No Interest on MOOWR Capital Goods Intended for Warehouse Use: Rajasthan HC

Commissioner of Customs (Preventive) Vs Acme Aklera Power Technology Pvt Ltd (Rajasthan High Court)

Summary: The Rajasthan High Court dismissed the Customs Department’s appeal and upheld the CESTAT order holding that interest under Section 61(2) of the Customs Act, 1962 was not payable on imported solar modules which qualified as capital goods “intended for use” in a warehouse where manufacture or other operations had been permitted under Section 65. The respondent-company had imported solar modules under the Manufacture and Other Operations in Warehouse Regulations, 2019 (MOOWR, 2019). The Department demanded interest of ₹2,88,17,955/- on the premise that certain modules remained uninstalled beyond ninety days. The Commissioner (Appeals) set aside the demand and CESTAT subsequently dismissed the Department’s appeal. The High Court affirmed those concurrent findings.

The Court examined the amended scheme of Sections 61 and 65 of the Customs Act, 1962 and MOOWR, 2019. It noted that Section 61 had been substituted by the Finance Act, 2016 with effect from 14.05.2016. Under the earlier provision, different categories of warehoused goods were subject to specified outer time limits and interest could become payable upon expiry of the applicable warehousing period. The amended provision consciously altered that architecture. Capital goods falling under Section 61(1)(a), including capital goods intended for use in a warehouse where manufacture or other operations have been permitted under Section 65, may remain warehoused “till their clearance from the warehouse”. There is therefore no prescribed outer warehousing period for such capital goods.