demanded a redemption fine and interest on the customs duty paid, citing Section 28AB of the Customs Act and Notification No.47/1996-CUS (NT). The petitioners contested this demand, arguing that the relevant provisions for interest did not exist at the time of import and that the demand was time-barred.

Key Issues

1. Whether Section 28AB of the Customs Act, 1962, and Notification No.47/1996-CUS (NT) can be applied retrospectively to demand interest on customs duty for imports made in 1989-1990, when these provisions were not in existence at the time of import? (Question of law) 2. Whether the demand for interest under Section 28AB is valid without issuing a notice under Section 28(1) of the Customs Act, 1962, and without fulfilling the pre-conditions for determining duty and interest as stipulated in Section 28(2)? (Question of law) Petitioner's arguments: The petitioners argued that Section 28AB and Notification No.47/1996-CUS (NT) were introduced after the import of the goods and were not made retrospective. Therefore, they could not be applied to their case. They also contended that the demand for interest was invalid as the mandatory procedural requirements under Section 28(1) and 28(2) were not followed. Revenue's arguments: The revenue contended that the petitioners committed a breach of conditions of the exemption notification, leading to confiscation and a demand for customs duty. They argued that since the duty and penalty were paid in 2012, interest under Section 28AB was leviable. They also stated that mentioning interest liability in the original show cause notice was not necessary.