Regarding request for an Extended Period of Warehousing under Section 61 of Customs Act, 1962 - Reference from Shipyards
March, 29th 2012
F. No. 473/02/2011-LC
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
New Delhi, dated the 29thof February, 2012
All Chief Commissioners of Customs
All Chief Commissioners of Customs & Central Excise
Subject:- Request for anExtended Period of Warehousing under Section 61 of Customs Act, 1962 - Reference from Shipyards - Reg.
A reference is invited to the Boards office letter of even no. dated 1stJune 2011 wherein it is stated, inter alia, that for goods falling under categories (v) and (vi) of para 5 of Circular 47/2002 - Customs, the Chief Commissioner of Customs may consider granting the extension of warehousing period for a period even greater than 3 months, if he is satisfied that the said goods are in good condition and are not likely to deteriorate in quality in the proposed period of extension and also if interest accrued on the goods in the preceding period is realized.Representations have been received from trade that the phrase - -if interest accrued on the goods in the preceding period is realized -iscausing hardship to them since further extension in the warehousing period would be given by the competent authority only if interest is paid, which will burden them, particularly when the warehoused goods are exempt from Customs duty when cleared for specified end uses.
2.In this connection, for the goods covered under the provisions of Section 61 (2) (ii) of the Customs Act, 1962, interest amount is payable at the rates fixed by the Board on the duty payable on the warehoused goods, if the goods remain in the warehouse beyond a period of ninety days, for the period from the expiry of the said ninety days till the date of payment of duty on the warehoused goods.However,Boards Circular 10/2006 Customs, which lays down the guidelines for waiver of interest on warehoused goods, clarifies that for machinery, equipment and raw materials imported for building and fitment to ships,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. It is further provided in the Circular thatdemands for interest are to be raised when due, but are not to be enforced, and on fulfillment of the purpose of import, the waiver of interest is to be decided. This approach obviates the need for the importer to first pay the interest and then, on waiver, seek refund and it also safeguards revenue interest through a demand.
3.The phrase --if interest accrued on the goods in the preceding period is realizedwas used in the letter dated 1stJune 2011 in view of the provisions of Section 61 (2) (ii) of the Act, ibid. However, only such interest is to be collected that is due. As evident from Circular 10/2006, in cases referred to in paragraph 4 thereof, there is to be no actual collection of interest at the time of grant of extension of the warehousing period. Only a demand is to be raised, and the issue of waiver of interest on such goods is to be decided depending on the usage of the goods, taking into account whether the said goods fulfill the specified end use condition and qualify for the duty exemption.
4.The issue dealt in the letter dated 1stJuly 2011 was that of grant of extension of warehousing period for a period greater than 3 months in case of goods imported by ship-building units; no change was intended to the existing position on collection or waiver of interest, which will be continue to be governed by the provisions of Section 61 of the Act, ibid, read with Circular 10/2006 Customs.