2004 (7) TMI 533 - AT - Customs

Summary

Issues:
1. Levy of duty and interest on lost/pilfered goods from a warehouse.
2. Demand of duty and interest on raw material and finished goods.
3. Applicability of interest on warehoused goods after the warehousing period.
4. Duty demands and interest on raw material and finished goods.

Analysis:

1. Levy of duty and interest on lost/pilfered goods from a warehouse:
The Appellant, a 100% EOU, was permitted to close operations on the condition of re-exporting all capital goods. However, 3 cases of goods were stolen. The Assistant Commissioner of Customs passed an order demanding duty and interest on the lost goods. The duty demand was upheld, and interest was confirmed on the lost goods, leading to a total amount to be paid by the Appellant.

2. Demand of duty and interest on raw material and finished goods:
The Assistant Commissioner issued demand notices for duty and interest on raw material and finished goods. The Commissioner (Appeals) upheld the demand for interest on machinery lying in the warehouse beyond the permitted period. The Commissioner found the lower authority's decision to impose duty and interest on unused finished goods correct, based on relevant legal provisions.

3. Applicability of interest on warehoused goods after the warehousing period:
The issue of levying interest on warehoused goods after the warehousing period was settled by the Apex Court. The judgment clarified that interest is an accessory to the principal, and if the principal duty is not payable, interest is also not payable. Therefore, interest on goods exported out of India is not applicable if duty is not demanded.

4. Duty demands and interest on raw material and finished goods:
Regarding raw material and finished goods, duty rates were to be levied as per the Apex Court's decision in a specific case. The Appellant was directed to seek permission to export these materials within six months, after which duty demands and interest would be determined based on the export. The Appeals were allowed in favor of the Appellant, subject to the conditions mentioned.

In conclusion, the judgment addressed the duty and interest demands on lost goods, raw material, and finished goods, clarifying the applicability of interest on warehoused goods post the permitted period. The decision provided a comprehensive analysis of the legal provisions and court precedents to determine the obligations of the Appellant in the given circumstances.