THUNGABHADRA FIBRES LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The Collector of Customs demands payment of interest on the duty amount for certain goods which have been warehoused, eventhough duty for those goods was subsequently withdrawn by the Government. The Collector does not allow the petitioner to remove the goods from the warehouse until payment of interest/on the duty amount which was payable earlier. The importer, who is called upon to pay the interest, has filed this Original Petition in challenge of the aforesaid demand made by the Collector of Customs.

(2.) Petitioner Company is engaged in manufacture of a product which is one of the constituents for making textile goods. "Wood pulp" is necessary for manufacture of that product. So, the petitioner imported wood pulp America from abroad. As the imported goods arrived at Cochin Port, petitioner for his own reasons did not pay the duty. However, the Customs officials had to keep the goods in the warehouse. Petitioner executed bonds under S.59 of the Customs Act, 1962 (for short 'the Act') binding himself to pay all duties together with interest on or before the date specified in a notice of demand and to remove the goods from the warehouse for home consumption. One bond was executed on 7-3-1984 and the other was executed on 14-9-1984. Petitioner did not apply for extension of the warehousing period. However, the goods remained in the warehouse as they were not removed. A notification was issued on 17-3-85 by which wood pulp was totally exempted from duty. Petitioner then approached the customs officers for clearance of the goods. But the Collector of Customs insisted that the petitioner should pay interest on the total amount of duty which was levied first, although no duty can now be collected in view of the exemption order. The customs officials refused permission to clear the goods without payment of interest accrued on the erstwhile duty, although the goods have ceased to be dutiable goods. Petitioner filed this Original Petition for a direction to the Collector of Customs to release the goods covered by the bonds.

(3.) In the counter affidavit filed by the Collector of Customs, he contended, inter alia, that inasmuch as the goods were dutiable goods till 17-3-85, the importer has liability to pay interest thereon, though of course at the time of clearance he has no liability to pay the duty. The reasoning is that warehouse is not a place where imported goods can be deposited by the importer and cleared by him at his own convenience.