2009 (5) TMI 88 - AT - Customs

Application for extension of warehousing period for six months from 29th of November 2001 was also applied for by the appellant on 26-11-2000 but no response was received by them. applications remained undecided - Department should have taken timely action for accepting/rejecting their application for extension of warehousing period. In my opinion when there is provision for extension of warehousing period and the appellant applied for extension for warehousing period before expiry of warehousing period which was not rejected by the Commissioner it is unjust and improper to hold that warehousing period was expired on 29-11-2001. - the appeal is allowed by way of remand to the original adjudicating authority for assessing the appellant s duty liability at the rate prevalent on the date of clearance of the goods and after examining the applicability of Notification No. 53/1997-Cus dt. 3-6-1997.

Issues Involved:
1. Determination of the applicable rate of duty.
2. Liability for interest on delayed payment of duty.

Issue-wise Detailed Analysis:

1. Determination of the Applicable Rate of Duty:

The primary issue was whether the rate of duty applicable on 29-11-2001, when the extended warehousing period expired, should be used for calculating the demand against the appellant or the rate of duty on the actual date of removal of the goods should apply.

The appellants, a 100% export-oriented unit, had applied for an extension of the warehousing period which was pending. They argued that the determination of the rate of duty as on the date of completion of the extended warehousing period was incorrect. They cited several tribunal decisions, including Pradeep Ullal, PSI Data Systems Ltd., and Macmillan India Ltd., which supported their argument that the authorities should wait for a final decision on the application for extension before demanding duty.

The tribunal noted that the appellants had requested to remove the goods on payment of duty after they found that they could not use the imported inputs for manufacture. The Revenue relied on the Supreme Court's decision in Kesoram Rayon, which stated that the relevant date for determining the rate of duty is when the warehousing period/extended period ends, not the date of filing the ex-Bond bill of entry.

The tribunal found that the appellants had not seriously pursued their request for an extension of the warehousing period, as evidenced by the timing and nature of their applications and lack of reminders. Consequently, the tribunal upheld the lower authorities' decision to treat 29-11-2001 as the date for calculating the rate of duty, aligning with the Kesoram Rayon decision.

However, Member (Judicial) Archana Wadhwa disagreed, emphasizing that the appellants' applications for extension were pending and should have been considered by the proper officer. She noted that the appellants' applications were made in accordance with Circular No. 47/2002-Cus, which advised a liberal approach for 100% EOUs. She argued that the appellants could not be penalized for the non-action of the Revenue officers and that the rate of duty should be based on the actual date of removal of the goods.

Ultimately, the third member, P.K. Das, concurred with Member (Judicial) Archana Wadhwa, leading to a majority decision to remand the matter to the original adjudicating authority to assess the duty liability at the rate prevalent on the date of clearance of the goods and examine the applicability of Notification No. 53/97-Cus.

2. Liability for Interest on Delayed Payment of Duty:

The second issue was whether interest was chargeable on the delayed payment of duty. The appellants argued that payment of duty by debit in a DEPB (Duty Entitlement Pass Book) licence should be considered as availment of exemption, not as payment of duty. They cited the tribunal's decisions in Reliance Industries Ltd. and Essar Steel Ltd., which supported their position that debiting the duty amount from the DEPB should be treated as full exemption from customs duty, and thus, no interest should be charged.

The tribunal agreed with the appellants, noting that the imported goods should be treated as fully exempted since the duty debit was made from the DEPB. Consequently, the question of interest on delayed payment did not arise.

Final Judgment:

The tribunal upheld the orders of the Commissioner (Appeals) regarding the relevant date for calculating the rate of duty but set aside the order concerning the levy of interest. The appeal was decided on these terms, with the majority decision leading to a remand to the original adjudicating authority to reassess the duty liability based on the date of clearance of the goods and the applicability of Notification No. 53/97-Cus.

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