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Challenge to the constitutionality of sub-section 2 of Section 61 of the Customs Act, 1962 regarding interest imposition on warehoused goods. Analysis: The petitioner, a private limited company, imported fishing net manufacturing machinery and warehoused it while awaiting a term loan for clearance. The second respondent assessed duty, overvaluing the machinery, leading to a dispute. The petitioner executed a warehousing bond under Section 59 of the Customs Act, agreeing to pay duty, rent, and charges with interest at 6%. Subsequently, upon clearance, the second respondent demanded additional interest at 18% from an earlier date, which the petitioner contested as arbitrary and capricious. The petitioner argued that the interest demand was unjustified as it was beyond the stipulated period and contrary to Section 59. Both respondents failed to file counter affidavits. The Advocate General contended that the interest claim was valid due to the petitioner's delay in adhering to timelines set by the Board. The Court analyzed Sections 59 and 61 of the Customs Act, noting the provision for interest not exceeding 18% on goods remaining warehoused beyond the specified period. Citing the Supreme Court's decision in Pratibha Processors v. Union of India, the Court emphasized that interest is linked to duty payable, and if duty is exempted, no interest is due. Considering the law laid down by the Apex Court and the warehousing period exceeded by the petitioner, the Court upheld the respondents' claim for interest at 18%. The judgment dismissed the writ petition, finding the respondents' actions justified under Section 61(2) of the Act. The Court concluded that the interest was contingent on the duty payable, which was exempted in this case, thus rejecting the petitioner's argument. The judgment did not award costs, and the related Writ Miscellaneous Petition was also dismissed.
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