TaxTMI 
TaxTMI 
2011 (2) TMI 227
X X X X Extracts X X X X
X X X X Extracts X X X X
....t made by the appellant company within two weeks from the date of such determination and communication thereof, the customs authorities shall enforce the bond executed by the company, pursuant to the interim order passed by the Court. 2. As a common question of law is involved in the appeals and in fact the latter order is based on the former, these are being disposed of by this common judgment. However, in order to appreciate the controversy involved, for the sake of convenience, the facts emerging from C.A. No. 2899/2006 are being adverted to. These are : Appellant No. 1 (hereinafter referred to as "the importer") a body corporate, is engaged in the manufacture of sugar. Appellant No. 2 is the Vice-President of the first appellant. With a view to set up a sugar manufacturing unit, the importer imported certain capital goods. Instead of getting the goods released for home consumption, the importer opted for getting these goods warehoused under Bond. The present appeal is confined to three consignments under Bond No. CW-20-4732 dated 26th December, 1995; CW-20-4733 dated 26th December, 1995 and CW-20-4842 dated 2nd January, 1996, which were to expire respectively on 25th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dated 26th September, 1997, issued under Section 72(1) of the Act, the Superintendent of Customs directed the importer to clear the goods covered under Bond No. CW-20-4842 dated 2nd January, 1996 on payment of full duty of customs and other charges within a period of 15 days. 7. On 14th January, 1998, the importer executed a bond and furnished a bank guarantee for 100% of the duty saved as required under Notification No. 29/97 dated 1st April, 1997. Having acquired licence under the EPCG Scheme, on 21st January, 1998, the importer filed three bills of entry for ex-bond clearance for home consumption of the goods lying in the warehouse. As afore-stated, by that time the bond period in respect of the three consignments had expired and demand for payment of full amount of customs duty chargeable on account of goods lying in the warehouse, along with interest, penalty etc. had already been raised against the importer. On 5th and 9th February, 1998, the importer made a representation to the Chief Commissioner of Customs stating that since zero duty was chargeable on the goods under the EPCG licence, there was no question of levy of interest thereon. 8. Vide letter dated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty from the date of expiry of the bond period and the interest payable thereon. As a matter of fact the company was aware that the duty has been calculated by the concerned Officer along with interest on the reverse of the bill of entry but this fact has been suppressed. 20. The edifice has been built on erroneous premise in the writ petition that no duty was payable on the goods and since no duty was payable on the goods no interest could be levied or demanded as interest is only the accessory to the principal and if the principal is not payable the interest is not payable. In challenging the demand of interest, the petitioners has misrepresented that the duty was not payable by virtue of notification dated 1st April, 1997 and the licence issued to the company under EPCG scheme and endorsement made thereon of zero duty. 21. Having noticed the facts above, we have no hesitation in holding that the provisions of Section 68 and consequently of Section 15(1)(b) have no application since the goods were not cleared from the warehouse within the bond period. Admittedly, no extension was granted. By reason of goods having remained in the warehouse beyond 25th December, 199....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ms, Calcutta - (1996) 5 SCC 576 = 1996 (86) E.L.T. 464 (S.C.) by the High Court was clearly misplaced because unlike in the present case, the goods in that case had been removed on the basis of the order under Section 72 of the Act. 16. Per contra, Mr. Harish Chander, learned senior counsel appearing on behalf of the respondents, while supporting the impugned judgments contended that the benefit of exemption from payment of duty in terms of the EPCG Scheme was not available to the importer because after the expiry of the warehousing period, the goods had been removed under Section 72 and not under Section 68 of the Act and therefore, Section 15(1)(b) of the Act had no application. It was stressed that the removal of all the consignments in question was by virtue of demand notice dated 26th September, 1997, which was admittedly not questioned in the writ petition filed on 3rd April, 1998 and therefore, the dictum laid down in Kesoram Rayon (supra) was squarely applicable on the facts of the present case. 17. Having considered the matters in the light of the statutory provisions, we are of the considered opinion that there is no merit in these appeals. 18. Sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e warehouse : Provided that the Board may, if it considers it necessary so to do in the public interest, waive, by special order and under circumstances of an exceptional nature to be specified in such order, the whole or part of any interest payable under this sub-section in respect of any warehoused goods." 19. From a bare reading of the afore-extracted Section, it is manifest that warehousing is permissible for a limited period, as contemplated under sub-sections (1)(a) and (1)(b) of Section 61; and such period is extendable on showing sufficient cause for the same. However, by operation of sub-section (2), interest on the amount of duty is payable from the period of expiry of the permissible period till the date of clearance from the warehouse, regardless of whether the goods have remained in the warehouse beyond the permitted periods by reasons of extension or otherwise. [See : Kesoram Rayon (supra)] 20. Section 68 deals with the clearance of warehoused goods for home consumption and provides that an importer of any warehoused goods may clear the goods for home consumption if : (i) a bill of entry for home consumption of the said goods has been presented in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se. Such improper removal takes place when the goods remain in the warehouse beyond the permitted period or its permitted extension. The importer of the goods may be called upon to pay customs duty on them and, necessarily, it would be payable at the rate applicable on the date of their deemed removal from the warehouse, that is, the date on which the permitted period or its permitted extension came to an end. 14. Section 15(1)(b) applies to the case of goods cleared under Section 68 from a warehouse upon presentation of a bill of entry for home consumption; payment of duty, interest, penalty, rent and other charges; and an order for home clearance. The provisions of Section 68 and, consequently, of Section 15(1)(b) apply only when goods have been cleared from the warehouse within the permitted period or its permitted extension and not when, by reason of their remaining in the warehouse beyond the permitted period or its permitted extension, the goods have been deemed to have been improperly removed from the warehouse under Section 72." 23. We respectfully concur with the enunciation of law on the point. It is plain that Section 15(1)(b) would be applicable only whe....