Prospective application of customs warehousing interest amendment defeats interest and penalty for goods warehoused before the change.

An amendment imposing interest on warehoused goods under the Customs Act operates prospectively unless expressly made retrospective, so liability is governed by the law in force when the goods were warehoused. Goods warehoused before 12-05-1999 were therefore outside the amended Section 61(2), and the consequential demand of interest could not be sustained. On the same footing, the penalty under Section 117 also failed because it was founded on a non-applicable amended liability. The Revenue's challenge was rejected and the order setting aside the interest and penalty demand was upheld.

---

---

Issues: Whether the amendment to Section 61(2) of the Customs Act, 1962 introducing interest on warehoused goods beyond six months applied to goods warehoused before the amendment, and whether the consequential penalty under Section 117 of the Customs Act, 1962 could be sustained.

Analysis: The goods had been warehoused before the amendment dated 12-05-1999. The governing principle applied was that the law in force at the time of warehousing would govern the liability, since the amendment was not retrospective. Support was also drawn from Circular No. 12/2007-Cus. dated 14-2-2007, which clarified that the amended conditions were not applicable to goods warehoused prior to the amendment.

Conclusion: The amended provision did not apply to the goods warehoused before 12-05-1999, and the levy of interest and the penalty were not sustainable.

Final Conclusion: The Revenue's challenge failed, and the order setting aside the demand of interest and penalty was upheld.

Ratio Decidendi: An amendment imposing interest on warehoused goods operates prospectively unless expressly made retrospective, and liability is determined by the law prevailing when the goods are warehoused.

---