1996 (11) TMI 286 - AT - Customs

Summary

Issues:
1. Liability to pay interest on warehoused goods under Section 61(2) of the Customs Act, 1962.
2. Interpretation of provisions of Section 59 and Section 61(2) of the Customs Act, 1962.
3. Conflict between rulings of Madras High Court and Kerala High Court on payment of interest on warehoused goods.

Analysis:

1. The case involved the liability of the appellant to pay interest on warehoused goods under Section 61(2) of the Customs Act, 1962. The appellant imported consignments of nylon tyre yarn under the Advance Licensing Scheme but faced delays in receiving the license. The goods were bonded under Sections 17 and 18 of the Customs Act, and interest was demanded by the Assistant Collector for the overstay of goods in the warehouse beyond the bond period.

2. The Collector (Appeals) held that the liability to pay interest on warehoused goods arises under Section 61(2) of the Customs Act, 1962. He emphasized that the goods were assessed to duty at the time of warehousing, and the interest is payable on the amount of duty on warehoused goods if they remain in the warehouse beyond the specified period. The Collector rejected the appellant's argument based on the Kerala High Court ruling, stating that the liability to pay interest is determined by Section 61(2) of the Act.

3. The Tribunal considered the conflicting views of the Madras High Court and the Kerala High Court on the payment of interest on warehoused goods. The Madras High Court held that interest is a payment for delayed clearance of goods, even if no duty is due, to ensure prompt clearance from the warehouse. The Tribunal, following the Madras High Court's ruling, dismissed the appeal. Subsequently, a Reference Application was filed to refer the question of law to the Hon'ble High Court due to the conflicting views between the two High Courts.

4. The Tribunal, recognizing the conflicting decisions of the Madras and Kerala High Courts, referred the question of law to the Hon'ble Supreme Court under Section 130A of the Customs Act, 1962. The question posed for reference was whether the appellant is liable to pay interest under Section 61(2) of the Act for warehoused goods cleared after an overstay in the warehouse, even if no customs duty is payable.

This comprehensive analysis outlines the key issues and the legal interpretations provided by the authorities, leading to the reference of the matter to the Hon'ble Supreme Court for resolution.