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Relevant date for calculation of customs duty in cases where warehoused
goods are cleared after the expiry of warehousing period
Circular No. 31 dated 14th August 1997
I am directed to
refer to Board's instructions as contained in F.No. 473/ 206/ 87-Cus-VII dated
12.7.98 on the above mentioned subject wherein it was clarified that on expiry
of the permissible or extended warehousing period the goods kept in a warehouse
cease to be warehoused goods and, therefore, their removal from the warehouse
cannot be regarded as covered by the provisions of section 15(1) (b) of the
Customs Act. It was also noted that there was no specific legal provision to
determine the rate of duty in such cases of warehoused goods where the bond
period has expired. It was accordingly concluded that the residual clause of
Section 15 (1) (c) of the Customs Act could apply after expiry of the
warehousing period and that the rate of duty in such cases shall be the rate
prevalent on the date of payment of duty.
2. The
issue has been re-Considered in the light of Hon'ble Supreme Court's judgement
(in Civil Appeal No. 4459) delivered on August 23, 1996 in the case of Kesoram
Rayon vs. Commissioner of Customs, Calcutta 1996 (66) ECR 201 (SC) report. In
the said judgement the Hon'ble Apex Court has held that goods, which are not
removed from a warehouse within the permissible or extended period, are to be
treated as goods improperly removed from the warehouse. In such a case the
importer is required to pay the full amount of duty chargeable on the goods
together with interest, penalties, rent and other charges. It was further held
that the duty would be chargeable at the rate applicable on the date of their
deemed removal from the warehouse, that is, the date on which the permitted or
extended period expired.
3. In
other words, a clear interpretation of the Hon'ble Supreme Court's judgement is
that the date of payment of duty in the case of warehoused goods removed after
the expiry of the permissible or extended period would hence-forth be the date
of expiry of the warehousing period or such other extended period as the case
may be and not the date of payment of duty.
4. The
amended instructions in the light of the Hon'ble Supreme Court's judgement as
aforesaid under para 2 and 3 may be implemented with immediate effect. These
instructions supersede Board's instructions issued vide F.No. 473/206/87-Cus.
VII dated 12th July 1989.
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