Case Law Details
Lonsen Kiri Chemical Industries Limited Vs Commissioner of Central Excise & ST (CESTAT Ahmedabad)
In the present case, the assessee being 100% EOU, imported goods exempted under Notification No. 50/2003-Cus. There is no dispute about the intention of the said goods to be used in the manufacture of final product in the 100% EOU unit of the appellant. Section 61(1) of Customs Act, 1962 does not provide that goods should be used in the manufacture but it only requires that the goods imported with intention of use in 100% EOU. As regards the intention for use, it is not disputed. Therefore, appellants clearances falls under Section 61(1)(aa), according to which the interest provisions provided under sub-Section (2)(i) shall apply, which provides that interest to be charged only after expiry of three years till the date of payment of duty. The appellant have discharged the customs duty along with interest beyond three years till the date of payment. Therefore, as per statutory provisions, as discussed above under Section 61, the demand of interest over and above the interest paid by the appellant is not sustainable.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that appellant is 100% EOU, imported certain raw materials and warehoused the same in 100% EOU. Since the goods could not be used in the manufacture, they cleared after four years. At the time of clearance, the appellant had paid customs duty and also paid interest after the period of three years of bonding. The case of the department is that appellant is required to pay interest after expiry of 90 days in terms of Section 61 (2)(ii). The contention of the department is that since the appellant have not used the goods imported, it cannot be said that the same was intended for use by 100% EOU. Accordingly, the same is covered under Section 61(1)(b) and in terms of sub-Section 2(ii), the appellant is required to pay interest after expiry of 90 days. Learned Commissioner (Appeals) also upheld the demand of interest, hence the present appeal is filed.
2. Shri Anil Gidwani, learned Counsel appearing on behalf of the appellant submits that the appellant has imported goods under notification which is meant for 100% EOU and the goods were intended for the purpose of manufacture of final product by EOU. Since the same could not be used and cleared on payment of Customs duty, interest is payable only after three years of bonding period as prescribed under Section 61(2)(i). He also placed reliance on the decision in the case of Sun Pharmaceuticals Industries Limited vs. CCE & ST, Vadodara – 2016 (335) ELT 188 (Tri. Ahmd.).
3. Shri J. A Patel, learned Superintendent (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that since the goods have been traded, it cannot be said that same is for intended purpose of manufacture of final product in 100% EOU. Accordingly, in terms of Section 61(1)(b) read with (2) (ii), the appellant is required to pay interest after expiry of 90 days.
4. I have carefully considered the submissions made by both the sides and perused the record. I find that there is no dispute that appellant is 100% EOU and the goods imported by them under exemption provided to 100% EOU whereby after warehousing the goods, the same were cleared after four years on payment of Customs duty as per Customs Warehouse provisions, which is reproduced below:-
“SECTION 61: Period for which goods may remain warehoused. –
(1) Any warehoused goods may be left 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, till the expiry of five years
(aa) in the case of goods other than capital goods intended for use in any hundred per cent, export-oriented undertaking, till the expiry of three years, and
(b) in the case of any other goods, till the expiry of one year,
After the date on which the proper officer has made an order under section 60 permitting the deposit of the goods in a warehouse
Provided that – ……………………………
(2) Where any warehoused goods, –
(i) specified in sub-clause (a) or sub-clause (aa) of sub-section (1) remain in a warehouse beyond the period specified in that sub-section by reason of extension of the aforesaid period or otherwise, interest at such rate as is specified in section 47 shall be payable, 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 warehousing period till the date of payment of duty on the warehoused goods;
(ii) specified in sub-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.”
By reading the provisions under Section 61 (1)(aa), it is clear that any goods intended to use by 100% EOU and the same were cleared after warehousing period of three years and in terms of sub-section (2)(i) the assessee was required to clear the goods after expiry of three years.
5. In the present case, the assessee being 100% EOU, imported goods exempted under Notification No. 50/2003-Cus. There is no dispute about the intention of the said goods to be used in the manufacture of final product in the 100% EOU unit of the appellant. Section 61(1) does not provide that goods should be used in the manufacture but it only requires that the goods imported with intention of use in 100% EOU. As regards the intention for use, it is not disputed. Therefore, appellants clearances falls under Section 61(1)(aa), according to which the interest provisions provided under sub-Section (2)(i) shall apply, which provides that interest to be charged only after expiry of three years till the date of payment of duty. The appellant have discharged the customs duty along with interest beyond three years till the date of payment. Therefore, as per statutory provisions, as discussed above under Section 61, the demand of interest over and above the interest paid by the appellant is not sustainable.
6. A similar issue has been considered by this Tribunal in the case of Sun Pharmaceuticals Industries Limited (supra) wherein the following order has been passed:-
“3. On consideration of the arguments of both sides and careful perusal of the records, we find force in the arguments of the learned Counsel. The impugned goods were imported duty free and warehoused as per the warehouse provisions. The warehousing provisions specify that the same can be warehoused till expiry of three years as per Section 61(i)(a) of the Customs Act, 1962. The duty liability on the goods will arise only after expiry of such time limit, or when the goods are cleared from the warehouse before that time limit. In the instant case, the appellants had imported the goods during the period June, 2010 to March, 2011 and they had cleared the goods on 13-9-2011. Therefore, clearances of the goods have been done clearly within the permitted period of three years and there is no contravention. As regards the duty, the appellant had sought permission from the Customs department for clearing the goods, and they had deposited the duty amount voluntarily. Therefore, there is no occasion to demand interest from the appellant as there is no delay in payment of the duty. Interest can be levied only if there is delay in payment of duty, which is not the case herein. Therefore, we find no reason to demand interest from the appellant. Consequently, there is also no reason for imposition of penalty, as the appellant has not violated any of the provisions nor delayed the payment of duty. Therefore, the impugned orders of the lower authorities cannot be sustained.
4. We also find that the CBEC is also of the same view, as is evident from Para 6 of Circular No. 15/2009, dated 12-5-2009, though the officers under CBEC appears to have a different view. Para-6 of the said circular is as follows :-
“6. Further, as per the provisions of Section 61(2), interest on warehoused goods is payable when they remain in the warehouse beyond the permitted warehousing period specified in Section 61(1). Such interest is payable on the amount of duty payable at the time of clearance of the goods from the expiry of the said warehousing period (including such extended period), till the date of payment of duty on the warehoused goods. Thus, when a provision has been made for warehousing of imported goods, without payment of interest for a specified period, it is not the intention to charge interest within the said interest-free period, even if duty is paid after 5 days after return of the ex-bond Bill of Entry. Interest in any case is chargeable if the warehoused goods remain in the warehouse beyond the permitted period for the period from the expiry of the said period till the date of payment of duty on the warehoused goods.”
5. In the light of the above analysis, we set aside the interest and penalty on the appellant. The impugned order-in-original and Order-in-Appeal are modified to the above extent.”
7. As per my above discussion, which is supported by judgment in the case of Sun Pharmaceuticals Industries Limited (supra), the impugned order is set-aside and the appeal is allowed.
(Dictated and pronounced in the open court)
