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1996 Supreme(Ori) 198
IN THE HIGH COURT OF ORISSA
P.C. Naik, Mohanty, JJ.
MAGNETIX (INDIA) LTD. - APPELLANT
Versus
SUPDT. OF C. EX. AND CUS. - RESPONDENT
Original Jurisdiction Case No. 6734 of 1992
Decided On : 12-11-1996
M.C. Jena, P.R. Mishra and R.K. Jena, for the Appellant; A.B. Mishra, CGSC, for the Respondent
The exemption from payment of customs duty under Notification No. 159/90-Cus. was not automatic but subject to certain conditions, including the requirement of an advance license for the import of goods.
Headnote:
CUSTOMS ACT, 1962 - SECTION 61(2) - DUTY EXEMPTION ENTITLEMENT CERTIFICATE (D.E.E.C) - INTEREST ON DUTY - INTERPRETATION OF NOTIFICATION NO. 159/90-CUS. - APPLICABILITY OF EXEMPTION TO IMPORTED GOODS - CONDITIONS FOR EXEMPTION - REQUIREMENT OF ADVANCE LICENCE - CALCULATION OF VALUE ADDITION - AVAILABILITY OF STATUTORY REMEDY UNDER SECTION 128 OF THE CUSTOMS ACT, 1962.
Fact of the Case:
The petitioner, a public limited company, imported Barium Carbonate and Strontium Carbonate from West Germany. The goods were stored in a bonded warehouse in Calcutta and later transferred to a bonded warehouse in Bhubaneswar. The petitioner applied for and obtained a Customs Duty Exemption Entitlement Certificate (D.E.E.C). However, the petitioner was informed that it was not eligible for exemption from payment of interest on the goods accrued during the storage period.
Finding of the Court:
The court held that the matter should be considered by the statutory authorities under the Customs Act, 1962, as any determination at that stage would prejudice either party and preclude them from exercising their statutory remedies. The court directed the petitioner to file a reply to the demand-cum-show cause notice issued by the authorities and that the appropriate authority should consider the contentions raised and pass an appropriate speaking order expeditiously.
Issues: 1. Whether the petitioner was liable to pay interest on the customs duty for the period during which the goods were stored in the bonded warehouse. 2. Whether the exemption from payment of customs duty under Notification No. 159/90-Cus. was automatic or subject to certain conditions. 3. Whether the petitioner fulfilled the conditions for exemption under the notification.
Ratio Decidendi: 1. The court held that the petitioner was liable to pay interest on the customs duty as per Sub-section (2) of Section 61 of the Customs Act, 1962, as the goods were dutiable at the time of import and storage in the warehouse. 2. The court held that the exemption under Notification No. 159/90-Cus. was not automatic but subject to certain conditions, including the requirement of an advance license for the import of goods. 3. The court held that the petitioner did not fulfill the condition of having an advance license for the import of goods and was, therefore, not eligible for exemption from payment of customs duty under the notification.
Final Decision: The court disposed of the petition and directed the petitioner to file a reply to the demand-cum-show cause notice issued by the authorities. The court also directed the appropriate authority to consider the contentions raised by the petitioner and pass an appropriate speaking order expeditiously.
JUDGMENT :
P.C. Naik, J. - The petitioner is a public limited company registered under the Indian Companies Act 1956. During the course of its business, it imported from West Germany 10 metric tons of Barium Carbonate and 3 metric ton of Strontium Carbonate, which are essential raw materials required for the manufacture of Hard Ferrites - a product the Company manufactures. The goods arrived at Calcutta Air Port on 27-12-90 and were stored in the Bonded Ware House at Calcutta on 16-1-91. Thereafter, on the basis of the application filed by the petitioner, the goods were transferred to the Central Warehousing Corporation Bonded Ware House at Bhubaneswar on 20-2-91. Subsequent to the import, the petitioner, on 3-6-91 applied to the appropriate authority for grant of Customs Duty Exemption Entitlement Certificate (D.E.E.C), which was granted on 31-3-92. After obtaining this certificate, the petitioner moved opposite party No. 1 for clearing the bonded goods from Customs Ware House, Bhubaneswar without payment of Customs duty in terms of the Notification No. 159/90-Cus., dated 30-3-90. On 6-8-92, the petitioner was informed that he was eligible to clear up the customs goods for manufacture and clearance for export goods only in terms of the said Notification. He was further informed that though he was eligible to get exemption from payment of Customs Duty, he was not eligible to avail exemption of payment of interest already accrued on the goods at the rate of 18% per annum up to 22-12-91 and at the rate of 20% per annum from 23-12-91. A copy of this letter dated 6-8-92 is Annexure 4 to the petition. It appears that after receiving Annexure 4, the petitioner took up the matter for determination of interest with the Collector of Central Excise and Customs, Bhubaneswar who vide letter dated 16th September, 1992 (Annexure 6) re-itereated that though the petitioner was entitled to duty free clearance from the Warehouse in terms of the exemption notification, he was liable to pay interest on the duty in terms of Sub-section (2) of Section 61 of the Customs Act. Aggrieved with the aforementioned orders (Annexures 4 and 6), the petitioner approached this Court for quashing the said Annexures, inter alia, on the ground that as the goods have been exempted from duty interest in terms of Sub-section (2) of Section 61 could not be claimed.
2. The petition is opposed by the opposite party on the grounds, inter alia, that as the goods on the date of import and on the date on which this was stored in the warehouse were dutiable goods, the Department was justified in claiming interest for a period during which the goods were stored in the customs warehouse. It is also submitted that the exemption under the Notification is not automatic, but subject to certain conditions, which are required to be fulfilled by the petitioner before a claim for exemption can be made. Attention of the Court is invited to the various provisions contained in the notification, in particular, Explanation (vi) (a) to Clause 1, which reads thus:
"Explanation:- In this notification:
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(v) "Imported into India against an Advance licence" includes:
(a) Goods imported under any licence (including Open General Licence) issued under the Imports and Exports (Control) Act, 1947 (18 of 1947), for the time being in force, for which at the time of clearance out of Custom's Control a valid Advance Licence is produced by the importer,"
Reliance is placed in the words goods imported under any licence for emphasing that as the import was not under licence the petitioner was liable to pay the interest.
3. It is the further submission that the scheme is applicable only to those export products, which provides a minimum value addition of 33% or such higher value addition as specified in Appendix 13-D of the Policy. It was also submitted that this Court ought not to interfere in exercise of its jurisdiction as the petitioner has statutory right of appeal u/s 128 of the Customs. Act,. 1962
