Ghanshyam Das Suresh Chand vs Union Of India (Uoi) And Ors.
2003 Latest Caselaw 855 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. In this writ petition the only question that arises for consideration is the question of interest payable on the import duty in respect of goods imported by the petitioner. The brief facts are that the petitioner imported, inter alia, cloves in 1988-89. The goods were warehoused on 16.3.1989. On the same date a warehousing bond was executed and furnished by the petitioner in respect of the said goods. Thereafter, various events took place with which we need not concern ourselves. The main issue centres around the notice of demand issued on 05.07.1991 whereunder a demand was raised on the petitioner by the revenue authorities in respect of the custom duty as well as interest payable on the custom duty. It is the contention of the respondents that interest on custom duty was payable by the petitioner for the period 16.06.1989 to 05.07.1991, in the first instance and thereafter, from 05.07.1991 till the date the goods were cleared from the warehouse. The custom authorities by virtue of the said notice of demand dated 05.07.1991 computed the interest on custom duty for the first period i.e. 16.06.1989 to 05.07.1991 at Rs. 2, 22, 808/-. For the subsequent period, the notice of demand indicated that interest would be charged at the rate of Rs. 265/- per day till the date of clearance. It is an admitted position that the goods were cleared on 13.07.1991. On the other hand, the petitioner contends that interest was not leviable or payable from the date indicated in the notice of demand i.e. from 16.6.89 and that in fact interest, if at all, should only be charged after the date of the notice of demand, i.e., 05.07.1991.

2. The amount of duty is not in dispute. The only dispute is with respect to the date from which the interest on the custom duty would become payable. The petitioner contends that the date is 05.07.1991 whereas the respondents contend that the date is 16.06.1989 as given in the notice of demand.

3. However, it appears that, this question is no longer res integra in view of the Supreme Court decision in Union of India v. Bangalore Wire Rod Mill, . In this decision, the Supreme Court considered the provisions of Sections 59(1) and 61(2) of the Customs Act, 1962 and after construing the same came to the following conclusions:

" The language of section 59(1)(b), as it stood at the relevant time is clear and unambiguous. It says that the importer shall have to execute a bond undertaking inter alia to pay interest from the date specified in the notice of demand. We have already extracted clause (b) in full herein before. The liability to pay interest arises only after the expiry of the period prescribed in the notice of demand."

In the present case the only difference is that the notice of demand does not specify any period within which the amount mentioned in the demand is to be paid. In such a situation, it is to be construed that the amount specified in the notice of demand would become payable immediately, i.e., on the date of the notice of demand, which is 05.07.1991.

4. The present case is entirely covered by the aforesaid decision of the Supreme Court in the case of Bangalore Wire Rod Mill (supra). Accordingly, the notice of demand, to the extent it raises a demand of interest for the period 16.06.1989 to 05.07.1991 will have to be set aside. This is so because no amount would be due until the notice of demand was issued and served upon the petitioner. When the principal amount itself would not be due, the question of paying interest thereon would not arise. Since the notice of demand itself was issued on 05.07.1991, in view of the aforesaid decision of the Supreme Court, no interest could be charged for a period prior to 05.07.1991. Insofar as the interest for the period 05.07.1991 to 13.07.1991 (i.e., the date on which the goods were cleared) is concerned, the same is payable and the learned senior counsel who appeared on behalf of the petitioner submitted that the petitioner is ready to pay the amount in terms of the bond already executed on 16.03.1989.

5. This matter can be viewed from another perspective. It is to be noted that Section 15 of the Customs Act, 1962 prescribes the date for determination of rate of duty and tariff valuation on imported goods. Section 15(1)(b) clearly specifies that in case the goods are cleared from a warehouse under Section 68, the relevant date would be the date on which the goods are actually removed from the warehouse. In another words, the date of clearance from the warehouse, i.e., 13.07.1991 would, in fact, be the relevant date for computing customs duty. Section 68 of the said Act provides for the clearance of warehoused goods for home consumption. The present case is one of clearance under Section 68 and, therefore, the date on which the duty is to be computed would be 13.07.1991. However, since there was no change in the rate of duty between 05.07.1991 and 13.07.1991, the duty computed in the notice of demand on 05.07.1991 would be the one that would be relevant and applicable. Accordingly, interest also would become payable from 05.07.1991 itself being the date of the notice of demand. Interest cannot be charged from the petitioner for any period prior to 05.07.1991.

6. In view of the aforesaid discussion, the impugned notice of demand dated 05.07.1991 inasmuch as it provides for interest for the period from 16.06.1989 to 05.07.1990 is hereby quashed and set aside. To this extent, the writ petition is allowed. On the payment of the interest amount due for the period 05.07.1991 to 13.07.1991, which the petitioner ought to do within a week from today, the bank guarantees furnished and kept alive during the pendency of the present matter would stand discharged. This writ petition is accordingly disposed of with no order as to costs.