Case Law Details
Pratibha Processors & Ors. Vs Union of India & Ors. (Supreme Court)
The case of Pratibha Processors & Ors. vs Union of India & Ors. presented a significant question of law regarding the interpretation of Section 61(2) of the Customs Act, 1962. This judgment was a landmark decision by the Supreme Court of India, addressing the liability of importers to pay interest on the duty assessed when goods are warehoused beyond the stipulated period. The case was initially dismissed by the Bombay High Court, which led to an appeal to the Supreme Court. This article delves into the details of the case, the legal arguments presented, and the Supreme Court’s decision.
Background of the Case
The dispute arose from the importation of Polyester Filament Yarn by Pratibha Processors, a public limited company engaged in import, export, and manufacturing. The company imported goods under the Open General License (OGL) and warehoused them under Section 59 of the Customs Act. The warehousing period expired after three months, and the company subsequently cleared the goods under the Advance License issued under the Duty Exemption Entitlement Certificate (DEEC) scheme, which allowed them to import goods duty-free.
However, the Customs Department demanded interest at 18% per annum on the duty from the date of warehousing until the date of clearance, despite the goods being cleared duty-free. The primary contention was whether interest could be levied on the duty that was assessed but not payable at the time of clearance.
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