TMI Blog2017 (6) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... of warehousing time application could be entertained, even after the initial period of warehousing had expired - In the context of Section 61 of the Act, as obtaining at the relevant point in time, the initial warehousing period could be extended on a "sufficient cause" being shown. There is nothing in Section 61(1)(b)(i)(B), which is suggestive of the fact, that an application, for that purpose, was required to be moved, prior to the expiry of the initial period of warehousing. Liability of interest - whether any interest, as demanded by the Revenue, was payable by the Assessee - Held that: - the Assessee had obtained a licence, as indicated above, under the EPCG Scheme on 20.03.2013 and, accordingly, the subject capital goods, were cleared from the warehouse, without being mulct with duty. The record shows that the Bills of Entries were assessed on the following dates: 12.09.2013, 23.06.2015 and 23.06.2015 - Since, the goods were cleared against zero per cent duty, no interest could have been levied. Appeal dismissed - decided against Revenue. - C.M.A. No. 2476 of 2015, M.P. No. 1 of 2015 - - - Dated:- 9-6-2017 - Rajiv Shakdher And R. Suresh Kumar, JJ. For the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as, in the wisdom of the learned counsels for the parties require to be re-framed. 4.1.Therefore, the following questions of law, are framed for adjudication of the instant appeal: (i) Whether the Tribunal mis-directed itself, in coming to the conclusion, that the first proviso to Section 61 of the Act, does not require, that an application be made, prior to the expiry of the warehousing period? (ii) In case, the answer to question no.(i) above is in favour of the Revenue, whether the Assessee could be called upon to pay interest, as contended by the Revenue? 5.Before we proceed further, it may be necessary, to set out the broad facts, which have led to the institution of the instant appeal. 5.1.The Assessee, as it appears, had set up a manufacturing unit at Cuddalore. The Assessee, proposed to manufacture, at the relevant point in time intermediates . These intermediates, are, evidently, used to manufacture life saving drugs, which, the Assessee intended to export out of India. 5.2. Towards this end, the Assessee imported capital goods, qua, which, it applied for issuance of licences under the EPCG Scheme. The EPCG Scheme, in issue, is part of the Exim P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved upon it, a deficiency letter and that, in response thereto, the Assessee had provided the necessary clarifications. 9.2.The reply, concluded with the request of the Assessee that the validity of the bond, be extended, till such time, the subject goods were cleared, i.e., upto 31.03.2013, against the licence, which it anticipated, it would be issued, under the EPCG Scheme. 10.The Revenue appears to have disregarded the reply dated 18.03.2013, issued in response to the demand notice dated 13.03.2013. 10.1.This is apparent from the record, which, contains a notice dated 26.03.2013, issued under Section 72 (2) of the Act, whereby, the Assessee was informed that, if, the demand made, via, notice dated 13.03.2013, was not liquidated, within five (5) days of its receipt, the subject capital goods would be disposed of via, auction, without reference to it and without prejudice to its liability qua other charges. 11.It appears that in the interregnum, on 20.03.2013, the Assessee was issued an EPCG licence, which conferred upon it, the right to clear the goods against zero per cent duty. 11.1.The Assessee having been strengthened by the fact that it had secured an EPCG l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessee's request for extension of period of warehousing, in respect of the 1st and 2nd Bills of Entry. 15.1.Aggrieved by the same, the Assessee, preferred an appeal, to the Tribunal. The Tribunal, vide judgment dated 20.06.2014, allowed the appeal of the Assessee, on the ground, that the said order was passed, without hearing the Assessee and therefore, violated the principles of natural justice. 15.2.The Tribunal, via, its operative directions, remanded the matter to the original Authority, with a direction, to decide the matter afresh, after considering all the grounds raised in the matter, including the issue, relating to the notice issued under Section 72 (2) of the Act. 16.It is, in this background, that the order dated 07.10.2014/ 10.10.2014 came to be passed by the Commissioner, to which, we have made a reference above. 17.As alluded to above, the Assessee, carried the matter, once again, in appeal, to the Tribunal. The Tribunal, via the impugned judgement has held in favour of the Assessee. Submissions of Counsels: 18. It is, in the backdrop of these facts, that the Revenue has preferred the instant appeal, in support of which, submissions have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in U.K.Paint Industries Vs. Commissioner of Customs, 2014 (306) E.L.T. 284 (Del.). 20.6.Thus apart, the learned counsel for the Assessee, brought to our notice, the fact, that out of the three Bills of Entry, one Bill of Entry was assessed on 12.09.2013, while the remaining two Bills of Entry were assessed on 23.06.2015. 