1. Dispute over interest on warehoused goods under the Customs Act, 1962, involving the application of the DEEC Scheme. (Para 1 , 2 )
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2000 Supreme(SC) 612
SUPREME COURT OF INDIA
R.C.Lahoti : S.R.Babu
Commissioner Of Customs, Chennai
Versus
Jayathi Krishna And Company
Case No. : 4367 of 1999
Date of Decision : 3/28/00
Important Points
Interest on warehoused goods under Section 61(2) of the Customs Act, 1962, is accessory to the principal duty. If the principal duty is not payable due to an exemption, no interest can be claimed as it lacks independent existence.
Subject
Tax Law - Customs Law
Act Referred
Customs Act, 1962: S.61(2)
Headnote
(A) Customs Act, 1962 - Section 61(2) - Interest on warehoused goods - Interest is merely an accessory to the principal - If the principal duty is not payable, interest on it cannot be claimed - Interest under Section 61(2) has no independent or separate existence. (Para 2)
Facts of the case:
Goods were warehoused and the warehousing period expired. The respondent had obtained the benefit of a scheme under which it was not liable to pay duty. The authority contended that since the warehousing period had expired, interest must be paid on the duty amount from that date. The Tribunal had previously held that since the scheme was applicable to the goods, the question of payment of interest did not arise.
Findings of Court:
The court found no merit in the appeal and agreed with the Tribunal's application of the principle that interest on warehousing goods is accessory to the principal duty.
Issues: Whether interest is payable under Section 61(2) of the Customs Act, 1962, on warehoused goods when the principal duty is not payable due to the applicability of an exemption scheme.
Ratio Decidendi: Interest on warehousing goods is merely an accessory to the principal; if the principal is not payable, the interest on it is also not payable, as interest under Section 61(2) of the Customs Act, 1962, has no independent or separate existence. (Para 2)
Result: Appeal dismissed.
Facts of the case:
Goods were warehoused and the warehousing period expired. The respondent had obtained the benefit of a scheme under which it was not liable to pay duty. The authority contended that since the warehousing period had expired, interest must be paid on the duty amount from that date. The Tribunal had previously held that since the scheme was applicable to the goods, the question of payment of interest did not arise.
Findings of Court:
The court found no merit in the appeal and agreed with the Tribunal's application of the principle that interest on warehousing goods is accessory to the principal duty.
Issues: Whether interest is payable under Section 61(2) of the Customs Act, 1962, on warehoused goods when the principal duty is not payable due to the applicability of an exemption scheme.
Ratio Decidendi: Interest on warehousing goods is merely an accessory to the principal; if the principal is not payable, the interest on it is also not payable, as interest under Section 61(2) of the Customs Act, 1962, has no independent or separate existence. (Para 2)
Result: Appeal dismissed.
Legal Category Hierarchy
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tax law
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customs law
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warehousing
- interest (Para 2)
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warehousing
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customs law
Table of Contents
2. Whether interest is payable upon expiry of the warehousing period or if the DEEC Scheme exempts the party from such liability. (Para 2 )
3. The court affirmed the Tribunal's reliance on the principle that interest on warehousing goods is an accessory to the principal duty. (Para 2 )
4. Interest under Section 61(2) of the Customs Act, 1962, is an accessory to the principal; if the principal is not payable, interest is not payable. (Para 2 )
5. Appeal dismissed. (Para 2 )
6. Does interest under Section 61(2) of the Customs Act, 1962, have an independent existence?
No, interest under Section 61(2) of the Customs Act, 1962, is merely an accessory to the principal and has no independent or separate existence. (Para 2 )
7. What is the effect on interest if the principal duty on warehoused goods is not payable?
If the principal duty is not payable, the interest on it is also not payable, as the interest is an accessory to the principal. (Para 2 )
S.RAJENDRA BABU, J.
(1) THE question raised in this appeal is one relating to payment of interest on certain goods which had been warehoused.
(2) THE contention putforth is that warehousing period having expired on 4-1-97 that is the relevant date for computing duty, and therefore, interest will have to be paid by the respondent on that amount. The respondent obtained the benefit of the DEEC Scheme under which it was not liable to pay duty at all, but did so after 4-1-1997. The Commissioner did not agree with the contention putforth on behalf of the respondent that it was not liable to pay any interest and on the matter being carried to the Tribunal it was held that the DEEC Scheme having been made applicable to the goods in question, the question of payment of interest could not arise at all and the Tribunal relied upon a decision of this Court in Pratibha Processors v. Union of India , (1996) 88 ELT 12 : (1996 AIR SCW 4299 : AIR 1997 SC 138). In that decision it is held that interest on warehousing goods is merely an accessory to the principal and if the principal is not payable, so is the interest on it. Thus interest under Section 61 (2) of the Customs Act, 1962 has no independent or separate existence. When the Tribunal had followed this decision applying the aforesaid principle, we do not think any exception could be taken to it. We find absolutely no merit in this appeal. It is accordingly dismissed.
