Warehousing orders and post-assessment interest liability cannot be re-opened by customs authorities at clearance stage.

A valid warehousing order passed by the proper officer remains operative unless set aside in accordance with law, and it cannot be ignored or re-opened by customs authorities at the place of clearance merely because they consider it incorrect. The calculation of the warehousing period and liability to interest on warehoused goods arises after assessment and does not form part of assessment under the Customs Act. The commentary states that a departmental demand cannot override the earlier warehousing order or be sustained on the footing that these matters are revisable assessment questions.

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Issues: (i) whether the warehousing order made by the proper officer could be ignored or re-opened by the customs authorities at the place of clearance; (ii) whether the calculation of warehousing period and the liability to interest on warehoused goods formed part of assessment under the Customs Act.

Issue (i): whether the warehousing order made by the proper officer could be ignored or re-opened by the customs authorities at the place of clearance.

Analysis: An order permitting warehousing under the relevant provisions had been passed by the proper officer. That order could not be treated as non-existent or casually disregarded by another customs authority. If it was to be displaced, it had to be set aside by the appropriate legal , which had not been done. The notice and the departmental appeal proceeded on the assumption that the earlier order was merely wrong, rather than seeking to annul it.

Conclusion: The warehousing order could not be ignored or re-opened, and the contrary view was against the assessee.

Issue (ii): whether the calculation of warehousing period and the liability to interest on warehoused goods formed part of assessment under the Customs Act.

Analysis: Assessment concerns determination of duty-related questions such as the applicable rate and valuation. The period for which goods may remain in a bonded warehouse without interest, and the liability to pay interest on duty, arise after assessment and do not form part of the assessment process. The authorities at the place of clearance were therefore not justified in treating those matters as revisable assessment questions.

Conclusion: The calculation of warehousing period and interest liability did not form part of assessment, and the contrary finding was against the assessee.

Final Conclusion: The order of the appellate authority was unsustainable, and the assessee's challenge succeeded because the departmental demand could not override the earlier warehousing order or be sustained on the footing of assessment.

Ratio Decidendi: A valid warehousing order passed by the proper officer remains operative unless set aside in accordance with law, and liability to interest on warehoused goods is not part of assessment of duty.

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