20.7.It was, therefore, the learned counsel's submission, that the clearance of goods was under Section 68 of the Act and not under Section 72 of the Act, as was asserted, on behalf of the Revenue. Reasons: 21.We have heard the learned counsels for the parties and perused the record. 22.According to us, what clearly emerges from the record, is as follows: (i) At the point in time, when the goods were imported, that is, in early part of 2012, the Assessee had not been issued a licence under the EPCG Scheme. (ii) The Assessee, had however, got the subject capital goods warehoused. The period of warehouse, in respect of the 1st and 2nd Bills of Entry, expired on 06.02.2013, while, in respect of the 3rd Bill of Entry, it expired on 09.04.2013. (iii) Since, the period of warehousing had expired, the Revenue, issued a notice of demand, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital goods intended for use in any hundred per cent. export oriented undertaking, till the expiry of five years; (aa) in the case of goods other than capital goods intended for use in any hundred per cent. export-oriented undertaking, till the expiry of three years; and (b) in the case of any other goods, till the expiry of one year, after the date on which the proper officer has made an order under section 60 permitting the deposit of the goods in a warehouse: Provided that (i) in the case of any goods which are not likely to deteriorate, the period specified in [clause (a) or clause (aa) or clause (b)] may, on sufficient cause being shown, be extended (A) in the case of such goods intended for use in any hundred per cent. export-oriented undertaking, by the [Principal Commissioner of Customs or Commissioner of Customs], for such period as he may deem fit; and (B) in any other case, by the [Principal Commissioner of Customs or Commissioner of Customs], for a period not exceeding six months and by the [Principal Chief Commissioner of Customs or Commissioner of Customs] for such further period as he may deem fit; (ii)in the case of any goods ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcises and Salt Act, 1944 (1 of 1944). (emphasis is ours) 26.This view has also found favour with the Bombay High Court in the matter of: Sunil Jugalkishore Gupta Vs. Union of India and Others, 1988 (36) E.L.T. 75 (Bom.), albeit, in the context of Section 61 of the Act, which was some what differently worded. The moot point, however, which was decided by the Court, was that, in the absence of any statutory impediment, the extension of warehousing time application could be entertained, even after the initial period of warehousing had expired. In the said judgment, the Bombay High Court has made the following apposite observations: There is nothing in Section 61 to indicate that the application for extension must be made before the expiry of the period of warehousing initially permitted. Counsel refers to the scheme of Chapter IX in support of the contention that the application for extension must come before the expiry of the permitted bonding period. It is true that after the expiry of the warehousing period, the authorities are at liberty to take coercive steps to recover the withheld customs duty and other charges. But when the second proviso empowers the Collecto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be extended on a sufficient cause being shown. There is nothing in Section 61(1)(b)(i)(B), which is suggestive of the fact, that an application, for that purpose, was required to be moved, prior to the expiry of the initial period of warehousing. 27.This brings us, to the other issue, as to whether any interest, as demanded by the Revenue, was payable by the Assessee. The Revenue seeks to claim interest, based on its argument that since the warehousing period had expired and the demand had been raised under Section 72 (1), on 13.03.2013, the clearance would only have been under the provisions of Section 72 of the Act and not Section 68 of the Act. 28.According to us, the argument is misconceived, for the reason that though the demand in the first instance, was raised on 13.03.2013 under Section 72(1) of the Act, and the same was followed by a notice dated 26.03.2013, under Section 72(2) of the Act, it was ultimately dropped, as is evident upon a plain reading of communication dated 09.04.2013. The intent initially expressed by the Revenue, to auction the good by taking recourse to Section 72(2) of the Act, appears to have dissolved. 28.1.Be that as it may. The Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61(2) of the Act that the interest shall be payable on the amount of duty payable or due on the warehoused goods for the period from the expiry of period specified or granted till the date of clearance of the goods from the warehouse. In this case, on the date of clearance of the goods, no duty is payable. The goods are not exigible to duty at that time. Calculation of interest is always on the principal amount. The interest payable under Section 61(1) (2) of the Act is a mere accessory of the principal and if the principal is not recoverable/ payable, so is the interest on it. This is a basic principle based on common sense and also flowing from the language of Section 61(1)(2) of the Act. 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 liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
