M/S SBEC SUGAR LIMITED & ANR. versus UNION OF INDIA & ORS.

Citation: [2011] 2 S.C.R. 585 · Decided: 07-02-2011 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2011) 2 S.C.R. 585 
M/S SBEC SUGAR LIMITED & ANR. 
v. 
UNION OF INDIA & ORS. 
(Civil Appeal No. 2899 of 2006) 
FEBRUARY 7, 2011 
[D.K. JAIN AND H.L. DATTU, JJ.] 
A· 
8 
Customs Act, 1962 - ss. 72(1)(b), 68 and 15(1)(b) -
Imported goods improperly removed from warehouse - Rate 
C 
of duty - Held: When the goods are cleared from the 
warehouse after the expiry of the permitted period or its 
permitted extension, the goods are deemed to have been 
improperly removed u/s. 72(1)(b) - Rate of duty has to be 
computed according to the rate applicable on the date of 
expiry of the permitted period u/s. 61 - Section 15(1 )(b) 
D 
whereby rate of duty is computed according to the rate and 
valuation applicable on the date on which goods are actually 
removed from the warehouse, would be applicable only when 
the goods are cleared from the warehouse u/s. 68, within the 
initially permitted period or during the permitted extended 
E · 
period - On facts, benefit of exemption from payment of duty 
in terms of the Export Promotion Capital Goods Scheme was 
not available to the importer because after the expiry of the 
warehousing period, the goods had been removed u/s. 72 and 
not uls. 68 and, thus, s. 15(1)(b) had no application. 
F 
Appellant No: 1 imported certain capital goods for its 
sugar manufacturing unit. Appellant No. 1-importer opted 
·for getting these goods warehoused under Bond. The 
importer made an application for extension of the bond 
G 
period in respect of all the said consignments and the 
same was rejected. Meanwhile, the Central Government 
extended the Export Promotion Capital Goods Scheme 
(EPCG) Scheme to Agro based Industries. The capital 
goods used in the manufacture of agro-products, like 
585 
H 
586 
SUPREME COURT REPORTS 
[2011] 2 S.C.R 
A sugar and covered under EPCG licence were exemptecl .-
from the payment of whole of the customs duty, and . 
additional duty leviable in term$ of Section 3 of the 
Customs Act, 1962. The Superintendent of Customs 
raised the demand u/s. 72 of the Act directing the 
B importer to clear the goods covered under the Bond on 
payment of full duty of customs and other charges within 
stipulated period. Appellant No. 1 acquired licence under 
the EPCG Scheme, and filed three bills of entry for ex· 
bond clearance for home consumption of the goods lying 
c in the warehouse. By that time the bond period had 
expired and demand for payment of full amount of 
customs duty chargeable on account of goods lying in 
the warehouse, along with interest, penalty etc. had 
already been raised against the importer. Appellant No. 
0 
1 made a representation to the Chief Commissioner of 
Customs stating that since zero duty was chargeable on 
the goods under the EPCG licence, no interest could be 
levied but the same was rejected. Appellant No. 1 filed a 
writ petition challenging the demand for interest in 
E respect of the three consignments. The Assistant 
Commissioner of Customs confirmed the levy of duty 
and interest. The High Court passed an interim order 
directing the respondents to permit the importer to 
remove the consignments on their executing a bond 
without payment of interest but on payment of other 
F charges. Appellant No. 1 challenged the confirmation 
order. The High Court dismissed the writ petition. It 
directed the department to finally assess the custom duty 
and other charges payable by the appellant in respect of 
goods covered under subject bills of entry. Therefore, the 
G appellants filed the instant appeals. 
Dismissing the appeals, the Court 
HELD: 1.1 From a bare reading of Section 61 of the 
H Customs Act, 1962, It Is manifest that warehousing is 
-
SBEC SUGAR LIMITED & ANR. v. UNION OF INDIA & 587 
ORS. 
permissible for a limited period, as contemplated under A,. 
sub-sections (1 )(a) and (1 )(b) of Section 61; and such 
period is extendable on showing sufficient cause for the 
same. However, by operation of sub-section (2), interest 
on the amount of duty is payable from the period of expiry 
of-the permissible period till the date of clearance from 
B 
the warehouse, regardless of whether the goods have 
remained in the warehouse beyond the permitted periods 
by reasons of extension or otherwise. [Para 19] [597-H; 
598-A-B] 
Kesorarn Rayon vs. Collector of Customs, Calcutta C 
(1996) 5 sec 576 - relied on. 
' 
1.2 Se'ction 68 deals with the clearance of 
warehoused -goods for home consumption and provides 
that an importer of any warehoused goods

Excerpt shown. Read the full judgment & AI analysis in Lexace.