2026-VIL-1196-DEL-CU
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CUSTOMS High Court Cases

Customs - Computation of interest reflected in Customs EDI System on liability arising from confiscation and redemption of goods under Section 125 of Customs Act, 1962 for the period prior to determination of liability by the Order-in-Original - Petitioner filed a Bill of Entry declaring the imported goods as Bitumen, which was assessed, but on examination the goods were found to be Used Oil and were seized, followed by SCN proposing confiscation and penalties - The proceedings remained pending for more than seven years until the Order-in-Original amended the description and classification of the goods, confirmed the duty already paid, allowed redemption on payment of fine and imposed penalties - The Customs EDI System reflected interest charges which continued to increase, computed from the original assessment - Petitioner sought waiver of the entire interest, contending that it cannot be liable for the period during which the goods remained seized and adjudication was pending - Whether interest on the liability arising from confiscation proceedings can be computed from the date of original assessment - HELD - Following the Hon'ble Apex Court, the liability under Section 125(2) arises when the owner exercises the option to redeem and the Department accepts it, the duty is assessed under Section 28, and statutory interest follows once Section 28 applies. The liability arising from confiscation proceedings is distinct from the original assessment of the Bill of Entry, which was based on the declaration of the goods as Bitumen and was followed by examination, seizure and initiation of confiscation proceedings. The consequences of confiscation stood determined only by the Order-in-Original. Interest cannot be calculated for a period during which the liability sought to be subjected to interest had itself not been determined, and the period anterior to determination cannot be treated as delayed payment of the subsequently determined liability. Departmental delay by itself does not extinguish a statutory liability to pay interest, and no blanket waiver can be granted for the period after determination. The EDI System cannot create a liability not authorised by the Act, and the question is one of correct computation - The computation of interest treating the period prior to the date of the Order-in-Original as delayed payment is set aside, the Respondent is directed to recompute interest, if any, from the date of determination taking into account the re-assessment and payments already made, and the petition is partly allowed
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