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In case of sale of goods by Warehouse, due to importer not seeking clearance of goods, the duty is payable on Sale price not on declared value by importer; SC.

Supreme Court of India

Justice Hemant Gupta, Justice A M Khanwilkar & Justice Dinesh Maheshwari

The issue required to be examined in the present case by the SC is whether the calculation of the custom duty would be assessed as on the date of the deemed removal of goods from the warehouse in terms of Section 61 or on the date of sale for the reason that the importer has failed to seek clearance of the goods imported.

The SC {UNION OF INDIA & ORS. v. M/S. ASSOCIATED CONTAINER TERMINAL LTD.} holds that the Central Board of Excise & Customs had issued a clarification on 28th November, 2001 keeping in view divergence of practice with regard to apportionment of sale proceeds from disposal/sale of unclaimed/uncleared goods under Section 150 of the Act. It was communicated that the custom duty shall be determined by backward calculation considering the sale proceeds of unclaimed/uncleared goods as the cum-duty price. It was held that for calculation of duty, total sale proceeds without allowing any deduction towards sales expenses or any other charge is to be taken as cum-duty price.

It was held that in view of the Circular issued by the Central Board of Excise & Customs, the custom duty is to be calculated on the sale price and not on the duty as is payable on the date of deemed expiration of permitted period of warehouse. Such Circular of the Board is binding on the Revenue. It was held, therefore, the custom duty has to be paid on the basis of sale proceeds realised from the sale of the goods kept in a warehouse and not on the basis of the custom duty payable at the time of filing the Bill of Entry or on the date of expiry of permitted period of warehouse. 

The present case is not a case of levy of custom duty on the importer. But to the contrary, the importer has not sought the release of goods within the permitted period of warehouse, which led to the sell of goods by the warehouse.

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