2016 (11) TMI 556 - HC - Customs

Waiver of interest, in terms of Section 61(2) of the Customs Act, 1962 - goods warehoused to public bonded warehouse - auction of goods - Held that - if the goods had not been auctioned, the petitioner would have had the benefit of the goods and the amount already paid by them would come to nearly 50% of the duty demanded. By making payment of the remaining amount, they could have retained the goods. Today, the payments made by them to the tune of about ₹ 75.00 lakhs, is in addition to the goods that they have lost. Therefore, if this is not a case, which will fall under the parameters of the first proviso to Section 61(2), we do not know which other case would fall. Therefore, the Writ Petition is allowed and the impugned demand is set aside. However, it is made clear that the petitioner will not be entitled to refund of the amounts already paid by them - petition dismissed - decided against petitioner.

Summary

Issues:
Refusal of waiver of interest under Section 61(2) of the Customs Act, 1962.

Analysis:
The petitioner imported goods in 1994-95, which were transferred to a customs bonded warehouse. Subsequently, a show-cause notice was issued in 1996, leading to the auction of the goods in 2001. The Department demanded a differential duty amount and interest from the petitioner, who paid the duty under protest and sought a waiver of interest only, which was denied. The power to grant a waiver under Section 61(2) is to be exercised in exceptional circumstances. The discretion must be objective, considering the circumstances of the case. The impugned order rejecting the waiver request did not consider the history of the case or the exceptional nature of the petitioner's situation.

The respondents' counter affidavit detailed the long litigation process since 1996, showing the petitioner's involvement in legal proceedings and payments made. Despite the petitioner's significant payments and loss of goods, the Department did not consider these aspects in denying the waiver request. The Court noted that the petitioner's case was exceptional, as evidenced by the payments made and the loss suffered. The Court allowed the writ petition, setting aside the demand for interest, but clarified that the petitioner would not be refunded the amounts already paid. The decision highlighted the unique circumstances of the case and the failure of the Department to consider them while rejecting the waiver request.

In conclusion, the Court emphasized the need for the waiver power to be exercised in exceptional cases and based on objective considerations. The judgment underscored the importance of assessing each case's unique circumstances and history before making decisions on interest waivers under Section 61(2) of the Customs Act, 1962.