1994 (8) TMI 119 - AT - Customs

Summary

Issues:
1. Interpretation of Section 59 of the Customs Act, 1962 regarding liability to pay interest on warehoused goods exempted from duty.
2. Conflict of views between High Courts on the issue of interest payment when goods are exempted from duty.
3. Relevance of Public Notice issued by Assistant Collector of Customs in claiming interest on duty-exempt goods.
4. Delinking interest from duty liability under Sections 59(1)(b), 61(2), and 68(b) of the Customs Act, 1962.
5. Legal validity of claiming interest on duties not payable at the time of clearance.
6. Authority of Public Notice to impose interest on duties not payable.

Analysis:

The primary issue in this case pertains to the interpretation of Section 59 of the Customs Act, 1962 concerning the liability of importers to pay interest on warehoused goods exempted from duty. The appellant's counsel argued that interest should not be payable when goods are exempted from duty, citing conflicting views from various High Courts. The Kerala High Court and Madras High Court rulings supported the appellant's stance that no interest is due when no duty liability exists. The Bombay High Court emphasized the importance of a nexus between compensation claimed and duty payable, to avoid arbitrariness in determining compensatory amounts.

Moreover, the case raised questions regarding the entitlement of respondents to claim interest on duty-exempt goods cleared under the Duty Exemption Scheme. The issue of delinking interest from duty liability under relevant sections of the Customs Act was crucial. The High Court's decision to allow interest even when no duties are payable created a conflict in judicial interpretation, prompting the Tribunal to refer the matter to the Supreme Court for resolution.

The Tribunal acknowledged the conflicting views of different Courts on the scope of Section 59 and the levy of interest on duty-exempt goods. Given the importance of the matter and the need for a definitive ruling, the Tribunal decided to refer the case directly to the Honorable Supreme Court under Section 130A of the Customs Act, 1962. This referral was deemed necessary in the interest of justice to resolve the conflicting interpretations and provide clarity on the issue of interest payment on duty-exempt goods.