TaxTMI 
TaxTMI 
2026 (9) TMI 1613
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....ls of Entry for clearance of the goods from the warehouse. 2.1 The Customs Division, Barmer, within whose jurisdiction the warehouse is situated, reported that out of the goods covered by the said Bills of Entry, only 1,379 modules out of 7,728 solar modules had been installed. The respondent, vide letter dated 12.12.2023, stated that the remaining solar modules/goods were lying at the project site in the same condition as imported. The remaining goods had thus not been put to use. 2.2 In the premise, the Department took the view that interest was payable on the customs duty relatable to the solar modules which were not installed. This view rested on Section 61(2) of the Customs Act, 1962, read with paragraph 12 of CBIC Circular No. 34/2019 dated 01.10.2019. According to the Department, the goods had remained in the warehouse beyond the prescribed period of ninety days. 2.3 The Assistant Commissioner of Customs, Jodhpur, vide Order of Assessment dated 28.12.2023, held that an interest for a sum of Rs. 2,88,17,955/- was payable under Section 61(2). 2.4 The respondent had already submitted 10 Demand Drafts aggregating to Rs.5,97,65,651/- towards payment of duty. However, ....
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....s that the imported solar modules were never installed or utilised for the purposes contemplated under Section 61(1)(a). They were ultimately cleared for home consumption. Except for 1,379 modules covered by Ex-bond Bill of Entry dated 02.12.2023, the remaining goods lay at the project site in the same condition as imported. This position was admitted by the respondent itself. The goods having remained in the warehouse beyond ninety days, they were liable to be treated as goods falling under Section 61(1)(c). Interest under Section 61(2) was therefore attracted. He submits that the Tribunal erred in holding that mere "intention to use" was sufficient to bring the goods within Section 61(1)(a). The goods were, in fact, never so used. 3.2 Learned counsel further submits that Pratibha Processors and Ors. v. Union of India and Ors. (1996) 11 SCC 101, Kesoram Rayon v. Collector of Customs, Calcutta (1996) 5 SCC 576 and SBEC Sugar Limited and Anr. v. Union of India and Ors. (2011) 4 SCC 668 recognise the statutory liability to pay interest on duty relatable to warehoused goods which remain beyond the permissible period. The object of the MOOWR scheme is to defer customs duty on capita....
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.... Modules only 48,742 Solar Modules could not be installed due to subsequent change in design, layout of the project and these were removed from the site by filing ex-bond Bills of Entry on payment of applicable duties of customs. These 48,742 solar modules contributed to only 5.82 percent of total imported Solar Modules. The Commissioner (Appeals) formed an opinion that the solar modules that were imported were 'intended for use' in the project... 23. It is not possible to accept the contention of the learned authorized representative appearing for the department that if 48,742 solar modules were not 'intended for use', they should have been immediately ex-bonded and should not have remained in the warehouse for six to seven months. It is because of the fact that ACME could not adjust these 48,742 solar modules in the module mounting structure and the land was also not sufficient to accommodate the design of structure and modules, that it was left with no option but to ex-bond these solar modules from the warehouses. Such a decision could not have been taken by ACME immediately upon import of the solar modules. It is only when it realized that these 48,742 solar modules co....
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....d in the prescribed form; (b) the import duty, interest, fine and penalties payable in respect of such goods have been paid; and] (c) an order for clearance of such goods for home consumption has been made by the proper officer. Provided that the order referred to in clause (c) may also be made electronically through the customs automated system on the basis of risk evaluation through appropriate selection criteria: Provided further that the owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish his title to the goods upon payment of penalties that may be payable in respect of the goods and upon such relinquishment, he shall not be liable to pay duty thereon: Provided also that the owner of any such warehoused goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force." 8. Section 61 of the Act was substituted in its entirety by the Finance Act, 2016 with effect from 14.05.2016 which governs the present imports. However,....
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....te of payment of duty on the warehoused goods; (ii) specified in clause (b) of sub-section (1), remain in a warehouse beyond a period of ninety days, interest shall be payable at such rate or rates not exceeding the rate specified in section 47, as may be fixed by the Board, on the amount of duty payable at the time of clearance of the goods in accordance with the provisions of section 15 on the warehoused goods, for the period from the expiry of the said ninety days till the date of payment of duty on the warehoused goods: Provided that the Board may, if it considers it necessary so to do in the public interest, by order and under circumstances of an exceptional nature to be specified in such order, waive the whole or part of any interest payable under this section in respect of any warehoused goods." "61. Period for which goods may remain warehoused.- (1) Any warehoused goods may remain in the warehouse in which they are deposited or in any warehouse to which they may be removed,- (a) in the case of capital goods intended for use in any hundred per cent. export oriented undertaking or electronic hardware technology park unit or software technology....
