TMI Blog2009 (4) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... n 61(2) of the Customs Act, when no duty is paid in cash, as having been exempted as per Notification 05/2002 and 96/2004 ? iii) Whether, adjustment of credit granted by the Government on export of goods in the DEPB towards import duty payable buy for the exemption is equivalent to payment of duty in cash ? iv) Whether clearance of goods from the warehouse after 90 days means that payment of duty due to the Government was delayed so as to earn interest by the Government? 2. The appellant, who is the holder of private bonded warehouse licences No.02/84 and 1/2005 issued under Section 58 of the Customs Act, 1962 received Acid Grade Flourspar falling under Chapter heading 25 of the Customs Tariff Act, 1975 from the Customers Bonded warehouse situated at Cuddalore under cover of a Transfer Bond. Subsequently, the warehoused goods are being cleared on payment of duty /DEEC/DEPB through Ex-bond Bills of Entry. 3. In this particular case, the importers have effected clearance by utilising the DEPB scrips. The Bills of Entry were assessed under Section 18 of the Customs Act (in short "the Act") In terms of Section 61(2(i), the importers were called upon to show cause why inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook), we are of the opinion that the entire Scheme is in a 'package' in allowing exemption to imported goods the Government had made it clear that goods imported into India against the Advance Licence includes goods imported under any licence (including Open General Licence) for which at the time of clearance out of Customs control a valid Advance Licence is produced by the importer. It is open to the importer to import the items in advance under Open General Licence and keep the same in Customs Board for getting a clearance against the valid Licence issued subsequently under Duty Exemption Scheme. When the notification granting the exemption and also the Import Policy has totally liberalised the entire 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 be 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest is necessarily linked to the duty payable. The interest provides 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 warehouswed goods at the time of delivery. At tht 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." 8. The learned counsel submitted that in that case, the Supreme Court held that importers are not liable to pay interest, since the goods were exempted from payment of duty at the time of clearance. 9. The learned Senior Standing Counsel for the respondent submitted that the judgment in Pratiba's case will not apply to the present case, since those goods were covered under the DEEC Scheme which is totally different. The learned counsel submitted that as per para 4.3.5 of Foreign Trade Policy 2004-07, the additional duty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly, no CENVAT or drawback was allowed for such payments. Para 4.3.5., of the Foreign Trade Policy, 2004-09 was amended allowing additional Customs duty paid through debit under DEPB to be adjusted as Cenvat credit or duty drawback. The said position was clarified vide Circular No.59/2004-Cus., dated 21.10.2004 (2004 (173) E.L.T. T9). It implies that the goods cleared by debits through DEPBs are not to be treated as exempted but duty paid. 4. Section 61 of the Customs Act, 1962 provides for charging of interest on duty payable on clearance of warehoused goods. Section 61(d)(i) and (ii) provides that the interest shall be payable on the amount of duty payable at the time of the clearance of the goods from the warehouse. In case of clearances under DEPB Scheme, the amount of duty payable is required to be debited from DEPB scrip. Therefore, it cannot be considered that the duty payable is nil or exempted. This is further supported by the fact that the CENVAT credit or duty drawback is available even when the additional Customs duty is debited under DEPB. 5. The issue regarding interest on warehoused goods has already been clarified by the Board vide Circular No.10/2006-Cus. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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