Case Note & Summary
The dispute concerned the rate of customs duty payable on 832 bales of rayon grade wood pulp that remained in a private bonded warehouse beyond the three-month warehousing period permitted under Section 61(1)(b) of the Customs Act, 1962. The appellants, a unit of Kesoram Industries Ltd., imported 4,832 bales and filed a bill of entry for warehousing on 25 May 1984. The goods were warehoused on 16 June 1984; 4,000 bales were cleared, leaving the 832 bales in question. The warehousing period expired on 15 September 1984. On 8 May 1985, the Assistant Collector of Customs issued a demand notice under Section 72(1), claiming customs duty of Rs.6,73,885.80, countervailing duty of Rs.1,63,657.98, and interest of Rs.67,003.52 at 12 per cent per annum from 16 September 1984 to 15 May 1985. The appellants had deposited Rs.8,03,458.32 and were asked to pay the balance plus interest until removal. On 30 May 1985, the appellants filed a bill of entry for ex-bond clearance for home consumption. On 25 June 1985, an order recalled the demand notice and directed clearance after realisation of dues, clarifying that the goods would not be cleared under Section 68 but on realisation of charges under Section 72. The bales were removed between 29 June and 2 July 1985. The appellants contended that the rate of duty in force on the date of actual removal applied under Section 15(1)(b), and that a notification dated 17 March 1985 exempting pulp from vegetable fibre from duty meant no duty was payable. The Customs, Excise and Gold (Control) Appellate Tribunal rejected this, holding that after expiry of the warehousing period the goods ceased to be warehoused goods and were removed under Section 72; Section 15(1)(b) applied only to clearance under Section 68; and the applicable rate was the rate in force on the date of filing the into-bond bill of entry under the proviso to Section 15(1) read with Section 46. The Tribunal also upheld interest. The Supreme Court examined the relevant provisions, including Sections 2(43), 2(44), 12, 15, 18, 46, 47, 59, 61, 62, 68, 71 and 72. It observed that the statutory scheme distinguished between clearance of warehoused goods for home consumption under Section 68 and removal of goods improperly remaining in a warehouse under Section 72. Since the appellants' goods remained beyond the permitted period, they were not cleared under Section 68, and the exemption notification did not apply. The Court affirmed that the rate of duty was determinable as on the date of filing the into-bond bill of entry and that interest was chargeable. The appeal was dismissed, upholding the customs authorities' demand.
Headnote
A) Customs Law - Warehoused Goods - Rate of Duty - Customs Act, 1962 Sections 15(1)(b), 46, 61, 68, 72 - Goods that remained in a bonded warehouse beyond the permitted period under Section 61 ceased to be warehoused goods and their removal under Section 72 was not clearance under Section 68; therefore, the rate of duty applicable was the rate in force on the date of filing the into-bond bill of entry, as provided by the proviso to Section 15(1) read with Section 46, and not the date of actual removal. Held that duty and interest were recoverable under Section 72. B) Customs Law - Exemption Notification - Applicability to Goods Removed Under Section 72 - Customs Act, 1962 Section 15(1)(b) - A notification dated 17 March 1985 exempting pulp derived from vegetable fibre from customs and additional duties did not apply to goods removed after expiry of the warehousing period under Section 72 because such removal was not clearance for home consumption under Section 68. Held that no exemption was available to the appellants. C) Customs Law - Interest on Duty - Warehousing Period - Customs Act, 1962 Sections 61(2), 72 - Interest at 12 per cent per annum was payable on the amount of duty for the period goods remained in the warehouse beyond the permitted warehousing period up to the date of clearance. Held that interest was recoverable under Section 72 together with duty, penalties, rent and other charges.
Issue of Consideration
Whether the rate of customs duty on goods that remained in a bonded warehouse beyond the permitted period and were removed under Section 72 of the Customs Act, 1962, should be determined under Section 15(1)(b) on the date of actual removal or on the date of filing the into-bond bill of entry; and whether an exemption notification dated 17 March 1985 applied to such goods.
Final Decision
The Supreme Court dismissed the appeal, affirming the Tribunal's order that duty was chargeable at the rate in force on the date of filing the into-bond bill of entry and that interest was recoverable under Section 72 of the Customs Act, 1962.
Law Points
- Rate of customs duty on warehoused goods cleared under Section 68 is determined under Section 15(1)(b) on date of actual removal
- goods remaining beyond permitted period under Section 61 cease to be warehoused goods and removal under Section 72 is not clearance under Section 68
- applicable rate for such goods is rate in force on date of filing into-bond bill of entry under proviso to Section 15(1) and Section 46
- interest under Section 72 is recoverable for storage after expiry.
