2017 (7) TMI 118 - AT - Customs

Liability of interest - goods lying in the warehouse after the warehousing period is over - Held that - section 61 of Customs Act, 1962 as amended in 1983 creates liability of interest till the goods were actually removed from the warehouse - the interest liability has been incorrectly limited in the impugned order and direct that the interest be charged on the duty recoverable till the date of receipt of sale proceeds. Warehousing charges - jurisdiction of the adjudicating or appellate authority to decide on the quantum - Held that - Merely because the sales appear to have been effected by the Customs authorities, the liability for warehouse-keeper charges would not alter. The actual charges due to the warehouse-keeper would require to be met out of the sale proceeds in accordance with the priority enacted in section 150 of Customs Act, 1962. Obviously, the charges that are communicated by the warehouse-keeper is to be deducted. The competent authority is directed to limit the recovery to such amount as has been claimed by the warehouse-keeper as charges. Appeal disposed off - re-computation will be effected by the original authority within a period of three months from the date of receipt of this order - decided partly in favor of respondent.

Summary

Issues:
1. Disallowance of interest on duty leviable on warehoused goods.
2. Limiting warehousing charges to the period for which goods are warehoused.
3. Permission to seek rectification of computed duty liability on failure to meet export obligation under DEEC scheme.

Analysis:

Issue 1: Disallowance of interest on duty leviable on warehoused goods
The appellant was fastened with duty liability for failure to fulfill export obligation against imports under the DEEC scheme. The detention notice was issued for recovery of the amount. The first appellate authority held that the interest charged under section 61 of Customs Act, 1962 was not authorized. However, the Tribunal held that interest liability should be charged on duty recoverable till the date of receipt of sale proceeds, citing relevant legal precedents. The Tribunal disagreed with the first appellate authority's decision and directed the interest to be charged accordingly.

Issue 2: Limiting warehousing charges to the period for which goods are warehoused
The first appellate authority limited the warehousing charges to the period permitted for warehousing. However, the Tribunal emphasized that the adjudicating or appellate authority does not have jurisdiction to decide on the quantum of warehousing charges to be withheld. The charges are to be deducted from the sale proceeds as prescribed in the Customs Act, and the actual charges due to the warehouse-keeper should be met from the sale proceeds. The Tribunal directed the competent authority to limit the recovery to the amount claimed by the warehouse-keeper as charges.

Issue 3: Permission to seek rectification of computed duty liability under DEEC scheme
The appellant's plea regarding the duty liability computed for failure to fulfill export obligation was responded to by the first appellate authority with a direction to seek rectification under section 154 of Customs Act, 1962. However, the Tribunal noted that the appeal before the first appellate authority related to the distribution of sale proceeds, not the quantification of duty liability. The Tribunal held that the duty liability issue should have been dealt with in a separate appeal proceeding, and the direction given by the first appellate authority was beyond its jurisdiction.

In conclusion, the Tribunal directed the original authority to recompute the interest and warehousing charges within three months from the date of the order, disposing of the appeal accordingly.