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TMI Blog2009 (9) TMI 1043X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant, who is the holder of private bonded warehouse licences No. 02/84 and 1/2005 issued under Section 58 of the Customs Act, 1962 received Acid Grade Flourspar falling under Chapter heading 25 of the Customs Tariff Act, 1975 from the Customers Bonded warehouse situated at Cuddalore under cover of a Transfer Bond. Subsequently, the warehoused goods are being cleared on payment of duty /DEEC/DEPB through Ex-bond Bills of Entry. 3. In this particular case, the importers have effected clearance by utilising the DEPB scrips. The Bills of Entry were assessed under Section 18 of the Customs Act (in short the Act ) In terms of Section 61(2)(i), the importers were called upon to show cause why interest shall not be demanded from them, since they had effected clearance beyond the interest free ware housing period of 90 days as per Section 61 of the Act. 4. The appellant replied that they were effecting clearance utilising the DEPB licence under the Notification issued under Section 25 of the Act and that the Notification refers to exemption from payment of duty and so the liability to pay interest cannot arise on a non-existing duty. The Order in Original held that deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce and keep the same in Customs Board for getting a clearance against the valid Licence issued subsequently under Duty Exemption Scheme. When the notification granting the exemption and also the Import Policy has totally liberalised the entire process, the mere fact of warehousing the goods on an anterior date and clearing the same on the basis of a subsequent Advance Licence, validly obtained under Duty Exemption Scheme cannot be any stretch of imagination import the idea of levy of interest for the period the goods were kept in the warehouse. The liability of the assessee to pay the duty arises only on clearance of the goods from a warehouse. The assessee has no obligation to pay duty as long as the goods were kept or remained in the warehouse. It is only in cases where the goods kept in the warehouse are exigible to duty and they are so kept in the warehouse for more than the permitted period and the said goods are cleared subsequently and duty paid, interest is chargeable for the period of delay in the clearance of the goods. Since the goods warehoused are kept for a longer period such delay entails delayed payment of duty payable and so interest is charged for such delayed pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty on the warehouswed goods at the time of delivery. At that time, the principal amount (duty) is not payable due to exemption. So, there is no occasion or basis to levy any interest, either. We hold accordingly. 8. The learned Counsel submitted that in that case, the Supreme Court held that importers are not liable to pay interest, since the goods were exempted from payment of duty at the time of clearance. 9. The learned Senior Standing Counsel for the respondent submitted that the judgment in Pratiba's case will not apply to the present case, since those goods were covered under the DEEC Scheme which is totally different. The learned Counsel submitted that as per para 4.3.5 of Foreign Trade Policy 2004-07, the additional duty of customs paid in cash or through DEPB license shall be adjusted in a CENVAT credit for payment of interest duty on the imports and therefore, this would clearly show that the debit under DEPB license amounts to payment of duty, the only difference is that it is not paid in cash and therefore, in respect of the warehousing goods which remain beyond the time stipulated, the liability to pay interest will arise. The learned Counsel al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 61(d)(i) and (ii) provides that the interest shall be payable on the amount of duty payable at the time of the clearance of the goods from the warehouse. In case of clearances under DEPB Scheme, the amount of duty payable is required to be debited from DEPB scrip. Therefore, it cannot be considered that the duty payable is nil or exempted. This is further supported by the fact that the CENVAT credit or duty drawback is available even when the additional Customs duty is debited under DEPB. 5. The issue regarding interest on warehoused goods has already been clarified by the Board vide Circular No. 10/2006-Cus., dated 14.2.2006 clarifying, inter alia, that interest on warehoused goods is not payable where the principle amount (duty) itself is not payable following the Apex Court Judgment in the case of Pratibha Processors 1996(88)ELT12(SC) on this issue. In the case of notification governing imports under DEPB Scheme, the situation is slightly different. As explained above, the notification issued under DEPB Scheme provides for exemption subject to debit of duties in DEPB scrips. It is thus not a case where the goods are unconditionally exempt from duty. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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