{"id":2725,"date":"2025-02-22T17:44:38","date_gmt":"2025-02-22T12:14:38","guid":{"rendered":"https:\/\/centaxblogs.taxmann.com\/?p=2725"},"modified":"2025-02-22T17:44:38","modified_gmt":"2025-02-22T12:14:38","slug":"interest-is-payable-on-cvd-if-export-obligation-is-not-met-as-per-customs-notification-hc","status":"publish","type":"post","link":"https:\/\/www.centaxonline.com\/blog\/interest-is-payable-on-cvd-if-export-obligation-is-not-met-as-per-customs-notification-hc","title":{"rendered":"Interest is Payable on CVD if Export Obligation is Not Met as per Customs Notification | HC"},"content":{"rendered":"<pre><strong>Case Details: <\/strong><a href=\"https:\/\/www.centaxonline.com\/latest-news-updates\/customs\/101010000000383408\/interest-is-payable-on-cvd-if-export-obligation-is-not-met-as-per-customs-notification-hc\">KBS Industries Ltd. Versus Customs Central Excise and Service Tax Settlement Commission, New Delhi (2025) 26 Centax 348 (Del.)<\/a><\/pre>\n<h2><em>Judiciary and Counsel Details<\/em><\/h2>\n<ul>\n<li><strong>Vibhu Bakhru<\/strong>, ACJ. &amp; <strong>Ms Swarana Kanta Sharma<\/strong>, JJ.<\/li>\n<li><strong>Ms Tuhina<\/strong> &amp; <strong>Shri Deep Shah<\/strong>, Advs., for the Petitioner.<\/li>\n<li><strong>Shri Harpreet Singh<\/strong>, Senior Standing Counsel with <strong>Ms Suhani Mathur<\/strong>, Adv., for the Respondent.<\/li>\n<\/ul>\n<h2><em>Facts of the Case<\/em><\/h2>\n<p>The petitioner availed an exemption scheme allowing imports without customs duties, subject to specific conditions, including the fulfilment of export obligations. This scheme was backed by a notification issued under Section 25(1) of the Customs Act, 1962. The petitioner imported goods under this scheme, benefiting from duty exemptions. However, due to failure to meet the export obligations within the stipulated timeframe, the conditions tied to the exemption were not satisfied. As a result, the petitioner faced a demand for the payment of duties, along with interest at the rate of 15% per annum, as prescribed by the notification. The petitioner, seeking to challenge this liability, filed the petition after the Settlement Commission issued an order for the settlement of the case, which included the imposition of duties, penalties, and interest. The petitioner contested the validity of the settlement order and the imposition of interest on the unpaid duties.<\/p>\n<h2><em>High Court Held<\/em><\/h2>\n<p>The Honourable High Court ruled that the imposition of interest at the rate of 15% per annum on the unpaid duties was consistent with statutory provisions, specifically Section 25(1) of the Customs Act, which grants the Central Government the power to impose conditions for exemption from duties. The Court upheld the validity of the settlement order passed by the Settlement Commission, emphasizing that once the petitioner&#8217;s application was allowed to proceed, the order was conclusive, and no part of it could be selectively accepted or rejected. The court also found that the petitioner had availed the duty exemption under the condition of fulfilling export obligations, and failure to do so warranted the payment of duties with interest at 15% per annum, as outlined in the relevant notification. Furthermore, the petitioner&#8217;s challenge to the constitutional validity of the notification was dismissed, as the conditions imposed were deemed reasonable and lawful.<\/p>\n<h2><em>List of Cases Cited<\/em><\/h2>\n<ul>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=(2023)%203%20Centax%20261%20(Bom.)&amp;itemType=AP\">Mahindra &amp; Mahindra Ltd. v. Union of India<\/a> \u2014 (2023) 3 Centax 261 (Bom.) \u2014 Distinguished [Paras 26, 39]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2010%20(251)%20E.L.T.%203%20(S.C.)&amp;itemType=AP\">Sanghvi Reconditioners Pvt. Ltd. v. Union of India<\/a> \u2014 2010 (251) E.L.T. 3 (S.C.) \u2014 Followed [Para 37]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2023%20(386)%20E.L.T.%2011%20(S.C.)&amp;itemType=AP\">Union of India v. Mahindra and Mahindra Ltd.<\/a> \u2014 2023 (386) E.L.T. 11 (S.C.) = (2023) 9 Centax 361 (S.C.) \u2014 Referred [Para 26]<\/li>\n<\/ul>\n<h2><em>List of Notifications Cited<\/em><\/h2>\n<ul>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=Notification%20No.%2018%2F2015-Cus.&amp;itemType=AP\">Notification No. 18\/2015-Cus.<\/a>, dated 1-4-2015 [Paras 2, 17, 40, 42, 44, 47]<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Case Details: KBS Industries Ltd. Versus Customs Central Excise and Service Tax&hellip;<\/p>\n","protected":false},"author":5,"featured_media":2746,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[38,177,47],"tags":[],"class_list":["post-2725","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-customs","category-customs-news","category-custom-case-chronicles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Interest is Payable on CVD if Export Obligation is Not Met as per Customs Notification | HC<\/title>\n<meta name=\"description\" content=\"High Court upheld the Settlement Commission\u2019s order, ruling that interest at 15% on unpaid duties was lawful under Section 25(1) of the Customs Act, as failure to meet export obligations justified duty recovery.\" \/>\n<meta name=\"robots\" content=\"index, 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