TaxTMI 
TaxTMI 
1996 (10) TMI 88
X X X X Extracts X X X X
X X X X Extracts X X X X
....whether such importers are liable to pay interest on the amount of duty which was assessed and ascertained on the date of warehousing until the goods is cleared under Section 68 of the Act (excluding the free period of three months)." 3.Writ Petition No. 1854 of 1991 was treated as the main case. The facts in the said case were adverted to in detail. The judgment in the said case was followed in all other cases, including Writ Petition Nos. 1908 of 1991, 1958 of 1991 and 3145 of 1991. The three appeals C.A. Nos. 2416-2418 of 1993 are preferred against the judgments in the said writ petitions. For convenience sake the facts relevant to Writ Petition No. 1854 of 1991 (the main judgment) will be adverted to since the facts are almost identical in all the other cases. 4.There are two petitioners in Writ Petition No. 1854 of 1991. The first petitioner is a public limited company incorporated under the Companies Act, 1956. The second petitioner is a shareholder. The company is engaged in the business as Importers, Exporters and Manufacturers. The first respondent is Union of India and the second and third respondents are officials of Customs Department. The petitioners imported Pol....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and 176 of the paper book), came to the following conclusion in Paragraph 20 of the judgment, thus :- ".....until goods were sought to be cleared against Advance Licence till then, duty under the Customs Act was payable to the Respondents. By reason of facility under the DEEC scheme, the importers were permitted to apply for Advance Licence. The amount of interest therefore started accruing and remained accumulated from the date when goods were warehoused and subject to statutory period of three months as provided under Section 61(1)(b) of the Act. In our opinion, the interest started automatically accruing to the amount of duty after expiry of period of three months till the date of clearance of goods from the warehouse." It further held thus :- "We hold that the petitioners are liable to pay interest on the amount of duty payable at the time when goods were warehoused till they are cleared at the rate then prevailing under Customs Tariff Act." (emphasis supplied) It was concluded that the various assessees — the importers — are liable to pay interest on the amount of duty withheld by them in respect of warehoused goods after the expiry of the period of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essel by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards." ****** *** "25. Power to grant exemption from duty. - If the Central Government is satisfied that it is necessary(1) in the public interest so to do it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance), as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon. If the Central Government is satisfied that it is(2) necessaryin the public interest so to do, it may, by special order in each case, exempt from the payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duty is leviable." ****** *** "59. Warehousing bond. - (1) The importer of any goods specified in sub-section (1) of Section 61, which have been entered for warehousing and assessed to duty under Section 17 or Section 18 shall execute a bond binding himself in a sum equal to twice the amount of the duty assessed on such goods - (a) t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ence for any private warehouse is cancelled, the owner of any goods warehoused therein shall, within seven days from the date on which notice of such cancellation is given or within such extended period as the proper officer may allow, remove the goods from such warehouse to another warehouse or clear them for home consumption or exportation. Where any warehoused goods remain in a wareshouse beyond the(2) period of one year or three months specified in Clause (a) or Clause (b) of sub-section (1) by reason of the extension of the aforesaid period or otherwise, interest at such rate, not exceeding eighteen per cent per annum as is for the time being fixed by the Board shall be payable on the amount of duty on the warehoused goods for the period from the expiry of the period of one year or, as the case may be, three months, till the date of clearance of the goods from the 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." ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ms(ii) binding himself to pay on demand an amount equal to the duty leviable but for the exemption, on the imported materials in respect of which the conditions specified in this notification have not been complied with;" Explanation. - In this notification - ...... ...... ....... ........ "Imported into India against an Advance Licence" includes(v) — goods imported under any licence (including Open General(a) Licence) issued under the Imports and Exports (Control) Act, 1947 (18 of 1947), for the time being in force, for which at the time of clearance out of Custom's Control, a valid Advance Licence is produced by the importer;" *** ****** "IMPORT-EXPORT (TRADE) POLICY 1990-93. (Blue Book) Import of items in advance of issue of licence 355(1) Where the exporter is otherwise eligible to import an OGL item or other items against his own licences and also claim duty exemption benefits under this Scheme, it will be open to him to import such items in advance under OGL or against his own licences and keep the same in Customs Bond for getting clearance against a valid licence issued subsequently under Duty exemption scheme. Clearance of the items ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etch of imagination import the idea of levy of interest for the period the goods were kept in the warehouse. The liability of the assessee to pay the duty arises only on clearance of the goods from a warehouse. The assessee has no obligation to pay duty as long as the goods were kept or remained in the warehouse. It is only in cases where the goods kept in the warehouse are exigible to duty, and they are so kept in the warehouse for more than the permitted period, and the said goods are cleared subsequently and duty paid, interest is chargeable for the period of delay in the clearance of the goods. Since the goods warehoused are kept for a longer period such delay entails delayed payment of duty payable and so interest is charged for such delayed payment of duty. 13.In fiscal Statutes, the import of the words — "tax", "interest", "penalty", etc. are well known. They are different concepts. Tax is the amount payable as a result of the charging provision. It is a compulsory exaction of money by a public authority for public purposes, the payment of which is enforce by law. Penalty is ordinarily levied on an assessee for some contumacious conduct or for a deliberate violation of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ear in our mind that the interest is necessarily linked to the duty payable. The interest provided under Section 61(2) has no independent or separate existence. When the goods are wholly exempted from the payment of duty on removal from the warehouse, one cannot be saddled with the liability to pay interest on a non-existing duty. Payment of interest under Section 61(2) is solely dependent upon the exigibility or factual liability to pay the principal amount, that is, the duty on the warehoused goods at the time of delivery. At that time, the principal amount (duty) is not payable due to exemption. So, there is no occasion or basis to levy any interest, either. We hold accordingly. 15.Counsel for the Revenue placed heavy reliance on the decision of this Court in Union of India v. Bangalore Wire Rod Mill [1996 (83) E.L.T. 251 (SC)]. That was a decision rendered in appeal from the decision of the Karnataka High Court reported in 1992 (61) E.L.T. 37 (Kar.). In that case the assessee — M/s Bangalore Wire Rod Mill — imported goods on which customs duty was leviable under the Act, in the year 1982. On 11-11-1982 it warehoused the said goods without paying the duty as contemplated ....