Difference between revisions of "L.M.L. LTD. v. COMMNR. OF CUSTOMS"

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Latest revision as of 22:53, 2 August 2020

This appeal is directed against the order-in-appeal dated 1-10-2004, wherein it was held that the appellants are liable to pay interest on the warehoused goods and their refund claim was rejected.


2. The relevant facts that arise for consideration are that the appellants imported goods and warehoused them as per provision of the Section 61 of the Customs Act, 1962. The said Section provided for interest free warehousing for a period of one year. The interest free period of one year in the Section 61, was reduced to six months by Notification No. 30/99-Customs-(N.T.), dated 12-5-99. The Said notification came into effect from 12-5-99 itself. The appellants goods which were warehoused prior to 12-5-99, were cleared by appellants, on which they were directed to pay interest for the period of beyond six months of warehousing, relying upon the newly inserted provisions. The appellants paid the interest and subsequently filed a refund claim for the excess interest charged by the authorities. The adjudicating authority rejected the refund claim on 2 counts, one that the interest charged is as per the provisions of the amended Section and that the appellant has not produced any documentary evidence to support that the incidence of the amount has not been passed on to the buyer, on an appeal the Commissioner (Appeals) has also come to the same conclusion. Hence this appeal.


3. The learned Advocate appearing for the appellant submits, that, the interest charged on the goods of the appellant is wrong as, when the appellants warehoused the goods they were given a specific interest free period as per assessment done on the yellow Bill of Entry and the same could not be reduced by the insertion of Sub-section vide Notification No. 30/99-Custom (N.T.), dated 12-5-99. It is his submission that the reduced interest free period will apply only to the goods warehoused on or after 12-5-99. For this proposition he relies upon the decision of the Tribunal in the case of Jindal Steel and Power Ltd. v. CCE Raipur 2004 (65) RLT 147 (CESTAT-Del).


4. The learned Department Representative submits that the Order of the Commissioner (Appeals) is correct is as much that, the CBEC vide its Circular 62/99, dated 17-9-99 has clarified that revised interest effective from 12-5-99 is applicable in respect of goods warehoused prior to that date but only from the expiry of six months or 12-5-99, whichever is later. This clarification is a very clear interpretation and hence rejection of the refund claim by the lower authorities is correct.


5. Considered the submissions made by both sides and perused the records. I find, that it is not in dispute, that the appellants goods (imported) were warehoused by them under yellow Bill of Entry before 12-5-99, while assessing the said Bill of Entry the assessing authority had clearly indicated on the Bills of entries about the interest free period available to the appellant. I observe that the said Bills of Entries clearly specify the date from which interest shall be payable. This assessment was done by the Customs authorities at Mumbai and the goods were warehoused at Bonded warehouse, Kanpur. The reduction of interest free period by the Customs authorities at Kanpur while debonding, to my mind, would amount reassessment of the Bill of Entries, which could not have be done without following the proper of process of Law. Be that as it may, a division Bench of the Tribunal in the case of Jindal Steel and Power Ltd. (Supra) had an occasion examine an identical issue of reduction of interest free period in the year 2001, wherein at paras 5 and 6 it was held :


The original and first appellate authorities have held that the interest-free warehousing period of 30 days was applicable to all goods which were in warehouse as on 1-6-2001 or were warehoused after that date. According to the appellants, in respect of the goods warehoused prior to 1-6-2001, the interest-free period of six months under the pre-amendment provision of Section 61(2)(ii) alone would apply. For illustration, if any goods were warehoused on 15th May, 2001, it would be entitled to remain warehoused without interest on duty till 14th November, 2001 and interest would be leviable in respect of such goods only from 15th November, 2001. This, in our understanding, is what is meant by the plea of prospective operation of the amended provision of Section 61(2)(ii) supra. We find much force in this argument of the counsel for the appellants inasmuch as it is well-supported by some of the decisions cited by him and Circular No. 62/99-Cus., dated 17-9-99 of the CBEC has virtually accepted the above prospective operation of law. The said Circular was issued in clarification of Notification No. 30/99-Cus. (N.T.), dated 12-5-99 which provided for a graded scale of interest in respect of goods warehoused under Section 61(1)(b) of the Customs Act, which remained in warehouse beyond 6 months from the date of warehousing. After consulting the Ministry of Law, the Board clarified that the interest as revised under Notification No. 30/99-Cus. (N.T.), dated 12-5-99 was applicable in revised of goods warehoused prior to the said date but only from the expiry of six months or 12-5-99 whichever is later. Significantly, in respect of goods warehoused prior to 12-5-99 the revised interest rate was not made applicable for a period of six months from the date of warehousing. This rule of prospective operation appears to be equally good in respect of Notification No. 23/2001-Cus. (N.T.).


the interest-free warehousing period of six months in full will be available to the goods warehoused prior to 1-6-2001. We have no doubt in our mind that any different view on the point will militate against the Honble Supreme Courts ruling in P. Mahendrans case (supra)


To my mind the ratio of the division Benches, decision in above paras clearly covers the issue in this case.


6. In view of the above findings and the circumstances the interest imposed and demanded from appellant, for the warehoused goods before 12-5-99, by invoking amended provisions of Section 61 of Customs Act, is not a correct legal position. Further, it is fairly admitted by the appellants counsel, that they had not produced any evidence regarding the unjust enrichment before the lower authorities, but seeks liberty to do so, before the adjudicating authority.


7. The impugned order, wherein it is held that, the reduced interest free period will be applicable, even to the goods warehoused prior to 12-5-99 is set aside. As the appellant is ready to produce the evidence of non-passing of the amount to the buyer, I remand the matter to the adjudicating authority to consider the evidence produced by the appellant and pass appropriate Order in respect of the refund claim, after granting a opportunity of hearing to the appellant. Ordered accordingly.