TMI Blog1998 (4) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of Pondicherry. The firm has obtained an Import licence and imported 3 fishing net manufacturing machineries at a cost of Rs. 30 lakhs from Japan during February, 1988. The firm has approached a Financial Institution for sanction of term loan for clearing of the imported machineries and it took some time for getting the loan and hence the petitioner firm has filed Bill of Entry for warehousing with the second respondent for keeping the machineries in a Public bonded warehouse at Virugambakkam. The second respondent has assessed the total duty for the 3 machineries by over valuing the same at Rs. 41,35,892/-. Though the petitioner Firm has disputed the assessment it has complied with the provisions of Section 59 of the Customs Act, 1962 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section 2 of Section 61 of the Customs Act is arbitrary, ultra vires, unconstitutional and capricious as provision 61(2) is contrary to Section 59 of the Act. It is stated that by keeping its goods in the warehouse there is no transaction of any grant of loan or advance, no interest can be claimed in any transaction which is not in the nature of loan or advance. Accordingly the payment of interest for keeping the goods in the warehouse and that too beyond the period as stipulated under Section 61 of the Act is unreasonable. When once there is, the rent is being paid for keeping the goods, there can not be any other claim in the nature of interest for keeping the goods beyond the stipulated period as provided under Section 61. Hence, accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The importer of any dutiable goods which have been entered for ware-housing and assessed to duty under Section 17 or Section 18 shall execute a bond binding himself in a sum equal to twice the amount of the duty assessed on such goods, - (a) to observe all the provisions of this Act and the rules and regulations in respect of such goods; (b) to pay on or before a date specified in a notice of demand all duties, rent and charges claimable on accounts of such goods under this Act, together with interest on the same from the date so specified at the rate of six per cent per annum or such other rate as is for the time being fixed by the Board; and (c) to discharge all penalties incurred for violation of the provisions of this Act and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board shall be payable on the amount of duty on the ware-housed goods for the period from the expiry of the period of one year or as the case may be, three months, 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 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)," 9. The reading of the above provisions show that where the goods remain in a ware-house beyond the period as prescribed under Section 61(1)(a), it is open to the respondents to impose interest at such rate not exceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 remained in the warehouse. It is only in cases where the goods kept i ..... 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) and (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 commonsense and also flowing from the language of Section 61(1) and (2) of the Act. The principal amount herein is the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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