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1998 Supreme(Mad) 694
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE P. SATHASIVAM
Vijai Narain Products Private Limited - Appellant
Versus
Union of India - Respondents
Writ Petition No. 4320 of 1989 and W.M.P. No. 6351 of 1989
Decided On : 29 April 1998
INTEREST PAYABLE UNDER SECTION 61(2) OF THE CUSTOMS ACT, 1962 IS SOLELY DEPENDENT UPON THE EXIGIBILITY OR FACTUAL LIABILITY TO PAY THE PRINCIPAL AMOUNT, THAT IS, THE DUTY ON THE WAREHOUSED GOODS AT THE TIME OF DELIVERY.
Headnote:
CUSTOMS ACT, 1962 - SECTION 61(2) - INTEREST ON WAREHOUSED GOODS - INTERPRETATION - HELD, INTEREST PAYABLE UNDER SECTION 61(2) IS SOLELY DEPENDENT UPON THE EXIGIBILITY OR FACTUAL LIABILITY TO PAY THE PRINCIPAL AMOUNT, THAT IS, THE DUTY ON THE WAREHOUSED GOODS AT THE TIME OF DELIVERY.
Fact of the Case:
THE PETITIONER IMPORTED FISHING NET MANUFACTURING MACHINERIES AND KEPT THEM IN A PUBLIC BONDED WAREHOUSE. THE PETITIONER FILED A WRIT PETITION CHALLENGING THE DEMAND OF INTEREST AT 18% PER ANNUM ON THE BOND AMOUNT FROM THE DATE OF EXPIRY OF THE PRESCRIBED PERIOD FOR KEEPING THE GOODS IN THE WAREHOUSE.
Finding of the Court:
THE COURT HELD THAT THE CLAIM MADE BY THE RESPONDENTS IN PURSUANCE OF SECTION 61(2) IS WELL-FOUNDED AND THE INTEREST PAYABLE UNDER SECTION 61(2) IS SOLELY DEPENDENT UPON THE EXIGIBILITY OR FACTUAL LIABILITY TO PAY THE PRINCIPAL AMOUNT, THAT IS, THE DUTY ON THE WAREHOUSED GOODS AT THE TIME OF DELIVERY.
Issues: WHETHER THE DEMAND OF INTEREST AT 18% PER ANNUM ON THE BOND AMOUNT FROM THE DATE OF EXPIRY OF THE PRESCRIBED PERIOD FOR KEEPING THE GOODS IN THE WAREHOUSE IS VALID.
Ratio Decidendi: THE COURT RELIED ON THE DECISION OF THE SUPREME COURT IN PRATIBHA PROCESSORS V. UNION OF INDIA, WHEREIN IT WAS HELD THAT INTEREST UNDER SECTION 61(2) IS PAYABLE ONLY WHEN THE GOODS ARE EXIGIBLE TO DUTY AND ARE KEPT IN THE WAREHOUSE BEYOND THE PERMITTED PERIOD.
Final Decision: THE WRIT PETITION WAS DISMISSED.
The Order of the Court is as follows :-
The petitioner is seeking a writ of declaration declaring the sub-section 2 of Section 61 of the Customs Act, 1962 asultra vires, un-constitutional and capricious in so far as the petitioner is concerned, on various grounds.
2.The case of the petitioner is briefly stated hereunder :
According to them the petitioner Company is a private limited Company and it has proposed to establish a fishing net manufacturing business at Kattukuppam village in the Union Territory of Pondicherry. The firm has obtained an Import licence and imported 3 fishing net manufacturing machineries at a cost of Rs. 30 lakhs from Japan during February, 1988. The firm has approached a Financial Institution for sanction of term loan for clearing of the imported machineries and it took some time for getting the loan and hence the petitioner firm has filed Bill of Entry for warehousing with the second respondent for keeping the machineries in a Public bonded warehouse at Virugambakkam. The second respondent has assessed the total duty for the 3 machineries by over valuing the same at Rs. 41, 35, 892/-. Though the petitioner Firm has disputed the assessment it has complied with the provisions of Section 59 of the Customs Act, 1962 and executed ware-housing bond binding itself in a sum equal to twice the amount of the duty assessed and also to all other conditions for the bond. In accordance with such execution of the bond the machineries were kept in the bonded ware-house on 27-4-1988. As per the terms of the bond only 6 per cent interest to the duty is imposed as stated under Section 59 of the Customs Act. However, at the time of the execution of the bond, the stipulation of interest was stated at 12 per cent per annum. It is further stated that it has paid Rs. 1, 30, 000/- to the Central Ware-housing Corporation through their clearing Agents towards rent and insurance charges. After paying the said amount on 6-3-1989 had filed Bill of Entry for Ex-bond clearance for home consumption with the second respondent after obtaining the term loan from the Financial Institutions and from the Banker, during February, 1989. The second respondent has now assessed the total duty at Rs. 12, 64, 892/- to which the firm is ready and willing to pay and clear the dues. However the second respondent has also demanded a further sum of Rs. 1, 55, 946/- towards interest on bond and that too at 18 per cent interest from 25-7-1988.
3.It is further stated that the petitioner has no obligation to pay the enhanced interest of 18 per cent per annum from 25-7-1988 as the notification enhancing the interest from 12 per cent to 18 per cent was demanded under the Notification No. 143 of 1983 from 20-9-1988. It is further stated that sub-section 2 of Section 61 of the Customs Act is arbitrary, ultra vires, unconstitutional and capricious as provision 61(2) is contrary to Section 59 of the Act. It is stated that by keeping its goods in the warehouse there is no transaction of any grant of loan or advance, no interest can be claimed in any transaction which is not in the nature of loan or advance. Accordingly the payment of interest for keeping the goods in the warehouse and that too beyond the period as stipulated under Section 61 of the Act is unreasonable. When once there is, the rent is being paid for keeping the goods, there can not be any other claim in the nature of interest for keeping the goods beyond the stipulated period as provided under Section 61. Hence, according to the petitioner the claim of interest made is arbitrary and capricious.
4.Both the respondents though were duly served even on 22-3-1989 and 5-3-1989 respectively, none of them have chosen to file counter affidavit disputing the various averments made by the petitioner.
5.In the light of the above pleadings. I have heard Mr. K. Venkatapathy, learned Advocate General for the petitioner and Mr. S. Udayakumar, learned Additional Central Government Standing Counsel for the r
