Legal principle

Where warehoused goods are not removed within the permitted period or its permitted extension under Section 61, they are deemed improperly removed under Section 72(1)(b) on the date that period expires, and duty is leviable at the rate in force on that date — Section 15(1)(b) applies only to goods actually cleared from the warehouse under Section 68.

Court decision

The Supreme Court dismissed the appeal with costs, holding that the goods were deemed improperly removed under Section 72(1)(b) on 15 September 1984, the date the permitted warehousing period expired, and duty was payable at the rate in force on that date; since there was no change in the rate of duty during the three-month permitted period, the appellants' liability was unaltered and the exemption notification did not apply.

Facts

Kesoram Rayon imported 4832 bales of rayon grade wood pulp, filed a bill of entry for warehousing on 25 May 1984, and warehoused the goods on 16 June 1984 in its own private bonded warehouse; after clearing 4000 bales, 832 bales remained and the three-month warehousing period under Section 61(1)(b) expired on 15 September 1984 without their removal. On 8 May 1985 the Assistant Collector issued a demand notice under Section 72(1) for Customs duty, countervailing duty and 12% interest, recoverable under Section 72(2) if unpaid. The appellants filed an ex-bond bill of entry for home consumption on 30 May 1985, and an order dated 25 June 1985 recalled the demand notice and directed clearance on realisation of amounts due, expressly stating this was not a Section 68 clearance but one under Section 72. The bales were removed between 29 June and 2 July 1985, by which date a notification of 17 March 1985 had exempted pulp derived from vegetable fibre from Customs and additional duties.

Key provisions

• Section 72, Customs Act, 1962 — Goods improperly removed from warehouse, etc
• Section 68, Customs Act, 1962 — Clearance of warehoused goods for home consumption
• Section 61(1)(b), Customs Act, 1962 — Period for which goods may remain warehoused