IMPORTANT POINT
Goods that remain in a bonded warehouse beyond the permitted period are treated as goods improperly removed from the warehouse and the custom duty would be payable at the rate applicable on the date of their deemed removal from the warehouse, that is, the date on which the permitted period or its permitted extension came to an end.

JUDGMENT

Bharucha, J.-This is an appeal against an order of the Customs, Excise & Gold (Control) Appellate Tribunal. It raises a question of some importance relating to the rate at which Customs duty is to be levied on goods that remain in a bonded warehouse beyond the permitted period.

2. The appellants imported and, on 25th May, 1984, filed a bill of entry for 4832 bales of rayon grade wood pulp for warehousing. The 4832 were warehoused on 16th June, 1984, in a private bonded warehouse of the appellants. Of these, 4000 were cleared and we are concerned only with the remaining 832 bales (now referred to as the said bales ). The period of three months for which the said bales were warehoused under the provisions of Section 61(1)(b) of the Customs Act, 1962 (hereinafter referred to as the Act ) came to an end on 15th September, 1984. On 8th May, 1985, the Assistant Collector of Customs issued to the appellants a demand notice under Section 72(1) of the Act. It recorded that the said bales remained in the bonded warehouse although the period of warehousing had not been extended beyond 15th September, 1984. The appellants had, therefore, become liable to pay in respect of the said bales Customs duty in the sum of Rs. 6,73,885.80, countervailing duty in the sum of Rs. 1,63,657.98 and interest at the rate of 12 per cent per annum in the sum of Rs. 67,003.52 for the period 16th September, 1984, to 15th May, 1985, under the provisions of Section 72(1)(b). Giving credit for the amount of Rs. 8,03,458.32 which had been deposited by the appellants, the appellants were called upon to pay Rs. 1,01,88.98 plus interest after 15th May, 1985, till the date of removal of the said bales from the bonded warehouse. If the amount was not paid within 7 days of receipt of the demand notice, it was recoverable in terms of the provisions of Section 72(2), without prejudice to any other mode of recovery. On 30th May, 1985, the appellants filed a bill of entry for ex-bond clearance of the said bales for home consumption. On 25th June, 1985, the appellants were served with an order in respect of the bonded warehouse within which the said bales were stored. The order recalled the demand notice dated 8th May, 1983, and the deposit made by the appellants thereunder. It directed the Suprintendent of the bonded warehouse to allow clearance of the said bales after realisation of such amount as was due. It stated that the bonded warehouse would be treated as delicensed fromthe date on which the said bales were cleared and action regarding cancellation of the bond given by the appellants was completed. the order concluded :

"It is clarified for removal of doubts that the warehoused goods which will be cleared on the basis of the instant order will not be cleared on ex-bond Bill of Entry as this is not a case of clearance under Section 68 of Customs Act, 62 but on realisation of charges under Section 72 ibid."

Between 29th June and 2nd July, 1985, the said bales were removed from the bonded warehouse.

3. On 25th May, 1984, when the bill of entry for warehousing the said bales was filed, they were liable to Customs duty. By virtue of an exemption notification dated 17th March, 1985, pulp derived from vegetable fibre was exempted from the payment of Customs and additional duties.

4. The contention of the appellants before the authorities below and the Tribunal was that the rate of Customs duty in force on the date of removal of the said bales from the bonded warehouse was the applicable rate, having regard to the provisions of Section 15(1)(b), and, by virtue of the exemption notification aforementioned, no duty was payable thereon. The Tribunal noted that the said bales were removed from the bonded warehouse after the expiry of the bonding period. They had not been cleared from the warehouse under Section 68 but had been removed on the basis of the order under Section 72. No ex-bond bill of entry for home consumption had been filed by the appellants and no order for