APPLICABILITY OF PENALTY ON WAREHOUSED GOODS

[CS RAHUL AGARWAL]

In case of warehoused goods kept in warehouse for a period longer than permissible (more than 5 years in this case as it is 100% EOU) interest u/s 61 (2) read with NN. 28/2002 is payable for the delay along with duty.

My query is that whether penalty is also payable ? Whereas S. 59 (1) (c) provides for imposing penalty for violation of any provision of the custom act, does not clearance of goods within the permissible time in terms of S. 61(1) even though paying interest u/s 61(2) amounts to Violation of Act ?? I understand that in terms of S. 61 if the importer do not removes the warehoused goods within the permissible / extended time period, such person can remove goods by paying interest on delay period along with duty but there should not be violation of the act as the enabling proviso (2) of S. 61 provides for an option to hold the goods beyond the permissible period without triggering Violation Of Act. Please clarify the exact position.

[Mahir S]

Rahulji,

If the assessee has not filed an application for the extension of warehousing period before the expiration of the 5 years period, then department may after expiry of the period, issue an order on its own for removal of such goods on payment of duty, interest and penalty.

If application for extension period is made prior to expiration of 5 years period, then it appears no need for any penalty.

[CS RAHUL AGARWAL]

Thank you Mihir Ji. Yes i agree with you this could be the position w.r.t imposing penalty.

[Mahir S]

Yes Sir..

AI Summary

Penalty for warehoused goods may follow absence of a timely extension application, despite interest being payable.
Penalty depends on whether an extension application was filed before expiry. The regime allows payment of duty and interest for delayed removal and the proviso contemplates holding goods beyond the term on payment of interest without automatic violation; if no extension application is filed before expiry, department may order removal and demand duty, interest and penalty, while an application made prior to expiry appears to obviate penalty.