CircularNo.31/1997-Cus. date 1/8/97

Sub:

Relevant date for calculation of Customs duty in cases where warehoused goods are cleared after the expiry of warehousing period.

I am directed to refer to Board's instructions as contained in F.No. 473/206/87-Cus-VII dated 12.7.89 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(l)(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 of 1989) 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'bleApex 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 henceforth 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 maybe implemented with immediate effect. These instructions supersede Board's instructions issued vide F.No. 473/206/J87-CUS.VU dated 12th July, 1989.

Sd/-
(K.Chopra)
Under Secretary to the Govt. of India

F.No. 473/29/97-LC

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