Warehousing interest liability cannot be imposed where Board-prescribed conditions do not specify interest for the relevant default.
Interest on delayed duty payment arising from transit loss in excess of the condonable limit could not be demanded under the general interest provision where the governing warehousing arrangement made interest recoverable only as specified by the Board and no interest was prescribed for the relevant default. The Tribunal noted that the cited circular addressed recovery of duty when the warehousing certificate was not received, but did not provide for interest, so confirmation of interest under Section 11AB was unsustainable on that basis. The impugned order was set aside and the matter remanded for fresh consideration after granting a reasonable opportunity of hearing.
Issues: Whether interest could be demanded on delayed payment of duty arising from transit loss in excess of the condonable limit where the governing warehousing provision did not specify any interest rate.
Analysis: The dispute was confined to interest liability. The Tribunal noted that, in the comparable precedent relied upon, the matter had been remanded for consideration of the assessee's contentions under the warehousing provisions. Rule 20 made the facility of removal without payment of duty subject to conditions, including interest, only as specified by the Board. The cited circular, however, dealt with recovery of duty where the warehousing certificate was not received and did not specify any interest component. In that situation, interest could not be confirmed under Section 11AB merely on the basis of delayed duty payment when the governing board-prescribed conditions did not expressly provide for such interest.
Conclusion: The demand of interest was not sustained and the matter was remanded for fresh consideration in accordance with law.
Final Conclusion: The impugned order was set aside and the adjudicating authority was directed to reconsider the issue after granting a reasonable opportunity of hearing.
Ratio Decidendi: Where a warehousing provision makes interest recoverable only as specified by the Board and the Board has not prescribed interest for the relevant default, interest cannot be demanded independently under the general interest provision.
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AI Drafter ✕
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