2007 (9) TMI 127 - AT - Customs

Interpretation of Customs Act Section 61: Interest Liability for Warehoused Goods

INDIAN OIL CORPORATION LTD. Versus COMMISSIONER OF C. EX., VADODARA

INDIAN OIL CORPORATION LTD. Versus COMMISSIONER OF C. EX., VADODARA - 2008 (222) E.L.T. 147 (Tri. - Del.) Issues:1. Interpretation of Section 61 of the Customs Act regarding warehousing period and interest liability.2. Applicability of the longer period for demand in cases of delayed clearance.3. Consideration of documents and grounds for invoking longer period for interest liability.Analysis:Issue 1: Interpretation of Section 61 of the Customs ActThe appeal involved a dispute regarding the interpretation of Section 61 of the Customs Act concerning the warehousing period and interest liability for goods stored in bonded warehouses. The appellants, an oil corporation, imported crude oil and stored it initially in a public bonded warehouse before transferring it to a private bonded warehouse in Vadodara. The Revenue alleged that the goods were cleared after the 30-day warehousing period, leading to a demand for interest. The appellants contested this, arguing that the 30-day period should be calculated from the date of warehousing in the private bonded warehouse, not the initial warehousing. The Revenue contended that the total warehousing period should be considered to avoid interest liability.Issue 2: Applicability of the longer period for demandAnother point raised was the applicability of the longer period for demand in cases of delayed clearance. The appellants highlighted that the demand period extended from June 2001 to October 2001, while the show cause notice was issued in March 2004, invoking the longer period. They argued that the Customs Act, unlike the Central Excise Act, had provisions of limitation for interest liability. The appellants emphasized that each clearance of goods was documented, indicating no intention to evade interest liability. They contended that the invocation of the longer period was unjustified.Issue 3: Consideration of documents and grounds for invoking longer periodThe Tribunal analyzed the situation and concluded that the total warehousing period should determine interest liability to prevent manipulation by importers shifting goods between warehouses to evade interest. However, in this case, the Tribunal agreed with the appellants that the longer demand period was not warranted. They noted that each clearance was documented, providing the Department with sufficient information within the normal period specified in the Customs Act. As the Department failed to act within the stipulated time, the demand for interest was deemed time-barred, leading to the appeal being allowed with consequential relief.This judgment clarifies the interpretation of warehousing provisions and interest liability under the Customs Act, emphasizing the importance of considering the total warehousing period and the necessity for timely action by the Department to avoid time-barred demands for interest.