This Tax Alert summarizes indirect tax related amendments to Finance (No. 2) Bill, 2024, proposed by the Hon’ble Finance Minister (FM) and introduced in Lok Sabha.
Provisions of Customs Tariff Act, 1975 are amended to postulate that the provisions of Customs Act, 1962 including those relating to the date of determination of rate of duty, assessment, non-levy, short-levy, refunds, exemptions, interest, recovery, appeals, offences and penalties shall apply to duty or tax or cess as they apply to duties under Customs Act.
Similar provisions have been inserted under the relevant Finance Acts for National Calamity Contingent Duty (NCCD), Special additional excise duty, Additional duty of excise, Social Welfare Surcharge, Road and Infrastructure Cess, Health Cess, and Agriculture Infrastructure and Development Cess.
For the abovementioned duties, surcharge and cesses, the provisions of Customs Act, 1962 and Central Excise Act, 1944, as the case may be, shall apply accordingly.
Comments:
- Bombay High Court in case of Mahindra and Mahindra Limited [TS-446-HC-2022(BOM)-CUST] had held that in the absence of explicit provisions, interest and penalty are not leviable for delayed payment of Countervailing duty (CVD), Special Additional Duty (SAD) and Customs surcharge.
Revenue preferred an SLP before the Supreme Court, however the same was dismissed. [TS-434-SC-2023-CUST].
- On the other hand, Kolkata CESTAT in case of Texmaco Rail Engineering Limited [TS-25-CESTAT-2024(Kol)-CUST] upheld the levy of interest on CVD and other duties of customs.
CESTAT distinguished Bombay HC ruling on the ground that it was a settlement case in case of Mahindra and Mahindra which is different from normal adjudication cases.
The said matter is currently pending before Calcutta HC.
- It is relevant to note that these amendments will be made effective prospectively.
- Accordingly, businesses may need to evaluate interest and penalty implications for the past period considering the Bombay HC ruling and the pending matter before the Calcutta HC.
