U.K. Paint Industries Proprietor M/S. U.K. Paint ( Vs. Commissioner of Customs and Others - Court Judgment

$~ * + IN THE HIGH COURT OF DELHI AT NEW DELHI WRIT PETITION (CIVIL) No.2494/1997 Reserved on:

1. t November, 2013 Date of decision:

18. h December, 2013 U.K. PAINT INDUSTRIES PROPRIETOR M/S. U.K. PAINT (INDIA) LIMITED & ANR. ..... Petitioners Through Mr. G.L. Rawal, Sr. Advocate with Mr. Rajesh Rawal, Advocate. versus COMMISSIONER OF CUSTOMS & OTHERS ..... Respondents Through Mr. Rahul Kaushik Bhuvneshwari Pathak, Advocates. & Ms. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJIV KHANNA, J.: Two issues arise for consideration in the present writ petition. The first issue is whether the petitioner- U.K. Paint Industries proprietorship of U.K. Paint (India) Limited can utilise advance licences in respect of goods imported earlier?. The second question is whether the petitioner is liable to pay interest under Section 61(2) of the Customs Act, 1962 (Act, for short)?. The aforesaid questions, have to be answered in light of the decision of the Supreme Court in Pratibha Processors versus Union of India, (1996) 11 SCC101SC), which has been followed in Commissioner of Customs, Chennai versus Jayathi Krishna and Company, (2000) 119 ELT4(SC) and other decisions of the Supreme Court, to what the respondents contend and believe, are contrary decisions but applicable to the facts of the present case i.e., Kesoram Rayon versus Collector of Customs, Calcutta, (1996) 5 SCC576SC) and SBEC Sugar Limited and Another versus Union of India and Others, (2011) 4 SCC668 2.1 In order to decide the issue, we would like to refer to the basic and relevant facts. The petitioner, manufacturer of paints, in August, 1994 imported 136 metric tons of the Titanium Dioxide Rutile. On 29th December, 1994 under bill of entry for warehousing, also referred to as the yellow bill of entry, the goods were shifted to the warehouse under bond. The petitioner had stated that instead of paying duty in cash they would furnish duty free licence as per Paragraph 65 of the applicable Import and Export Policy, 1992-97. On 27th January, 1995, the goods were warehoused for a period of one year. On 19 th April, 1996, the respondents issued notice under Section 72(1) of the Act to the petitioner to pay customs duty of Rs.87,59,508/- and interest within fifteen days. The petitioner was warned that in case demand was not discharged within fifteen days, the goods would be disposed of by auction under Section 72(2) of the Act. The petitioner informed the respondents vide letter dated 2nd May, 1996 that their advance licences were pending revalidation with the Joint Director General of Foreign Trade and upon revalidation they would clear the consignment against these advance licences and an extension of three months was requested through this letter. The petitioner clarified that they would not claim abetment of duty due to deterioration in the quality during the extended period. It was stated that they had already paid Rs.1 crore approximately for clearances of other consignments of the same product. By letter dated 23rd September, 1996, the petitioner informed the respondents that they were ready to clear the goods against subject bill of entry against a valid DEEC Book No.217708 and Advance Licence No.0025309 dated 12th July, 1996, the originals of which were enclosed. They requested for waiver of interest via Notification No.59/93 dated 26th November, 1993. Thereafter, by means of letter dated 23rd September, 1996 a request for releasing of goods against Advance Licence with benefits of DEEC Book was made. This was followed by another letter dated 4th February, 1997 in which the petitioner referred to the decision in Kesoram Rayon (supra) highlighting that it dealt with the rate of duty applicable, whereas in the case at hand this was not the dispute. 2.2. The respondents by their letter dated 7th March, 1997 informed the petitioner that their request for release of goods against advance licence with benefit of DEEC Book was examined but stands rejected. The petitioner therefore, was requested to pay the duty and other dues and to get their goods cleared immediately. This was followed by correspondence, notice etc. It also appears that the respondents had issued Form of Release Advice dated 30th December, 1996 in which it was recorded that the petitioner had furnished import licences dated 30th December, 1996. In the counter affidavit, respondents have stated that the letter dated 19th April, 1996 was not meant for the concerned bill of entry but there was another notice dated 17th April, 1996 under which the petitioner was directed to deposit Rs.70,07,606/- as customs duty with interest within fifteen days. 2.3 The stand of the respondents in the counter affidavit is that the advance licences produced by the petitioner were issued in 1996 and, as Notification Nos. 79/1995 and 80/1995, did not provide for subsequent production of Advance Licence for the goods earlier imported, the same were not applicable.

