TMI Blog1996 (10) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt of Bombay dismissed a batch of 36 writ petitions in the matter by a common judgment dated 19th November, 1992. The question that arose for consideration was posed, thus :- "On importation of goods under OGL if the importers had kept the same in the warehouse under Section 59 of the Act and after expiry of statutory period of three months if they clear the goods under the Advance Licence issued under DEEC Scheme, whether such importers are liable to pay interest on the amount of duty which was assessed and ascertained on the date of warehousing until the goods is cleared under Section 68 of the Act (excluding the free period of three months)." 3.Writ Petition No. 1854 of 1991 was treated as the main case. The facts in the said case were adverted to in detail. The judgment in the said case was followed in all other cases, including Writ Petition Nos. 1908 of 1991, 1958 of 1991 and 3145 of 1991. The three appeals C.A. Nos. 2416-2418 of 1993 are preferred against the judgments in the said writ petitions. For convenience sake the facts relevant to Writ Petition No. 1854 of 1991 (the main judgment) will be adverted to since the facts are almost identical in all the other cases. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t payment of duty and refused to accede to the request made by the respondents to pay interest on the duty assessed (earlier) at the time of warehousing the goods. 7.The Division Bench of the Bombay High Court, after referring to Sections 2 (14), 2 (15), 12, 15, 25(1) and (2), 59, 61 and 68, and the Exemption Notification (General Exemption No. 147) and Duty Exemption Entitlement Certificate (DEEC) (pages 168-170 and 176 of the paper book), came to the following conclusion in Paragraph 20 of the judgment, thus :- ".....until goods were sought to be cleared against Advance Licence till then, duty under the Customs Act was payable to the Respondents. By reason of facility under the DEEC scheme, the importers were permitted to apply for Advance Licence. The amount of interest therefore started accruing and remained accumulated from the date when goods were warehoused and subject to statutory period of three months as provided under Section 61(1)(b) of the Act. In our opinion, the interest started automatically accruing to the amount of duty after expiry of period of three months till the date of clearance of goods from the warehouse." It further held thus :- "We hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on which a bill of entry in respect of such goods is presented under that section; in the case of goods cleared from a warehouse under Section(b) 68 on the date on which the goods are actually removed from the warehouse; in the case of any other goods, on the date of payment of(c) duty: Provided that if a bill of entry has been presented before the date of entry inwards of the vessel by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards." ****** *** "25. Power to grant exemption from duty. - If the Central Government is satisfied that it is necessary(1) in the public interest so to do it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance), as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon. If the Central Government is satisfied that it is(2) necessaryin the public interest so to do, it may, by special order in each case, exempt from the payment of duty, under circumstances of an exceptional nature to be state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em fit; 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. Where any warehoused goods remain in a wareshouse beyond the(2) period of one year or three months specified in Clause (a) or Clause (b) of sub-section (1) by reason of the extension of the aforesaid period or otherwise, interest at such rate, not exceeding eighteen per cent per annum as is for the time being fixed by the Board shall be payable on the amount of duty on the warehoused goods for the period from the expiry of the period of one year or, as the case may be, three months, till the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the imported materials makes - a claim in writing to the Collector of Customs(i) for such exemption and executes a bond or legal undertaking before such authority as may be approved by the Central Government for complying with the conditions specified in this notification; a declaration before the Assistant Collector of Customs(ii) binding himself to pay on demand an amount equal to the duty leviable but for the exemption, on the imported materials in respect of which the conditions specified in this notification have not been complied with;" Explanation. - In this notification - ...... ...... ....... ........ "Imported into India against an Advance Licence" includes(v) — goods imported under any licence (including Open General(a) Licence) issued under the Imports and Exports (Control) Act, 1947 (18 of 1947), for the time being in force, for which at the time of clearance out of Custom's Control, a valid Advance Licence is produced by the importer;" *** ****** "IMPORT-EXPORT (TRADE) POLICY 1990-93. (Blue Book) Import of items in advance of issue of licence 355(1) Where the exporter is otherwise eligible to import an OGL item or other items against his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by 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 remained in the warehouse. It is only in cases where the goods kept in the warehouse are exigible to duty, and they are so kept in the warehouse for more than the permitted period, and the said goods are cleared subsequently and duty paid, interest is chargeable for the period of delay in the clearance of the goods. Since the goods warehoused are kept for a longer period such delay entails delayed payment of duty payable and so interest is charged for such delayed payment of duty. 13.In fiscal Statutes, the import of the words — "tax", "interest", "penalty", etc. are well known. They are differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple 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 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 warehoused goods at the time of delivery. At that 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. 15.Counsel for the Revenue placed heavy reliance on the decision of this Court in Union of India v. Bangalore Wire Rod Mill [1996 (83) E.L.T. 251 (SC)]. That was a decision rendered in appeal from the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable would be the duty in force on the date of clearance of goods from the warehouse and not the one in force on the date of import or on the date of warehousing and the liability to pay interest arises only after the expiry of the period of 15 days from the date of demand notice. It was further held that since the rate of duty on the goods was not 90% through-out the period from 22-3-1985 to 9-9-1988, but was varying, the direction of the High Court to take the actual rate in force from time to time is reasonable. We fail to see how the said decision is applicable in the instant cases. That was a clear case where the goods were exigible to duty on the date of clearance from the warehouse. It was not a case where the goods were exempt from the levy of duty on the date of clearance. The interest was payable on expiry of 15 days from the date of demand notice on the duty payable. The facts in the said case are clearly distinguishable and can have no application to a situation such as the one in the present case where the goods are not exigible to duty at all on the date of clearance from the warehouse being totally exempt from the levy. 16.We are of opinion that the High Court err ..... X X X X Extracts X X X X X X X X Extracts X X X X
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