The CESTAT, Ahmedabad bench has held that no interest on customs duty demand is payable for the period prior to the date of Assessment Order.
The appellant, Chakra Special Trading Co. has entered into a contract dated 28.09.1995 with their supplier, namely, M/s Special Trading Co., USA for supply of scrap, which is in the form of used rails. Consequently, the appellant imported the scrap in the year 1996 and declared the value at a price of USD $110 PMT.The assessment was completed and the department demanded customs duty and interest from the appellants.The department, in the assessment order demanded interest as per sub clause 2(ii) of Section 61 of the Customs Act.
The appellant submitted that the term ‘warehoused goods’ is defined under Section 2 (44) of the Customs Act, 1962 as ‘goods deposited in a warehouse’. It was also contended that Section 61 further indicates that the warehoused goods have to remain in the warehouse beyond a period of ninety days, for the interest to be chargeable
The bench comprising Mr. Ramesh Nair, Member (Judicial) and Mr. Raju, Member (Technical) held that “We find from the letter dated 31.08.2012 issued by the DRI informing the appellant that seizure of the goods was made on 10.10.2005 and the cargo was handed over to Kandla Port Trust under supradnama of the same date. Even the DRI report which has been much relied upon in the assessment order has clearly stipulated that goods were not physically removed/deposited in the warehouse and were still in the custody of Kandla Port Trust. Therefore, we hold that goods were never warehoused by the department. We also find that the assessment order has been passed after the directions issued by the Hon’ble High Court of Gujarat. After going through the relevant provisions of the Act i.e. Section 15(1), 47, 58, 61 or72(1) of the Customs Act, we hold that appellant is not liable to pay interest for the period prior to passing of assessment order on 28.03.2014,” the Tribunal said.
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