JUSTICE DILIP GUPTA:

The issue that arises for consideration in this appeal that has been filed by Avery Dennison India Pvt. Ltd.¹the appellant, is whether interest can be levied under section 28AA of the Customs Act, 1962²the Customs Act, on the demand of Integrated Goods and Service Tax³IGST that was deposited by the appellant and whether the goods can be confiscated and in lieu of such confiscation, redemption fine can be imposed under section 125 of the Customs Act and penalty can be imposed under section 112(a) of the Customs Act.

2. This issue was examined by the Bombay High Court in A.R. Sulphonates Private Limited vs. Union of India⁴2025 (4) TMI 578 – Bombay High Court and it was held that in view of the judgment of Supreme Court in Mahindra & Mahindra Ltd. (Automotive Sector) vs. Union of India⁵2022 (10) TMI 212 – Bombay High Court, no interest could be charged on the IGST payment nor penalty or redemption fine could be imposed. This is for the reason that section 3(12) of Customs Tariff Act, 1975⁶the Tariff Act prior to its amendment made on 16.08.2024, did not apply the provisions of the Customs Act relating to interest, offences and penalties to integrated tax chargeable under section 3(7) of the Tariff Act. The relevant portions of the judgment of Bombay High Court that was affirmed by the Supreme Court in 2023 (8) TMI 135, are reproduced below:

“60. In Mahindra & Mahindra Limited (supra), this Court, after going through the provisions of Section 3 (6) of the Tariff Act and Section 3A (4) of the Tariff Act as applicable at the relevant time, held that no specific reference was made to interest and penalties in Sections 3 (6) and 3A (4) of the Tariff Act, which are substantive provisions and, therefore, imposing interest and penalty would be without the authority of law. In the present case, the levy of IGST is under Section 3 (7) of the Tariff Act, and Section 3 (12) of the Tariff Act which is applicable to the said levy is pari materia to Sections 3 (6) and 3A (4) of the Tariff Act as referred to in the case of Mahindra & Mahindra Limited (supra). In these circumstances, in our view, the said decision is squarely applicable to the facts of the present case.

61. Further, we are unable to accept the submissions of the Respondents that the decision in the case of Mahindra & Mahindra Limited (supra) is not applicable to the facts of the present case since it does not interpret Section 3 (12) of the Tariff Act. The provisions under consideration before this Court in the case of Mahindra & Mahindra Limited (supra) were Sections 3 (6) and 3A (4) of the Tariff Act. In Mahindra & Mahindra Limited (supra), this Court interpreted the provisions of Sections 3 (6) and 3 A(4) of the Tariff Act, which are pari materia to the unamended Section 3 (12) of the Tariff Act, which is in consideration in the present case. On interpreting Sections 3 (6) and 3A (4) of the Tariff Act, this Court held that when no specific reference was made to interest and penalties in the said provisions, imposing interest and penalty would be without the authority of law. In these circumstances, in our view, the ratio of the decision in the case of Mahindra & Mahindra Limited (supra), would be squarely applicable to the facts of the present case.

62. We are also not able to accept the submission of the Respondents that the provisions of Section 3 (12) use the term "including" and the same implies that the provisions of the Customs Act will be made applicable to the Tariff Act. As can be seen from the Judgement of this Court in Mahindra & Mahindra Limited (supra), Sections 3(6) and 3A(4) of the Tariff Act, which were considered by this Court in the said Judgement, also use the word "Including". Despite the same, this Court came to the conclusion that, since there was no specific reference to interest and penalties, imposing interest and penalties would be without the authority of law, *****

63. In these circumstances, in our view, the submission