2000 (5) TMI 65 - AT - Customs

Summary

Issues Involved:
1. Relevant date for determination of rate of duty applicable to goods cleared from a warehouse after the expiry of the warehousing period.
2. Applicability of interest on the amount of duty on warehoused goods beyond the permissible period.

Issue-Wise Detailed Analysis:

1. Relevant Date for Determination of Rate of Duty:

The conflict between two Tribunal decisions-Kesoram Rayon v. Collector of Customs and CBS Gramophone Records and Tapes (India) Ltd. v. Collector of Customs-necessitated the constitution of the Larger Bench. The core issue was the relevant date for determining the rate of duty for goods cleared from a warehouse after the expiry of the warehousing period.

In the Kesoram Rayon case, the Tribunal held that if goods are not cleared from the warehouse within the permissible period, they cease to be warehoused goods. The rate of duty applicable is the one in force on the date of filing the Into-Bond Bill of Entry, as provided under Section 15(1)(a) of the Customs Act.

Conversely, the CBS Gramophone Records case held that goods remain warehoused goods until their actual clearance from the warehouse, even if the warehousing period extension is refused. Consequently, the applicable rate of duty is the one in force on the date of actual removal, as per Section 15(1)(b) of the Customs Act.

The Larger Bench noted that the Supreme Court had upheld the Kesoram Rayon decision, stating that goods not removed within the permissible period are deemed to be improperly removed and are subject to duty at the rate applicable on the date of their deemed removal from the warehouse, i.e., the date when the permitted period or its extension expires.

2. Applicability of Interest on Duty:

The issue of interest on the amount of duty for warehoused goods beyond the permissible period was also discussed. The Supreme Court in the Pratibha Processors v. Union of India case held that interest under Section 61 of the Customs Act is chargeable only in the case of delayed payment of duty. The liability to pay interest is linked to the actual amount of tax withheld and the extent of delay in paying the tax on the due date. Interest is payable from the expiry of the permitted warehousing period until the date of clearance of the goods from the warehouse.

The Larger Bench rejected the contention that interest under Section 61(3) of the Customs Act commences from the expiry of 7 days from the date the Bill of Entry is returned for warehousing and extends till the date of clearance of the goods. Instead, it affirmed that interest is linked to the actual amount of duty payable and the delay in payment.

Conclusion:

The Larger Bench concluded that the relevant date for determining the rate of duty on goods cleared from a warehouse after the expiry of the warehousing period is the date of their deemed removal, which is the date when the permitted period or its extension expires. Furthermore, interest on the amount of duty is applicable from the expiry of the permitted warehousing period until the date of clearance of the goods, as per the Supreme Court's decision in Pratibha Processors.

The appeals were returned to the respective Original Benches for disposal in light of these findings.