3. In order to appreciate the controversy, we would like to reproduce Sections 62, 68, 71 and 72 of the Act, which read as under:

“62. Control over warehoused goods.—(1) All warehoused goods shall be subject to the control of the proper officer. (2) No person shall enter a warehouse or remove any goods therefrom without the permission of the proper officer. (3) The proper officer may cause any warehouse to be locked with the lock of the Customs Department and no person shall remove or break such lock. (4) The proper officer shall have access to every part of warehouse and power to examine the goods therein.

68. Clearance of warehoused goods for home consumption.—The importer of any warehoused goods may clear them for home consumption, if— (a) a bill of entry for home consumption in respect of such goods has been presented in the prescribed form; (b) the import duty leviable on such goods and all penalties, rent, interest and other charges payable in respect of such goods have been paid; and (c) an order for clearance of such goods for home consumption has been made by the proper officer: [Provided that the owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish his title to the goods upon payment of rent, interest, other charges and penalties that may be payable in respect of the goods and upon such relinquishment, he shall not be liable to pay duty thereon:]. [Provided further that the owner of any such warehoused goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force.].

71. Goods not to be taken out of warehouse except as provided by this Act.—No warehoused goods shall be taken out of a warehouse except on clearance for home consumption or re-exportation, or for removal to another warehouse, or as otherwise, provided by this Act.

72. Goods improperly removed from warehouse, etc.— (1) In any of the following cases, that is to say,— (a) where any warehoused goods are removed from a warehouse in contravention of Section 71; (b) where any warehoused goods have not been removed from a warehouse at the expiration of the period during which such goods are permitted under Section 61 to remain in a warehouse; (c) where any warehoused goods have been taken under Section 64 as samples without payment of duty; (d) where any goods in respect of which a bond has been executed under[Section 59 and which have not been cleared for home consumption or exportation are not duly accounted for to the satisfaction of the proper officer, the proper officer may demand, and the owner of such goods shall forthwith pay, the full amount of duty chargeable on account of such goods together with all penalties, rent, interest and other charges payable in respect of such goods. (2) If any owner fails to pay any amount demanded under sub-section (1), the proper officer may, without prejudice to any other remedy, cause to be detained and sold, after notice to the owner (any transfer of the goods notwithstanding) such sufficient portion of his goods, if any, in the warehouse, as the said officer may select.”

4. Section 72 creates a deeming fiction and states where warehoused goods were removed in contravention of Section 71 or were not removed from the warehouse at the expiration of the period permitted under Section 61 etc., the owner of the goods shall forthwith pay full amount of duty chargeable on the goods together with penalties, rent, interest and other charges. Thus, by deeming fiction on the happening of events mentioned in sub-clause (a) to (d) in Section 72(1), custom duty becomes immediately chargeable and payable, even when the bill of entry for home consumption has not been filed and the goods have not been actually removed from the bonded warehouse. Under sub-section (2), after giving notice to the owner, the said goods could be sold. The rate of duty payable and which could be levied or charged gets quantified on the dates mentioned and applicable as per sub-section (1) to Section 72. Under the normal provisions, rate of duty applicable was stipulated and calculated as per Section 15 read with Section 47 of the Act. Section 15 (1) clause (b) as applicable stated that the rate of duty and tariff valuation shall be at the rate and valuation in force on the date of removal of goods.

