2015 (1) TMI 18 - AT - Customs

Import of liquor for domestic purpose - Due to business exigencies they could not clear the goods within the permissible time and sought for relinquishment of 912 cases of beer vide their letter dated 3-8-2005 before the goods were cleared for home consumption - Demand of interest - Held that - When the duty itself is not demandable and demand has been dropped, the question of payment of interest and penalty does not arise. While it is clear that upon relinquishment of the title of the goods, the importer gains a freedom from liability to pay duty thereon, there appears to be some confusion in the field, whether such freedom also extends to the interest accrued on the said duty till the date of such relinquishment . The confusion appears to have generated from the word interest appearing in the text of the proviso - In this regard it is clarified that the word interest appearing in the said proviso, does not relate to interest accrued on the said duty till the date of such relinquishment but relates to interest on other dues such as warehouse charges, rent etc. I find that as submitted by the learned counsel, the Board s circular o. 42/2003-Customs, dated 20-5-2003 is in favour of the assessee. - Decided in favour of assessee.

Summary

Issues:
1. Relinquishment of goods under proviso to Section 68 of the Customs Act, 1962.
2. Liability to pay interest and penalty on relinquished goods.

Analysis:

Issue 1: Relinquishment of goods under proviso to Section 68 of the Customs Act, 1962
The appellant, engaged in importing liquor, sought to relinquish 912 cases of beer under the proviso to Section 68 of the Customs Act, 1962 due to business exigencies. The original authority dropped the demand of customs duty on the balance quantity of beer and detained the goods for disposal by destruction as they were past the expiry date. An interest amount and penalty were imposed. The appellant contended that as duty demand was dropped, interest and penalty should not apply. The Board's Circular clarified that upon relinquishment of goods, the importer is not liable to pay duty but did not specify about interest accrued on duty till relinquishment. The Tribunal noted that the circular favored the assessee, granting relief to the appellant based on the circular and the relevant legal provisions.

Issue 2: Liability to pay interest and penalty on relinquished goods
The learned AR relied on a High Court decision to support the imposition of interest and penalty on the relinquished goods. However, the Tribunal disagreed, emphasizing other observations in the same judgment that favored the appellant's case. Noting that the High Court's observations were against the Department and considering the circular issued by the Board, the Tribunal allowed the appeal in favor of the appellant, granting consequential relief. The Tribunal's decision was based on the interpretation of the legal provisions and the precedents cited, ultimately ruling in favor of the appellant based on the specific circumstances of the case.

In conclusion, the Tribunal's judgment in this case revolved around the interpretation of the proviso to Section 68 of the Customs Act, 1962 regarding the relinquishment of goods and the consequent liability for interest and penalty. The decision favored the appellant, providing relief from the imposed interest and penalty based on the Board's circular and the relevant legal provisions.