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Showing contexts for: consumable store in Bangalore Wire Rod Mills vs Union Of India on 10 April, 1992Matching Fragments
4. We shall now wet out the relevant facts, which are necessary for deciding the controversy between the parties. They are : The appellant in W.A. No. 1275 of 1991 - M/s. Bangalore Wire Rods Mills is a unit of Transport Corporation of India. It is engaged in the business of rolling of iron and steel. For the purpose of its business, the petitioner had secured licence from the Controller of Imports and Exports for importing one 2 High Reversible Rolling Mill for manufacture of M.S. Bars, Angles, Channels etc., at their factory as 'project import' for which import duty was lower, that is, 40% of the value of the goods plus 10%. Licence was granted by the Controller of Imports and Exports on 20-2-1982. Pursuant to the said licence, the goods were imported by the petitioner. On 7-9-1982 the petitioner requested the Assistant Collector of Customs and Excise to bond the imported equipments in their own premises. On 25-10-1982 the petitioner executed the necessary bond for Rs. 1,58,730.00 as required, for warehousing the goods. On 2-12-1982 the Customs Bonded Warehouse licence 10/82 was issued to the petitioner by the Assistant Collector of Customs. The value of the goods imported was assessed in terms of Section 14 of the Act at Rs. 1,55,69,773.00 and the customs duty payable at the rate prevailing on the said date, was computed at Rs. 77,32,886.00. Warehousing bond, as required under Section 59 of the Act, was executed by the petitioner binding itself in a sum equal to twice the amount of duty assessed on the goods and for observing all the provisions of the Act, Rules and Regulations in respect of the goods. On 13-5-1983 Government of India issued notification prescribing that the rate of interest payable in respect of the goods kept in a warehouse was 12% per annum on the amount of duties of customs claimable by the Union of India. According to the provisions of Section 61(1) of the Act, as it stood at the relevant point of time, the maximum period during which the imported goods could be kept in the warehouse was three years in the case of non-consumable stores and one year in respect of other goods. The petitioner failed to pay the duties of customs and clear the goods from the warehouse within or at the end of the prescribed period. Section 61(b)(ii) of the Act, both before and after its amendment, empowered the Collector and the Board to extend the period of bonding in respect of any goods which are not likely to deteriorate for a limited period and by the Board for such further period as it may deem fit. No maximum period beyond which the bonding period could be extended by the Board was prescribed. It appears that on account of certain practical difficulties, in particular the shortage of electric power in other States, the petitioner was unable to get the goods cleared and therefore had been making application for extension of bonding period from time to time. The latest application made was on 7-1-1988. The relevant portion of that letter reads :
Provided that the Board may, if it considers it necessary so to do in the public interest, waive, by special order and under circumstances of an exceptional nature to be specified in such order, to whole or part of any interest payable under this sub-section in respect of any warehoused goods."
As can be seen from the language of Section 59, an importer of durable goods which have been entered for warehousing and assessed to tax under Section 17 and 18 of the Act, is required to execute a bond binding himself in a sum equal to twice the amount of duty assessed on such goods. According to clause (b) of Section 59 he is also required to pay on or before a date specified in a notice of demand, the duties, rents and charges claimable on the goods together with interest on the same from the date so specified, at the rate of 6% per annum or such other rate as is for the time being fixed by the Board. According to sub-section (1) of Section 61, as it stood prior to its amendment the period during which goods could be left in the warehouse was 3 years in the case of non-consumable stores and in the case of other goods it was 1 year. After its amendment with effect from 13-5-1983 the period of warehousing was reduced to 1 year in respect of non-consumable stores and 3 months in respect of other goods. It is common ground that as far as the present case is concerned, the amended sub-section (1) of Section 61 is not applicable, for the reason the goods were entered for warehousing prior to the amendment of sub-section (1) of Section 61.
7. The only controversy, however, has been whether the goods in question are non-consumable stores as contended for the petitioner and therefore the period during which the goods could be left in the warehouse was 3 years or they are not non-consumable stores and therefore the maximum period during which the goods could be left in the warehouse was only 1 year.
8. We shall therefore, dispose of this controversy, in the first instance. The learned counsel for the petitioner contended that the goods in question come under the category of non-consumable stores and therefore the period during which the goods could be kept in the warehouse was 3 years. The learned counsel for the Central Government, however, pointed out that according to the definition of the 'stores' contained in Section 2(38) of the Act, the contention of petitioner is untenable. The said definition reads :
"2(38) - "stores" means goods for use in a vessel or aircraft and includes fuel and spare parts and other articles of equipment, whether or not for immediate fitting;"
As can be seen from the language of the definition of the word "stores" it means goods for use in a vessel or aircraft and includes fuel and spare parts and other articles of equipment, whether or not for immediate fitting. Admittedly the goods concerned in the case are not those meant for use in a vessel or aircraft. Therefore there is no substance in the contention of the petitioner that the goods in question though non-consumable, in that they are machinery for manufacturing certain items of steel product, constituted non-consumable stores. From this it follows that the period during which the petitioner could leave the goods in the warehouse was one year in accordance with sub-section (1) of Section 61 of the Act prior to its amendment. From this it follows that the respondents were empowered to issue notice in terms of Section 59 of the Act calling upon the petitioner to pay all duties, rent and charges claimable on account of such goods together with interest at 12% per annum which was the rate prescribed by the Board. It is also not in dispute that though the respondents were entitled to issue notice of demand in terms of Section 59 of the Act immediately after the expiry of the period specified in Section 61(1) which one year as pointed out earlier, on 11-11-1983 a notice of demand was issued only on 7-3-1985 giving 15 days' time to the petitioner to pay the excise duty and other amounts due to the Central Government. From a combined reading of sub-section (1) of Section 61, as it stood prior to 13-5-1983 and Section 59 of the Act, though the period during which goods could be left in the warehouse has been specified in the sub-section (1) of Section 61, the liability to pay interest on the part of the importer would arise only after a notice of demand is served in terms of Section 59 of the Act and in the event of the importer failing to pay the duty within the time specified and he would become liable to pay interest from the date so specified until the payment on realisation of duty.