5. Section 61 of the Act stipulates the period for which the goods could remain warehoused and an upper time limit has been prescribed. As noticed above, in the present case, the upper limit of one year had come to an end. On conjoint and harmonious reading of Sections 72, 68 and 15 of the Act, it is apparent that when imported goods were not removed from the warehouse within the permissible period, they were treated as goods improperly removed from the warehouse. Such improper removal took place when the period permitted under Section 61 came to an end. The importer of goods (i.e. the petitioner) therefore, was called upon to pay custom duty at the rate applicable on the date of the deemed removal from the warehouse. Interest on non- payment began to run from the said date as duty became payable but was not paid. But the contention of the petitioner is that advance license were produced and no duty was payable, hence no interest can/could be levied. Interest can/could be levied only when duty was payable. As noted above the respondents have contested the said submission on two grounds. First the advance licenses were issued subsequently and second and in alternative, interest was payable, inspite of furnishing of advance license.

6. The contention of the respondents that the advance licences issued subsequent to the date of import enclosed with the letters dated 2nd May, 1996 and 23rd September, 1996 cannot be used for goods imported earlier and on which custom duty was payable in terms of Section 72(1), has to be rejected in view of paragraph 65 of the policy which reads as under:

“65. The goods already imported/shipped/arrived in advance but not cleared from customs may also be cleared against Duty Free Licence issued subsequently.”

7. The said paragraph makes it clear that the advance licences could be issued subsequently, even after the goods had been imported or arrived. The only stipulation was that the goods should not have been cleared. It is not the case of the Revenue that the goods had been cleared. The Advance license in terms of paragraph 65 of the policy could have been used for clearing the goods in question. Section 72 does not relate to clearance of goods but refers to the term “removal of goods” and the duty payable on deemed removal. The case of the Revenue/respondents is that the duty had to be paid and was calculated in terms of Section 72(1) on the date the period of warehousing came to an end, i.e., on 27th January, 1996. This decides the first issue. (Also see paragraphs 14 to 16 below).

8. The second issue relates to payment of interest under Section 62(2) of the Act. The provision has been quoted above. It stipulates that the importer would be liable to pay interest for the delayed payment of duty and for the period during which the duty was not paid. As the imported goods had remained warehoused beyond the period prescribed, customs duty had become payable. Interest also commenced from the date when the duty became payable. In other words, the petitioner would be liable to pay interest from the date when the warehousing period specified/permitted came to an end i.e., 27th January, 1996 till the date of payment of duty.

9. However, this is not the end of the matter. The petitioner has relied upon General Exemption No.147, which was relied upon by the Supreme Court in Pratibha Processors (Supra) and reads:

“General Exemption No.147 Exemption to goods imported against advance licences.—In exercise of the powers conferred by subsection (1) of Section 25 of the Customs Act, 1962 (52 of 1962) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.116/88 — Customs [G.S.R. No.406(E)]. dated the 30th March, 1988, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods imported into India against an Advance Licence issued under the Imports (Control) Order, 1955, being materials required to be imported for the purpose of manufacture of products (hereinafter referred to as the resultant products) or replenishment of materials having identical specifications and technical characteristics as these actually used in the manufacture of the resultant products exported or both, or for export asmandatory spares along with the resultant products, for execution of one or more export orders or for transfer to another Advance Licence holder, from the whole of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and from the whole of the additional duty leviable thereon under Section 3 of the said Customs Tariff Act, subject to the following conditions, namely (a)*** (b) the importer at the time of clearance of the imported materials makes— (i) a claim in writing to the Collector of Customs for such exemptionand executes a bond or legal undertaking before such authority as may be approved by the Central Government for complying with the conditions specified in this notification: (ii) a declaration before the Assistant Collector of Customs binding himself to pay on demand an amount equal to the duty leviable but for the exemption, on the imported materials in respect of which the conditionsspecified in this notification have not been complied with:” Explanation.—In this notification— (i)-(iv)*** (v) ‘Imported into India against an Advance Licence’ includes— (a) goods imported under any licence (including Open General Licence) issued under the Imports and Exports (Control) Act, 1947 (18 of 1947), for the time being in force, for which at the time of clearance out of Customs' Control, a valid Advance Licence is produced by the importer;”

