TMI Blog1993 (6) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of such goods. Section 12 of the Act is a charging section and prescribes that-duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 or any other law for the time being in force, on goods imported into India. Section 85 of the Act reads as follows : "85. Stores may be allowed to be warehoused without assessment to duty. - Where any imported goods are entered for warehousing and the importer makes and subscribes to a declaration that the goods are to be supplied as stores to vessels or aircrafts without payment of import duty under this Chapter, the proper officer may permit the goods to be warehoused -without the goods being assessed to duty." 2. Section 59 of the Act, inter alia, provides that the bond to be executed by the importer of dutiable goods which have entered for warehousing shall provide for binding the importer to pay all duties, rent and charges claimable on account of such goods under the Act. Section 60 of the Act confers power upon the proper officer to make an order permitting the deposit of the goods in a warehouse without payment of duty on compliance with the provisions of Section 59 of the Act. Section 61 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onths, after the date on which the proper officer 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 likely to deteriorate, the aforesaid period of one year or three months, as the case may be, may be reduced by the Collector of Customs to such shorter period as he may deem fit; (ii) in the case of any goods which are not likely to deteriorate, the aforesaid period of one year or three months, as the case may be, may on sufficient cause being shown, be extended by the Collector of Customs for a period not exceeding six months and by the Board for such further period as it may deem fit: Provided further that when the licence for any private warehouse is cancelled, the owner of any goods warehoused therein shall, within seven days from the date on which notice of such cancellation is given or within such extended period as the proper officer may allow, remove the goods from such warehouse to another warehouse or clear them for home consumption or exportation. (2) Where any warehoused goods remain in a warehouse beyond the period of one year or three months specified in clause (a) or clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tension without payment of interest but that demand having been turned down, the petition was filed on September 13, 1983 under Article 226 of the Constitution of India to challenge action of the Officer in granting extension only on condition of payment of interest. During the pendency of the petition, the provisions of Section 61 of the Act were further amended by Customs (Amendment) Act, 1991 with effect from December 23, 1991. The petitioners thereafter sought amendment of the petition to challenge the amended provisions. The amended provision varies the rate of interest from 12% to not below 20% and not exceeding 30% to be fixed by the Board. The amended provision also adds a proviso which reads as follows : "Provided that the Board may, if it considers it necessary so to do in the public interest, waive, by special order and under circumstances of an exceptional nature to be specified in such order, the whole or part of any interest payable under this sub-section in respect of any warehoused goods." 4. Shri Doctor, learned counsel appearing on behalf of the petitioners, submitted that in respect of goods warehoused under Section 85 of the Act, the provisions of Sections 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el because it overlooks that there is no provision apart from Sections 59 to 61 under Chapter IX of the Act dealing with warehousing of the imported goods. Section 85 merely provides that the goods are not liable to payment of import duty if the goods are warehoused and the importer makes a declaration that the goods were supplied as stores to the ship. The fact that import duty is not payable does not necessarily mean that the Customs Officer is not required even to assess the goods. The assessment of duty is one thing, while the liability to pay duty is another. What Section 85 of the Act prescribes is that the importer will not be liable to pay duty and it confers a discretion upon the Customs Officer to permit the goods to be warehoused without the goods being assessed to duty. It is impossible to accede to the contention that the expression "may" should be read as "shall" and the Customs Officer has no jurisdiction to assess the goods when the conditions under Section 85 of the Act are complied with. Apart from this consideration, Shri Doctor has to concede that there is no provision under the Act or the Rules which provides for modalities or the conditions under which the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n an extension can be granted by Collector of Customs for a period not exceeding six months and by the Board for such period as it may deem fit. It is obvious that the Collector of Customs or the Board will grant extension provided there is a reasonable ground for the importer in not supplying the goods as stores to the vessel. The consequence of grant of extension is that the return of foreign exchange to the country is delayed and the Legislature thereupon felt that such importer should pay certain amount as compensation. Sub-section (2) of Section 61 merely provides for the modalities to calculate the amount of compensation. The amount of compensation should have nexus to the goods in respect of which extension is sought and, therefore, the compensation is calculated on the amount of duty payable on the warehoused goods for which extension is sought. The amount is to be calculated with reference for the period from the expiry of the original period and till the date of clearance of the goods from the warehouse. The mere fact that the expression 'interest' used in sub-section (2) of Section 61 of the Act should not cloud the reasoning that the amount liable to be paid by the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods. We enquired from the learned counsel as to what is the approximate percentage of goods in respect of which extension is sought and the answer was, it varies from 10% to 15%. The learned counsel further submitted that after the period was reduced from three years to one year, even this percentage has been substantially reduced. It is, therefore, obvious that the claim that by levy of charge under sub-section (2) of Section 61 of the Act, the petitioners will be deprived of carrying on their business as ship chandlers is nothing but imaginary. Shri Doctor then submitted that in some cases the importers suffer serious hardship and, therefore, the provisions of sub-section (2) of Section 61 of the Act should be struck down. It is impossible to accede to the submission. Merely because some hardship may be caused in case of some importers, the statutory provisions cannot be struck down. The submission also overlooks that the proviso to sub-section (2) of Section 61 of the Act confers power upon the Board to waive the whole or the part of the amount payable under sub-section provided the Board is satisfied that it is in the public interest to do so. The expression 'Board' under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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