Customs - Interest on Delayed Payment of Duty - Warehoused Goods - CBEC Clarifies - Privately
AS per section 47(2) of the Customs Act, where the importer fails to pay the import duty within five working days from the date on which the Bill of Entry for home consumption is returned to him for payment of duty, he shall pay interest on the amount of duty till the date of payment of the duty. A doubt had been raised whether the interest payable under Section 47(2) would apply to goods cleared from a bonded warehouse also.
CBEC had clarified in Circular No. 15/2009 - cus dated 12.05.2009, that the provisions of Section 47 (2) are not attracted in case of clearances made under Section 68. Consequently, no interest is liable to be paid on goods deposited in a warehouse and being cleared for home consumption by filing the Bill of Entry prescribed under Section 68 of the Act, ibid, for delayed payment of duty i.e. if the importer fails to pay the duty within 5 working days from the date on which such Bill of Entry is returned to him for payment of duty. However, interest on warehoused goods is payable when they remain in a warehouse beyond the period specified in sub-section (1) of Section 61 as per provisions of sub-section (2) of Section 61.
The Commissioner of Customs, Airport Mumbai had a doubt, "Circular 15/2009 Customs states that interest on warehoused goods is payable when they remain in the warehouse beyond the permitted warehousing period specified in Section 61(1), as per the provisions of Section 61(2), whereas as per provisions of Customs Act, 1962, in case of goods covered under Section 61(1)(b), though the initial permitted period of warehousing is up to one year, interest is charged after expiry of ninety days from the date of warehousing (and not after one year), as per Section 61 (2)(ii)."
To which the Board clarifies,
'It may be noted that Circular 15/2009 Customs was not issued to clarify on the subject of the effective date from which interest would be chargeable for various categories of warehoused goods. The Circular seeks to clarify the issue as to whether interest is chargeable under Section 47(2) of Customs Act, 1962 on goods deposited in a warehouse and for which a Bill of entry for home consumption has been filed under Section 68 of the said Act, if the duty is paid after 5 working days from the date on which such Bill of Entry is returned to importer for payment of duty.
It has been stated in the Circular that 'interest on warehoused goods is payable when they remain in a warehouse beyond the period specified in sub-section (1) of Section 61, as per provisions of sub-section (2) of Section 61'. The subject Circular does not merely state that interest on warehoused goods is payable when they remain in a warehouse beyond the period specified in sub-section (1) of Section 61; it states that said interest amount is payable as per the provisions of sub-section (2) of Section 61, which lay down the effective date from which the interest is chargeable on various categories of warehoused goods. Thus, the Circular 15/09 Customs does not clarify anything contrary to what is stated in the Section 61 of Customs Act, 1962."
This clarification is contained in a letter from the Board to the concerned Commissioner, with copies to all Chief Commissioners and DGs .
Apparently, Board did not understand the query raised by the Commissioner. He was saying that the permitted period of warehousing as per Section 61(1)(b) is one year while interest is charged after expiry of ninety days as per Section 61(2)(ii), whereas Board in Circular No 15/2009 stated that as per the provisions of Section 61 (2), interest on warehoused goods is payable when they remain in the warehouse beyond the permitted warehousing period specified in Section 61 (1), which is not correct.
What all this means in simple English is, "the interest under Section 47(2), is not applicable for clearances from bonded warehouse, under Section 68."
This was also the view taken by the CESTAT in Commissioner of Customs v Acalmar Oils & Fats Ltd - 2009-TIOL-1259-CESTAT-BANG
Why should the Board confuse such simple issues? Let us hope there will not be further complications in the field consequent to these clarifications.
CBEC Letter F. No.473 /01/2007-LC Dated, October 25, 2010