10. Similar exemption in respect of materials imported against advance licenses were equally applicable to the period in question by way of issue of notifications issued under Section 25(1) of the Customs Act 1962. For the sake of convenience and reference, we are reproducing the relevant portion of 204/92/cus., dated 19th May, 1992:

“Materials imported against an advance licence In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts materials imported into India, against an Advance Licence (hereinafter referred to as the said licence), from the whole of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and from the whole of the additional duty leviable thereon under Section 3 of the said Customs Tariff Act, subject to the following conditions, namely:-…………”

11. In terms of the aforesaid general exemption and notification quoted above upon production of an advance licence, the importer was entitled to exemption from payment of duty. In other words, no custom duty was payable.

12. Referring to the aforesaid facets and effect of exemption from payment of duty upon production of Advance Licences, the Supreme Court in the case of Pratibha Processors (supra) observed:

“12. On a fair reading of the relevant provisions of the Act and in particular Sections 15, 25, 59, 61 and 68 and the General Exemption granted by the Notification (pages 169-170 of the paper-book) and the Import-Export (Trade) Policy 1990-93 (Blue-Book) (page 176 of the paper-book), we are of the opinion that the entire Scheme is in a „package‟. In allowing exemption to imported goods the Government had made it clear that goods imported into India against the Advance Licence includes goods imported under any licence (including Open General Licence) for which at the time of clearance out of Customs control a valid Advance Licence is produced by the importer. It is open to the importer to import the items in advance under Open General Licence and keep the same in Customs Bond for getting a clearance against the valid licence issued subsequently under Duty Exemption Scheme. When the notification granting the exemption and also the Import Policy has totally liberalised the entire process, the mere fact of warehousing the goods on an anterior date and clearing the same on the basis of a subsequent Advance Licence, validly obtained under Duty Exemption Scheme, cannot by any stretch of imagination import the idea of levy of interest for the period the goods were kept in the warehouse. The liability of the assessee to pay the duty arises only on clearance of the goods from a warehouse. The assessee has no obligation to pay duty as long as the goods were kept or remained in the warehouse. It is only in cases where the goods kept in the warehouse are exigible to duty, and they are so kept in the warehouse for more than the permitted period, and the said goods are cleared subsequently and duty paid, interest is chargeable for the period of delay in the clearance of the goods. Since the goods warehoused are kept for a longer period such delay entails delayed payment of duty payable and so interest is charged for such delayed payment of duty.

13. In fiscal statutes, the import of the words — „tax‟, „interest‟, „penalty‟, etc. are well known. They are different concepts. Tax is the amount payable as a result of the charging provision. It is a compulsory exaction of money by a public authority for public purposes, the payment of which is enforced by law. Penalty is ordinarily levied on an assessee for some contumacious conduct or for a deliberate violation of the provisions of the particular statute. Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. The levy of interest is geared to actual amount of tax withheld and the extent of the delay in paying the tax on the due date. Essentially, it is compensatory and different from penalty — which is penal in character.

