DEPB debit counts as duty payment, so delayed clearance of warehoused goods attracts interest under customs law.

Duty debited through DEPB scrips is treated as payment of customs duty, not as a duty-free clearance or exemption, so the liability to interest under Section 61(2) of the Customs Act arises when warehoused goods are cleared beyond the permitted period. The court distinguished the DEEC scheme, where clearance is duty free, from the DEPB scheme, where the scrip is only a mode of discharging duty. On that basis, goods cleared under DEPB remained duty-paid goods, and delayed clearance attracted statutory interest. The challenge to the demand failed.

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Issues: Whether duty debited through DEPB scrips is equivalent to payment of duty in cash for the purpose of interest under Section 61(2) of the Customs Act, 1962, and whether interest is chargeable on warehoused goods cleared beyond the permitted period when duty is discharged through DEPB debit.

Analysis: The liability to pay interest under Section 61(2) is linked to the amount of duty payable on clearance of warehoused goods. The Court distinguished the DEEC scheme from the DEPB scheme: under DEEC the clearance is duty free, whereas under DEPB the scrip is utilised for payment of customs duty and the debit is only a mode of discharge of duty, not an exemption from duty. Since the goods cleared under DEPB are duty-paid goods and not exempt goods, the amount of duty remains payable at the time of clearance, and the statutory interest for delayed clearance follows.

Conclusion: Duty debited through DEPB scrips is treated as payment of duty for the purpose of Section 61(2) of the Customs Act, 1962, and interest is chargeable on warehoused goods cleared after the permitted period. The challenge to the demand failed.

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