TMI Blog2013 (12) TMI 1247X X X X Extracts X X X X X X X X Extracts X X X X ..... m duty in terms of the interim order, we do not think it will be appropriate to ask petitioner to furnish advance/duty free licences with DEEC book at this stage. This may also not be in the interest of the respondents as they will have to refund duty paid, with interest. Accordingly, it is directed that customs duty paid by the petitioner in terms of the interim order dated 25th February, 1999 will be treated as final and binding and “no interest for delayed payment will be recoverable” - Decided in favour of assessee. - Writ Petition (Civil) No. 2494/1997 - - - Dated:- 18-12-2013 - Sanjiv Khanna And Sanjeev Sachdeva,JJ. For the Petitioners : Mr. G. L. Rawal, Sr. Advocate with Mr. Rajesh Rawal, Advocate. For the Respondents : Mr. Rahul Kaushik Ms. Bhuvneshwari Pathak, Advocates. ORDER Sanjiv Khanna, J.: Two issues arise for consideration in the present writ petition. The first issue is whether the petitioner- U.K. Paint Industries proprietorship of U.K. Paint (India) Limited can utilise advance licences in respect of goods imported earlier? The second question is whether the petitioner is liable to pay interest under Section 61(2) of the Customs Act, 1962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of which were enclosed. They requested for waiver of interest via Notification No.59/93 dated 26th November, 1993. Thereafter, by means of letter dated 23rd September, 1996 a request for releasing of goods against Advance Licence with benefits of DEEC Book was made. This was followed by another letter dated 4th February, 1997 in which the petitioner referred to the decision in Kesoram Rayon (supra) highlighting that it dealt with the rate of duty applicable, whereas in the case at hand this was not the dispute. 2.2. The respondents by their letter dated 7th March, 1997 informed the petitioner that their request for release of goods against advance licence with benefit of DEEC Book was examined but stands rejected. The petitioner therefore, was requested to pay the duty and other dues and to get their goods cleared immediately. This was followed by correspondence, notice etc. It also appears that the respondents had issued Form of Release Advice dated 30th December, 1996 in which it was recorded that the petitioner had furnished import licences dated 30th December, 1996. In the counter affidavit, respondents have stated that the letter dated 19th April, 1996 was not meant for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for home consumption or re-exportation, or for removal to another warehouse, or as otherwise, provided by this Act. 72. Goods improperly removed from warehouse, etc. (1) In any of the following cases, that is to say, (a) where any warehoused goods are removed from a warehouse in contravention of Section 71; (b) where any warehoused goods have not been removed from a warehouse at the expiration of the period during which such goods are permitted under Section 61 to remain in a warehouse; (c) where any warehoused goods have been taken under Section 64 as samples without payment of duty; (d) where any goods in respect of which a bond has been executed under[Section 59 and which have not been cleared for home consumption or exportation are not duly accounted for to the satisfaction of the proper officer, the proper officer may demand, and the owner of such goods shall forthwith pay, the full amount of duty chargeable on account of such goods together with all penalties, rent, interest and other charges payable in respect of such goods. (2) If any owner fails to pay any amount demanded under sub-section (1), the proper officer may, without prejudice to any other remedy, cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied only when duty was payable. As noted above the respondents have contested the said submission on two grounds. First the advance licenses were issued subsequently and second and in alternative, interest was payable, inspite of furnishing of advance license. 6. The contention of the respondents that the advance licences issued subsequent to the date of import enclosed with the letters dated 2nd May, 1996 and 23rd September, 1996 cannot be used for goods imported earlier and on which custom duty was payable in terms of Section 72(1), has to be rejected in view of paragraph 65 of the policy which reads as under:- 65. The goods already imported/shipped/arrived in advance but not cleared from customs may also be cleared against Duty Free Licence issued subsequently. 7. The said paragraph makes it clear that the advance licences could be issued subsequently, even after the goods had been imported or arrived. The only stipulation was that the goods should not have been cleared. It is not the case of the Revenue that the goods had been cleared. The Advance license in terms of paragraph 65 of the policy could have been used for clearing the goods in question. Section 72 does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1975 (51 of 1975) and from the whole of the additional duty leviable thereon under Section 3 of the said Customs Tariff Act, subject to the following conditions, namely (a)*** (b) the importer at the time of clearance of the imported materials makes (i) a claim in writing to the Collector of Customs for such exemptionand executes a bond or legal undertaking before such authority as may be approved by the Central Government for complying with the conditions specified in this notification: (ii) a declaration before the Assistant Collector of Customs binding himself to pay on demand an amount equal to the duty leviable but for the exemption, on the imported materials in respect of which the conditionsspecified in this notification have not been complied with: Explanation. In this notification (i)-(iv)*** (v) Imported into India against an Advance Licence includes (a) goods imported under any licence (including Open General Licence) issued under the Imports and Exports (Control) Act, 1947 (18 of 1947), for the time being in force, for which at the time of clearance out of Customs' Control, a valid Advance Licence is produced by the importer; 10. Similar exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire process, the