14. In the above backdrop, let us consider the scope and content of Section 61(2) of the Act as it existed at the relevant time. Section 61(1) prescribes the period during which the goods imported may remain in the warehouse. The normal period in different cases are provided therein. Extension of time in special cases is also provided. If the goods imported remain in warehouse beyond the period provided or extended under Section 61(1), the consequences are specified in Section 61(2) of the Act. As per the provisions of the Act duty is payable (only) when the goods are cleared. If the goods are not cleared within the time granted under Section 61(1) of the Act, and the goods are cleared later, the payment of duty exigible on the goods gets automatically delayed. It is to meet the said contingency Section 61(2) provides that if the goods warehoused are cleared beyond the time specified or granted under Section 61(1) of the Act, interest not exceeding 18% per annum shall be payable on the amount of duty on the warehoused goods. It is implicit from the language of Section 61(2) of the Act that the interest shall be payable on the amount of duty “payable or due” on the warehoused goods for the period from the expiry of period specified or granted till the date of clearance of the goods from the warehouse. In this case, on the date of clearance of the goods, no duty is payable. The goods are not exigible to duty at that time. Calculation of interest is always on the principal amount. The „interest‟ payable under Section 61(1) and (2) of the Act is a mere „accessory‟ of the principal and if the principal is not recoverable/payable, so is the interest on it. This is a basic principle based on commonsense and also flowing from the language of Section 61(1) and (2) of the Act. The principal amount herein is the amount of duty payable on clearance of goods. When such principal amount is nil because of the exemption, a fortiori, interest payable is also nil. In other words, we are clear in our mind that the interest is necessarily linked to the duty payable. The interest provided under Section 61(2) has no independent or separate existence. When the goods are wholly exempted from the payment of duty on removal from the warehouse, one cannot be saddled with the liability to pay interest on a non-existing duty. Payment of interest under Section 61(2) is solely dependent upon the exigibility or factual liability to pay the principal amount, that is, the duty on the warehoused goods at the time of delivery. At that time, the principal amount (duty) is not payable due to exemption. So, there is no occasion or basis to levy any interest, either. We hold accordingly.”

13. The aforesaid paragraphs clearly indicate that only when duty was payable, interest was chargeable and when because of an exemption, as in case of production of advance licences, no duty was payable, no interest was chargeable. In the case of Pratibha Processors (supra) the warehousing period had come to an end on 3rd March, 1991 and on or about 9th May, 1991, the importer had filed bill of entry for home consumption and had produced advance licences. The facts are, therefore, identical. The legal ratio of Pratibha Processors (supra) is binding on us. The aforesaid legal ratio was subsequently followed in Jayathi Krishna and Company (supra). In the said case, the warehousing period came to an end on 4th January, 1997 and the said date became the relevant date for payment and computing duty and thereafter interest was payable. However, subsequently the importer had applied for clearance under DEEC Scheme and relying upon Pratibha Processors (supra), it was held that no interest under Section 61(2) of the Act was payable.

14. Decision in the case of Kesoram Rayon (supra) is distinguishable as the issue in the said case related to the rate at which custom duty was to be levied as the goods that remained in a bonded warehouse beyond the permitted period. After considering relevant provisions of the Act, it was held that Section 61 prescribes a period for which the goods might be warehoused and Section 72 by deeming fiction specifies the date on which goods should be subjected to charge for payment of duty and consequences upon non-payment. The said Section stipulates that the goods were deemed as improperly removed from the warehouse and once improper removal took place, duty became payable. Rate of duty as applicable then, would be payable. The ratio and the issue in the said case is thus different. For the purpose of record, we note that the decision in Pratibha Processors and Kesoram Rayon (supra) had a common Hon‟ble Judge (S.P. Bharucha J.

as his Lordship then was).