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....section 60. Explanation.-For the purposes of this section,- (i) "electronic hardware technology park unit" means a unit established under the Electronic Hardware Technology Park Scheme notified by the Government of India; (ii) "hundred per cent. export oriented undertaking" has the same meaning as in clause (ii) of Explanation 2 to sub-section (1) of section 3 of the Central Excise Act, 1944 (1 of 1944); and (iii) "software technology park unit" means a unit established under the Software Technology Park Scheme notified by the Government of India." 9. A comparative reading of the two provisions brings out distinct following statutory changes which bears directly on the present controversy. 10. First, as regards the permissible period of warehousing. Under the unamended provision, every category of goods was subject to an outer time limit. Capital goods intended for use in a 100% export-oriented undertaking could remain warehoused for five years. Other goods intended for such use could remain for three years. All other goods could remain for one year. Extensions were possible, but only by an order of the specified authority. Whereas, under the ....
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.... period is therefore wholly irrelevant to clause (a) goods. For clause (a) goods, there is no period whose expiry could set interest running. The premise of the Department's demand, namely that the goods "remained beyond the prescribed period", presupposes the existence of a prescribed period. For clause (a) goods, none exists. 11. The imports in the present case were effected in February and March, 2023. The Ex-bond Bills of Entry were filed in December, 2023. The amended Section 61, as substituted w.e.f. 14.05.2016, therefore indisputably governs the case. The law applicable is the law as it stands on the relevant date. Neither side has contended otherwise. 12. Once the amended provision applies, the classification of the goods is decisive. Three facts are not in dispute. First, the goods are capital goods, namely solar modules meant for setting up a solar power plant. Second, the respondent's warehouse is licensed under Section 58 and permitted for manufacture and other operations under Section 65, read with MOOWR, 2019. Third, the goods were deposited in that very warehouse. On these admitted facts, the goods answer the description in the amended Section 61(1)(a), i.e., t....
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....s. Interest, like tax, must be levied by clear and unambiguous words. In the absence of a substantive charge, no interest can be demanded. Thus, the respondent is entitled to the benefit of the amended Section 61. If the unamended provision were to apply, interest may would have been chargeable under the erstwhile Section 61(2)(i) upon expiry of the warehousing period even for capital goods. Parliament has consciously departed from that scheme by repealing the earlier provision. 14. Moving on now to reliance placed by revenue on clause 12 of CBIC Circular No. 34/2019-Customs dated 01.10.2019. Clause 12 of the circular is reproduced below for ready reference: "12. Since the warehouse operating under section 65 also functions as a warehouse licensed under section 58, the licensees can also import goods and clear them as such, for home consumption under section 68 on payment of import duties, along with interest as per subsection (2) of section 61 of the Act or clear them as such for export under section 69 of the Act. The licensees shall also be required to submit monthly returns in "Form B" as prescribed under Circular No. 25/2016-Cus dated 8th June 2016 in case the ware....
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....tion of the circular, if accepted, would also lead to an incongruous consequence. Parliament, by the Finance Act, 2016, consciously withdrew the charge of interest on capital goods of the description now contained in clause (a). If clause 12 of the circular issued in the year 2019 were to be read as reviving that charge, the executive would restore to itself, by administrative fiat, a levy which the legislature had deliberately repealed. Such a recourse is impermissible in law. 15. The decisions in Pratibha Processors and Ors. v. Union of India and Ors., Kesoram Rayon v. Collector of Customs, Calcutta and SBEC Sugar Limited and Anr. v. Union of India and Ors., (supra) relied upon by the Department, do not assist it. All three decisions were rendered in the context of the unamended Section 61 and the scheme then prevailing. Under that scheme, every category of warehoused goods was subject to a fixed warehousing period. Interest attached upon expiry of that period. The ratio of those decisions, that interest is a statutory accessory to duty on goods overstaying the permitted period, presupposes the existence of a permitted period. Under the amended clause (a), no such period exist....