2008 (2) TMI 646 - SC - Customs

Demand Demand raised on the goods lying in the warehouse on the date of applicability of duty as per the provision of section 15(1)(b) of the Act but assessee contended that goods cleared for the home consumption, so the said provision not applicable Demand rejected and interest payment would be decided by the custom authorities

Summary

Issues Involved:

1. Applicability of Section 15(1)(a) vs. Section 15(1)(b) of the Customs Act, 1962.
2. Determination of the rate of duty for goods cleared for home consumption.
3. Refund and interest on the duty paid under protest.

Issue-wise Detailed Analysis:

1. Applicability of Section 15(1)(a) vs. Section 15(1)(b) of the Customs Act, 1962:

The core issue was whether the duty on the imported goods should be determined under Section 15(1)(a) or Section 15(1)(b) of the Customs Act, 1962. The respondent argued that since the goods were cleared for home consumption upon payment of full duty, Section 15(1)(a) should apply. Section 15(1)(a) states that the duty rate applicable is the one in force on the date the Bill of Entry is presented for home consumption. Conversely, the appellant contended that Section 15(1)(b) should apply, which determines the duty rate based on the date the goods are actually removed from the warehouse.

The Court held that the goods were cleared for home consumption on 28th May 1998, and the subsequent storage was under Section 49, not Section 68. Therefore, Section 15(1)(b) was not applicable. The Court concluded that Section 15(1)(a) was more appropriate, as the goods ceased to be "imported goods" once cleared for home consumption.

2. Determination of the Rate of Duty for Goods Cleared for Home Consumption:

The Court examined the provisions of Section 15(1) and related case law. It was established that for goods cleared for home consumption under Section 46, the relevant date for determining the duty rate is the date on which the Bill of Entry is presented. The Court cited the Constitution Bench decision in Bharat Surfactants (Private) Ltd. vs. Union of India, which affirmed that the duty rate is determined based on the date of the Bill of Entry presentation.

The Court reiterated that once the goods are cleared for home consumption and the full duty is paid, they are no longer considered warehoused goods. Hence, the enhanced duty rates introduced later were not applicable to these goods.

3. Refund and Interest on the Duty Paid Under Protest:

After the Tribunal's order, the respondent sought a refund of the duty paid under protest, which was granted. The respondent also applied for interest on the refunded amount as per Section 27A of the Act. The Customs Authorities initially deferred the decision on interest due to the pending appeal in the Supreme Court.

The Supreme Court dismissed the appeals, affirming that the duty was correctly paid based on the date of the Bill of Entry. The Court directed the Customs Authorities to proceed with the respondent's application for interest on the delayed payment, in accordance with the law.

Conclusion:

The Supreme Court upheld the Tribunal's decision, confirming that the duty rate applicable was as on the date the Bill of Entry was presented for home consumption under Section 15(1)(a). The appeals were dismissed, and the Customs Authorities were instructed to address the respondent's interest claim on the refunded amount.