ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 07.08.2025
CESTAT Kolkata Clarifies Interest Liability in Provisional Customs Assessments
In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, has delivered a judgment that clarifies the applicability of interest liability under Section 18(3) of the Customs Act, 1962, in cases of provisional customs assessments. The decision, pronounced on August 5, 2025, in the case of M/s NHPC Limited vs. Commissioner of Customs (Port), Kolkata, addresses key issues surrounding the retrospective application of interest provisions and penalties in customs law.
Background of the Case
The appellant, NHPC Limited, a public sector undertaking under the Ministry of Power, imported equipment and spare parts for the Teesta Hydroelectric Project in Sikkim between April 2004 and April 2008. These imports were provisionally assessed under Section 18(1) of the Customs Act, 1962, and classified under CTH 9801, availing a NIL rate of Basic Customs Duty (BCD). However, the Department later issued a show-cause notice in May 2019, alleging that the value of spare parts imported exceeded 10% of the value of the main equipment, violating the conditions of the customs notification. Consequently, differential duty was demanded, along with interest and penalties.
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
Source: CESTAT Kolkata
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