Interest on warehoused goods cannot be demanded independently when the principal customs duty liability itself does not survive.

Interest on warehoused goods under Section 61(2) of the Customs Act, 1962 is only accessory to the principal duty liability. Where the applicable DEEC scheme meant that the principal duty was not payable, interest could not survive as an independent demand. The Tribunal applied this settled principle and relied on earlier Supreme Court authority recognising that such interest has no separate existence. The interest demand was therefore unsustainable and the appeal failed.

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Issues: Whether interest was payable on warehoused goods under Section 61(2) of the Customs Act, 1962 when the principal duty liability did not survive in view of the applicable DEEC scheme.

Analysis: Interest on warehoused goods is only an accessory to the principal duty liability. Where, on the facts and the applicable scheme, the principal duty itself is not payable, interest cannot be demanded as a separate or independent liability under Section 61(2) of the Customs Act, 1962. The Tribunal had applied this settled principle and relied on the earlier decision of the Court holding that interest on warehoused goods has no independent existence.

Conclusion: The demand for interest was unsustainable and the appeal failed.

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