TMI Blog1993 (5) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... have been disputing the levy of interest on the plea that when the goods are not at all levied to Customs duty on clearance, they should not also be liable to the interest. The matter has been carefully considered by the Board and it has been decided that the interest shall be levied in cases where goods are cleared without payment of duty and such interest shall be calculated with reference to the rate of duty assessed, at the time of initial warehousing of the goods. Subsequent exemption of any kind shall not be regarded as automatically exempting such goods from interest liability. This is for the information and guidance of the trade." 4. 34.10 MTs. of the 207.601 LDPE Granules were released after the petitioner paid a sum of Rs. 5,77,670/- as assessed duty. According to the documents, the Ex-Bond Bill of Entry in respect of the 34.10 MTs. is dated 2-2-1991. No interest was charged from the petitioner. The balance 173.50 MTs. remained in the warehouse. 5. According to the respondents, on 30th April 1991 a notice under Section 72(1) of the Act was issued to the petitioner and on 11th October 1991 a Notice under Section 72(2) was also issued in respect of the goods in qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Kerala High Court in Thungabhadra Fibres Ltd. v. Union of India 1991 (52) E.L.T. 357; a decision of the Tribunal in Shriram Needle Bearing Industries Ltd. v. Collector of Central Excise 1992 (62) E.L.T. 206 and on the decision of the Supreme Court in M/s. Prakash Cotton Mills Pvt. Ltd, v. B. Sen and Others AIR 1979 SC 675 = 1979 (4) E.L.T. (J 241) (S.C). 12. The petitioner then relied upon the decision of the Supreme Court in N.K. Bapna v. Union of India 1992 (60) E.L.T. 13 and the decision of a Learned Judge of this court in Shewbuxrai Onkar Mall v. Assistant Collector of Customs and Ors. 1981 CHN 369 to contend that where goods were warehoused under Section 59 the import was a continuing process which commenced with the crossing of the Customs barrier till actual clearance from the bonded warehouse. The goods were provisionally assessed to duty when warehoused under Section 59 but the rate was fixed only when clearance took place. Interest, according to the petitioner, was to be calculated on the duty assessed at the time of clearance and not on the duty which may have been applicable when the goods were warehoused. 13. The petitioner then challenged the public notice da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts of this case. 17. The first submission of the respondents that the goods continued to be liable to duty although the petitioner as the holder of the licence was not required to pay duty does not stand scrutiny. The DEEC scheme is a general exemption which has been granted under sub-section (1) of the Section 25 of the Customs Act, 1962 by the Central Government by Notification No. 159/90-Cus. dated 30th March 1990. By that notification the goods themselves have been exempted from payment of duty subject to the fulfilment of certain conditions including inter alia that the materials imported are covered by a DEEC. It is the materials themselves which are exempted. 18. In view of the decision of the Supreme Court in M/s. Prakash Cotton Mills (P) Ltd. (supra) that the rate of Customs Duty will be that in force on the date of actual removal of the warehoused goods from the warehouse, under Section 15(1)(b) read with Section 59 of the Act, there can, be no doubt that the petitioner is entitled to duty free clearance of the balance of the goods. 19. But the respondents say that the petitioner is not entitled to the benefit of the exemption because admittedly the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on the amount of duty on the warehoused goods for the period from the expiry of the period of one year till the date of the clearance of the goods from the warehouse: Provided that the Board may, if it considers it necessary so to do in the public interest, waive, by such order and under circumstances of an exceptional nature, to be specified in such order, the whole or part of any interest payable under this section in respect of any warehoused goods." 23. Section 68 provides : "S. 68. Clearance of warehoused goods for home consumption. The importer of any warehoused goods may clear them for home consumption if - (a) a bill of entry for home consumption in respect of such goods has been presented in the prescribed form; (b) the import duty leviable on such goods and all penalties, rent, interest and other charges payable in respect of such goods have been paid; and (c) an order for clearance of such goods for home consumption has been made by the proper officer." 24. Section 72 in so far as it is relevant provides: "S. 72. Goods improperly removed from warehouse, etc. (1) In any of the following cases, that is to say,- (b) Where any warehoused goods have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity to comply. 28. The period for which the petitioner could have warehoused the goods expired on 5-12-1991. The idea behind fixing a time-limit is to compel the importer to clear the goods after the statutory 'free period'. Notionally therefore the importer becomes liable to pay duty and to remove the goods on the expiry of the period. 29. A Division Bench of the Karnataka High Court in the case of Bangalore Wire Rod Mills v. Union of India [1992 (61) E.L.T. 37] had to consider a situation where the goods had been warehoused on 11-11-1982. Section 61(2) was introduced with effect from 13-4-1983 as already noted. Act 11 of 83 also amended the provisions of Section 61(1) of the Act. The Court held that goods which had been permitted to be warehoused under Section 61(1) of the Act as it stood prior to its amendment in 1983 were not affected by the provisions of Section 61(2) which only related to cases covered by Section 61(1), as amended. In that context Rama Jois, J., (as his Lordship then was) who delivered the judgment held that: "Obviously, in order to avoid loss to the Central Government on account of delay in issuing notice under Section 59 of the Act by the officers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner would be liable to pay interest at the rate of duty applicable after the expiry of the 'free' period. The public notice issued by the Collector is in keeping with this exposition of the law. 33. In the case of Thungabhadra Fibre Ltd. (supra), the goods were warehoused in March and September 1984. In March 1985 the goods were exempted from duty. Subsequently, the importer apply for clearance of goods. He was asked to pay the duty. The Court held : "A reading of the relevant provisions of the Act would show that the liability to pay interest cannot be delinked or divorced from the liability to pay duty. Both are conjunctive and must go together. The words "together with interest" in Section 59(b) are sufficient to indicate that the interest is linked with duty. In other words, an importer has no liability to pay interest is an adjunct to a debt or liability. It has no separate existence. It is one of the incidents of a debt which in the absence of the latter has no sanction for enforcement. The importer's liability to pay duty is at the time of clearance of the goods from a warehouse. He has no obligation to pay duty as long as goods remained in the warehouse. When the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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