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Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
New Delhi, dated the 29th of February, 2012
To
All Chief Commissioners of Customs
All Chief Commissioners of Customs & Central Excise
Subject:- Request for an Extended Period of
Warehousing under Section 61 of Customs Act, 1962 - Reference from Shipyards -
Reg.
Madam/Sir,
A reference is invited to the Board’s office letter of even no. dated 1st
June 2011 wherein it is stated, inter alia, that for goods falling under
categories (v) and (vi) of para 5 of Circular 47/2002 - Customs, the Chief
Commissioner of Customs may consider granting the extension of warehousing
period for a period even greater than 3 months, if he is satisfied that the said
goods are in good condition and are not likely to deteriorate in quality in the
proposed period of extension and also if interest accrued on the goods in the
preceding period is realized. Representations have been received from trade that
the phrase ‘- - if interest accrued on the goods in the preceding period is
realized -‘ is causing hardship to them since further extension in the
warehousing period would be given by the competent authority only if interest is
paid, which will burden them, particularly when the warehoused goods are exempt
from Customs duty when cleared for specified end uses.
2. In this connection, for the goods covered under the provisions of Section
61 (2) (ii) of the Customs Act, 1962, interest amount is payable at the rates
fixed by the Board on the duty payable on the warehoused goods, if the goods
remain in the warehouse beyond a period of ninety days, for the period from the
expiry of the said ninety days till the date of payment of duty on the
warehoused goods. However, Board’s Circular 10/2006 Customs, which lays down the
guidelines for waiver of interest on warehoused goods, clarifies that for
machinery, equipment and raw materials imported for building and fitment to
ships, the waiver of interest shall be considered only after the imported goods
have indeed been cleared from the warehouse for actual use for building and
fitment to ships. It is further provided in the Circular that demands for
interest are to be raised when due, but are not to be enforced, and on
fulfillment of the purpose of import, the waiver of interest is to be decided.
This approach obviates the need for the importer to first pay the interest and
then, on waiver, seek refund and it also safeguards revenue interest through a
demand.
3. The phrase ‘--if interest accrued on the goods in the preceding period is
realized’ was used in the letter dated 1st June 2011 in view of the provisions
of Section 61 (2) (ii) of the Act, ibid. However, only such interest is to be
collected that is due. As evident from Circular 10/2006, in cases referred to in
paragraph 4 thereof, there is to be no actual collection of interest at the time
of grant of extension of the warehousing period. Only a demand is to be raised,
and the issue of waiver of interest on such goods is to be decided depending on
the usage of the goods, taking into account whether the said goods fulfill the
specified end use condition and qualify for the duty exemption.
4. The issue dealt in the letter dated 1st July 2011 was that of grant of
extension of warehousing period for a period greater than 3 months in case of
goods imported by ship-building units; no change was intended to the existing
position on collection or waiver of interest, which will be continue to be
governed by the provisions of Section 61 of the Act, ibid, read with Circular
10/2006 Customs.
Yours faithfully,
(M. Satish Kumar Reddy)
Director (ICD)
F. No. 473/02/2011-LC
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