mere fact of warehousing the goods on an anterior date and clearing the same on the basis of a subsequent Advance Licence, validly obtained under Duty Exemption Scheme, cannot by any stretch of imagination import the idea of levy of interest for the period the goods were kept in the warehouse. The liability of the assessee to pay the duty arises only on clearance of the goods from a warehouse. The assessee has no obligation to pay duty as long as the goods were kept or remained in the warehouse. It is only in cases where the goods kept in the warehouse are exigible to duty, and they are so kept in the warehouse for more than the permitted period, and the said goods are cleared subsequently and duty paid, interest is chargeable for the period of delay in the clearance of the goods. Since the goods warehoused are kept for a longer period such delay entails delayed payment of duty payable and so interest is charged for such delayed payment of duty. 13. In fiscal statutes, the import of the words tax , interest , penalty , etc. are well known. They are different concepts. Tax is the amount payable as a result of the charging provision. It is a compulsory exact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The principal amount herein is the amount of duty payable on clearance of goods. When such principal amount is nil because of the exemption, a fortiori, interest payable is also nil. In other words, we are clear in our mind that the interest is necessarily linked to the duty payable. The interest provided under Section 61(2) has no independent or separate existence. When the goods are wholly exempted from the payment of duty on removal from the warehouse, one cannot be saddled with the liability to pay interest on a non-existing duty. Payment of interest under Section 61(2) is solely dependent upon the exigibility or factual liability to pay the principal amount, that is, the duty on the warehoused goods at the time of delivery. At that time, the principal amount (duty) is not payable due to exemption. So, there is no occasion or basis to levy any interest, either. We hold accordingly. 13. The aforesaid paragraphs clearly indicate that only when duty was payable, interest was chargeable and when because of an exemption, as in case of production of advance licences, no duty was payable, no interest was chargeable. In the case of Pratibha Processors (supra) the warehousing perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome consumption on payment of assessed duty and the proper officer making an order permitting clearance. Section 68 relates to clearance of warehoused goods for home consumption. The two provisions were distinguished from liability to pay duty under Section 72 of the Act in following words:- 10. Section 61 prescribes the period for which goods may be warehoused. They may be left in the warehouse in which they are deposited for the period of one year if they are such goods as are referred to in clause (a) of sub-section (1), and for the period of three months counted from the date of the order permitting warehousing if they are not such goods. The first proviso to sub-section (1) contemplates the reduction of the periods aforementioned, of one year and three months respectively (now referred to as the permitted periods ), if the goods are likely to deteriorate. It also permits, if the goods are not likely to deteriorate, an extension of the permitted periods on sufficient cause being shown; the Collector of Customs can extend the permitted periods by six months and the Central Board of Excise and Customs can do so for as long as it deems fit. By reason of sub-section (2), intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently, of Section 15(1)(b) apply only when goods have been cleared from the warehouse within the permitted period or its permitted extension and not when, by reason of their remaining in the warehouse beyond the permitted period or its permitted extension, the goods have been deemed to have been improperly removed from the warehouse under Section 72. 16. Decision in the case of Pratibha Processors (supra) was again distinguished by the Supreme Court in SBEC Sugar Limited (supra) for similar reasons. In the said case, the goods had been imported and the period for warehousing had also ceased. On the bill of entry, the Assistant Commissioner of Customs had made an endorsement directing payment of interest @ 20% per annum from the date of expiry of the bond. Subsequent to the expiry of the warehousing period on 25th December, 1996 and 1st January, 1997, the Government had issued a notification dated 1st April, 1997 under Section 25(1) of the Act, and had extended benefit of Export Promotion Capital Goods Scheme (EPCG Scheme) to the said goods, i.e., the goods, which were imported. The importer wanted to take benefit of the said notification, which was subsequent in point of time. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... graph 6.6 of Chapter VI of Exim Policy applicable in the case of SBEC Sugar Limited (Supra) containing EPCG Scheme was worded differently and operated in different circumstances. Paragraph 65 of the Advance Licences under the Import Export Policy, 1992-97 quoted above applied, as noted above, to prior imports and Advance Licenses could be utilised irrespective of the date of issue, which could be subsequent in the point of time. The ratio in SBEC Sugar Limited (supra) is therefore, not applicable. 18. This is apparent and the only way we can reconcile the ratio enunciated in the Supreme Court decisions. Pratibha Processors (Supra) primarily rests its ratio on the General Exemption 147 and the effect thereof. In case the respondents felt that the decision or ratio had gone beyond or had extended benefit beyond what was intended, the subsequent notifications could have been worded differently. Nothing to the said effect has been brought to our notice by the respondents. 19. In view of the aforesaid discussion it is held as under:- i. Advance Licences could have been utilized against earlier imports in terms of paragraph 65 of the policy as the goods had not been cleared from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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