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Challenge to condition No. 5 in a letter regarding liability to pay interest for re-exporting warehoused goods. Analysis: The petitioner challenged condition No. 5 in a letter that imposed liability to pay interest for re-exporting warehoused goods amounting to Rs. 1,15,00,000. The goods in question were imported copper concentrate warehoused for manufacturing Copper Cathode. Due to project delays, the petitioner requested re-export, which was allowed with conditions, including the payment of interest before removal of the goods. The dispute centered around the demand for interest by the Revenue based on Section 61 of the Customs Act, 1962. Section 61(2) specifies that interest is payable on warehoused goods remaining beyond six months, linked to the duty payable at clearance. However, in cases of re-export where no duty is levied, the question of interest payment does not arise. The petitioner argued that since the goods were re-exported and no duty was payable, invoking Section 61(2) for interest was incorrect. Referring to the decision in Pratibha Processors v. Union of India, the court emphasized that interest under Section 61(2) is linked to duty payable and has no separate existence. The court highlighted that if the principal duty amount is exempt, the interest is also nil. Another case, Commissioner of Customs v. Jayathi Krishna & Co., reiterated this principle, emphasizing that if the principal duty is not payable, interest does not apply. Based on the legal principles and precedents cited, the court held that the condition requiring payment of interest for re-exported goods was unjustified. The court quashed and set aside condition No. 5 in the letter, ruling in favor of the petitioner. The judgment concluded by making the rule absolute with no order as to costs.
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