CUS CIR NO. 38/2005 DATE 28/09/2005

Warehousing - Waiver of interest on re-export of warehoused goods u/s 69 the Customs Act, 1962 - Clarification thereto - regarding -

I am directed to refer to correspondence resting with the guidelines contained in Board’s letter F.No.475/82/92- LC, dated 27.12.1993 and Circular No.62/2004-CUS., dated 29.10.2004 (F.No.473/07/2004-LC) on the subject cited above.

2. The issue as to whether interest in case of export of warehoused goods u/s 69 of the Customs Act, 1962 is payable in terms of the guidelines contained in Board’s letter F.No.475/82/92-LC, dated 27.12.1993 OR whether the same is not required as per Hon’ble Supreme Court’s judgement in the case of M/s Pratibha Processors Vs U.O.I as reported in 1996 (88) E.L.T. 12 (SC) has been examined in the Board. It has now, been decided by the Board to adopt the ratio of Hon’ble Supreme Court’s judgement in the case of M/s Pratibha Processors Vs. U.O.I (1996 (88) E.L.T. 12 (SC), wherein the Apex Court has held that the interest on warehoused goods is merely an accessory of the principal and, if the principal is not recovered/payable, so is the interest on it. The interest under Section 61 (2) of the Customs Act, 1962 has, thus, no independent or separate existence.

3. Board has further decided to delete para 2 (xii) of the Board’s guidelines dated 27.12.1993 (i.e. goods warehoused and subsequently re-exported under Section 69 of the Customs Act, 1962) from the eligible cases for waiver of interest. Accordingly, para 3 of Board’s guidelines dated 27.12.1993 also stands revised and will now read as under:-

“In respect of cases at 2 (i) and (ii), the waiver of interest is normally to be considered only after ex-bond clearance of goods for the said purpose. For cases at 2 (iv), the waiver of interest shall be considered on completion of the export obligation period and for cases at 2 (vi), 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.”

4. The other two eligible cases indicated at para 2 (xiii) and 2 (xiv) of Circular No.62/2004-CUS., dated 29.10.2004 (i.e. import under EPCG Scheme and import of Capital Goods by Public Sector Undertakings), as incorporated after para 2 (xii) of Board’s guidelines dated 27.12.1993, may be read as para 2 (xii) and (xiii) instead of para 2 (xiii) and 2 (xiv) indicated in Circular No.62/2004-CUS dated 29 10.2004.

5. The other contents of the Board’s guidelines dated 27.12.1993 and Circular dated 29.10.2004 remain unaltered.

6. The contention of the Circular may bebrought to the notice of the field formations and the trade under your jurisdiction.

F.No.473/07/2005-LC

(S.M. Akhter)
Joint Commissioner (LC)

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