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Issues: Whether interest under section 61(2) was payable on solar modules cleared from a manufacturing warehouse when the modules had originally been intended for use in the project but could not be installed because of a subsequent change in project design and layout.
Analysis: Capital goods intended for use in a warehouse in which operations are permitted under section 65 fall within section 61(1)(a), under which they may remain warehoused until clearance. The expression "intended for use" is distinct from actual use and is satisfied where goods were imported with the purpose of use in the project, though supervening circumstances prevent their eventual use. The uninstalled modules constituted a small portion of the imported modules and were ex-bonded only after the design and layout constraints made their installation impracticable. Paragraph 12 of the circular concerns goods falling under section 61(1)(c), not capital goods covered by section 61(1)(a).
Conclusion: Interest under section 61(2) was not payable on the ex-bond clearance of the modules; the modules remained capital goods intended for use in the section 65 warehouse notwithstanding their non-installation. The finding is in favour of the assessee.
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