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Issues: Interpretation of Sec. 59A of the Customs Act, 1962 regarding mandatory deposit of duty for goods entered for customs bonded warehousing; Constitutionality of Sec. 59A in relation to Articles 19(1)(g) and 265 of the Constitution; Retrospective application of Sec. 59A; Validity of deposit conditions and absence of provision for interest in case of refund.
Analysis: The petitioner, an importer of raw materials, challenged the constitutionality and retrospective application of Sec. 59A of the Customs Act, 1962, which mandates a 50% deposit of assessed duty for goods entered for customs bonded warehousing. The petitioner argued that this provision violated Articles 19(1)(g) and 265 of the Constitution and should not apply to contracts finalized before 23rd December 1991. The court rejected these contentions, emphasizing the purpose of warehousing as a facility to defer duty payment until goods are cleared for consumption. Sec. 59A imposes conditions on this facility to prevent misuse and ensure prompt duty payment, which the court deemed reasonable and in the public interest. The court highlighted that Sec. 59A does not eliminate the warehousing facility but introduces necessary conditions to expedite revenue realization and discourage indiscriminate warehousing practices. The legislative change was justified based on past experiences of revenue loss due to misuse of the warehousing system. The court clarified that the material date for applying Sec. 59A is the order of warehousing, not the contract date, to prevent retrospective application concerns raised by the petitioner. Regarding the validity of the deposit conditions and absence of interest provision for refunds, the court noted that the deposit is adjustable against actual dues and any interest claim can be pursued through appropriate channels if necessary. The court dismissed the petitioner's argument on the unconstitutionality of Sec. 59A due to the absence of an interest provision, stating that such a situation is rare and can be addressed through existing mechanisms. Additionally, the court rejected the application of Article 265 concerning the levy or collection of tax in this matter, upholding the validity of the deposit provisions under Sec. 59A. In conclusion, the court dismissed the petition, discharged the rule, and awarded no costs to either party. The judgment clarified the application of Sec. 59A, upheld its constitutionality, and emphasized the legislative intent behind imposing deposit conditions for goods entered for customs bonded warehousing.
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