Period for which goods may remain warehoused [Section 61] :
The provisions of this sections are as under:
(1) Any warehoused goods may be left in the warehouse in which they were deposited or in any warehouse to which they may be removed-
(a) in the case of capital goods intended for use in any hundred percent export oriented undertaking, till the expiry of five years; and
(aa) Goods other than capital goods, intended for use in any hundred per cent export-oriented undertaking, can be warehoused till the expiry of three years.
(b) In the case of other goods till the expiry of one year, after the date on which the proper officer has made an order under section 60 permitting the deposit of the goods in a warehouse.
Provided that-
(i) In the case of any goods which are not likely to deteriorate, the period specified in clause (a) or clause (aa) or clause (b) may on sufficient cause being shown, be extended –
(A) in the case of goods intended for use in any hundred percent export oriented undertaking by the Principal Commissioner/Commissioner of Customs, for such period as he may deem fit, and
(B) in any other case, by the Principal Commissioner/Commissioner of Customs, for a period not exceeding six months and by the Principal Chief
Commissioner/Chief Commissioner of Customs for such further period as he may deem fit,
(ii) In case any goods referred to in clause (b) if they are likely to deteriorate, the Principal Commissioner/Commissioner of Customs may reduce the aforesaid period of one year, as he may deem fit.
Provided further that when the license for any private warehouse is cancelled, the owner of any goods warehoused therein shall, within seven days from the date on which notice of such cancellation is given or within such extended period as the proper officer may allow, remove the goods from such warehouse to another warehouse or clear them for home consumption or exportation.
(2) Where any warehoused goods
(i) specified in sub-clause (a) or sub-clause (aa) of sub-section (1), remain in a warehouse beyond the period specified in sub-section (1) by reason of extension of the aforesaid period or otherwise, interest at such rate as is specified in section 47 shall be payable at the time of clearance of the goods in accordance with the provisions of section 15 on the warehoused goods for the period from the expiry of said warehousing period till the date of payment of duty on the warehoused goods;
(ii) Specified in sub-clause (b) of sub-section (1), remain in a warehouse beyond a period of ninety days**, interest shall be payable at such rate or rates not exceeding the rate specified in section 47, as may be fixed by the Board, on the amount of duty payable at the time of clearance of goods in accordance with the provisions of section 15 on the warehoused goods, for the period from the expiry of the said ninety days till the date of payment of duty on the warehoused goods .
However, the Board may, if it considers it necessary so to do, in the public interest by order and under circumstances of an exceptional nature, to be specified in such order waive the whole or part of any interest payable under this section in respect of any warehoused goods;
Provided further that the Board may, if it considers it necessary so to do in the public interest, by notification in the respect of which no interest shall be charged under this section.
Explanation: For the purposes of this section “hundred percent export oriented undertaking” has the same meaning as in Explanation 2 to sub-section (1) of section 3 of the Central Excise Act, 1994.
**The relevant date when the aforersaid period of 90 days would commence is the date of deposit of goods in the warehouse [Circular No. 39/2013 Cus dated 01.10.2013].
| CBEC vide Notification No. 18/2003-cus-(NT) dated 1.03.2003 has fixed the rate of interest at 15% for the purpose of clause (ii) of section 61. |
However, if no customs duty is payable at the time of clearance of goods from warehouse, no interest is payable. Interest is mere „accessory‟ to principal [Pratibha Processors v. UOI 1996 (88) E.L.T. 12 (S.C.)].
In case of Swil Ltd v. UOI 2005 (185) E.L.T. 251 (Guj.), it was held that when the goods are re-exported after the prescribed time limit (90 days) for warehousing, there is no liability to pay duty. Therefore, no interest is leviable for warehousing beyond the prescribed time.
Main features of the provisions of section 61: The main features of section 61 can be analysed as follows:
(1) the three classes of warehoused goods for the purposes of different periods of warehousing are
(a) capital goods intended for use in 100% export oriented undertaking and
(b) goods other than capital goods intended for use in 100% export oriented undertaking, and
(b) other goods.
(2) The warehousing period for capital goods and other goods used in 100% EOU is 5 years and 3 years respectively. For the rest of the goods it is 1 year.
(3) The power to extend the warehousing period beyond 5 years/3 years has been delegated to the Principal Commissioner/Commissioner of Customs for such further period as he may deem fit. The period of 1 year can be extended by the Principal Commissioner/Commissioner of Customs for further 6 months. However, for extending it further, authorisation of Principal Chief Commissioner/Chief Commissioner of Customs is required.
(4) The Explanation under section 3 of the Central Excise Act, 1944 defines hundred percent export oriented unit to mean an undertaking which has been approved as a hundred percent export oriented undertaking by the Board appointed in this behalf by the Central Government, in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 and the rules made under that Act.
(5) The goods that are likely to deteriorate fall under the category “others” alone. Their warehousing period can be reduced to a shorter period by the Principal Commissioner/Commissioner of Customs.
(6) The interest under section 47 is chargeable only after the expiry of warehousing period;
(7) The interest is chargeable on the amount of duty determined at the time of clearance of the warehoused goods under section 15.
(8) The Board has power to waive the above interest, in individual cases (ad hoc orders) and by Gazette notification in respect of any class of goods.
Application for extension of warehousing period: There is nothing in section 61 to indicate that application for extension of warehousing period must be made before expiry of the period of warehousing initially permitted. It would appear that unless the authorit ies have taken coercive measures to recover duty and warehousing or other charges, power to grant extension of time does not come to an end. This was held by the Bombay High Court in the case of Banswara Syntex Ltd. V. UOI, 1994, (74) ELT 522 (Bom).
The guidelines to be followed while granting extension by customs authority are given in Circular No. 47/2002-Cus dated 29.7.2002. It should be ensured that the goods are not likely to deteriorate during the extended period of warehousing. Wherever necessary the goods should be tested for quality before granting extension of warehousing period. Whenever necessary interest accrued should be paid before granting extension.
If the warehousing period is reduced by any amendment to law, the reduced period will not be applicable to the goods which are warehoused prior to the amendment [Bangalore Wire Rod Mills v. UOI 1992 (61) E.L.T. 37 (Kar.)] [approved by SC].