15. Thus in Kesoram Rayon Ltd (Supra) the question related to the rate of customs duty to be levied on goods that had remained in a bonded warehouse beyond the permitted period. 832 bales of rayon grade wood pulp were warehoused beyond the period specified under section 61 of the Act which came to an end on 15 th September 1994. However before the goods were cleared for home consumption, the bales were actually removed between 29th June 1985 and 2nd July 1985, exemption notification 17th March 1995 had been issued exempting such bales from payment of customs and additional duty. Reference was also made to Sections 15(1)(b) and 47(1). The later relates to clearance of goods for home consumption on payment of assessed duty and the proper officer making an order permitting clearance. Section 68 relates to clearance of warehoused goods for home consumption. The two provisions were distinguished from liability to pay duty under Section 72 of the Act in following words:

“10. Section 61 prescribes the period for which goods may be warehoused. They may be left in the warehouse in which they are deposited for the period of one year if they are such goods as are referred to in clause (a) of sub-section (1), and for the period of three months counted from the date of the order permitting warehousing if they are not such goods. The first proviso to sub-section (1) contemplates the reduction of the periods aforementioned, of one year and three months respectively (now referred to as “the permitted periods”), if the goods are likely to deteriorate. It also permits, if the goods are not likely to deteriorate, an extension of the permitted periods on sufficient cause being shown; the Collector of Customs can extend the permitted periods by six months and the Central Board of Excise and Customs can do so for as long as it deems fit. By reason of sub-section (2), interest is payable on the amount of duty on the warehoused goods for the period from the expiry of the permitted periods till the date of their clearance from the warehouse, regardless of whether the goods have remained in the warehouse beyond the permitted periods by reason of extension of such periods or otherwise.

11. Put briefly, so far as it is relevant for our purpose, warehousing is permissible for only a stated period; the period is extendible if cause for doing so is shown; and, whether or not the permissible period has been extended, interest on the amount of duty on the warehoused goods is payable for the period subsequent to the permissible period up to their clearance.

12. Section 72 deals with goods improperly removed from a warehouse. Goods are improperly removed from a warehouse under the terms of sub-section (1) if they are removed without clearance under Section 71 [clause (a)].; if they are taken as samples but without payment of duty [clause (c)].; if a warehousing bond has been executed in respect of the goods under Section 59 but they are not satisfactorily accounted for [clause (d)].; and if they have not been removed from the warehouse on the expiration of the permitted period or its permitted extension [clause (b)].. In all such cases the Customs Officer is empowered to demand, and the importer shall pay, the full amount of duty chargeable on the goods and interest, penalties, rent and other charges thereon. If payment as demanded is not made, it is recoverable by sale of other goods of the importer in the warehouse.

13. Goods which are not removed from a warehouse within the permissible period are treated as goods improperly removed from the warehouse. Such improper removal takes place when the goods remain in the warehouse beyond the permitted period or its permitted extension. The importer of the goods may be called upon to pay customs duty on them and, necessarily, it would be payable at the rate applicable on the date of their deemed removal from the warehouse, that is, the date on which the permitted period or its permitted extension came to an end.

14. Section 15(1)(b) applies to the case of goods cleared under Section 68 from a warehouse upon presentation of a bill of entry for home consumption; payment of duty, interest, penalty, rent and other charges; and an order for home clearance. The provisions of Section 68 and, consequently, of Section 15(1)(b) apply only when goods have been cleared from the warehouse within the permitted period or its permitted extension and not when, by reason of their remaining in the warehouse beyond the permitted period or its permitted extension, the goods have been deemed to have been improperly removed from the warehouse under Section 72.”

16. Decision in the case of Pratibha Processors (supra) was again distinguished by the Supreme Court in SBEC Sugar Limited (supra) for similar reasons. In the said case, the goods had been imported and the period for warehousing had also ceased. On the bill of entry, the Assistant Commissioner of Customs had made an endorsement directing payment of interest @ 20% per annum from the date of expiry of the bond. Subsequent to the expiry of the warehousing period on 25th December, 1996 and 1st January, 1997, the Government had issued a notification dated 1st April, 1997 under Section 25(1) of the Act, and had extended benefit of Export Promotion Capital Goods Scheme (EPCG Scheme) to the said goods, i.e., the goods, which were imported. The importer wanted to take benefit of the said notification, which was subsequent in point of time. The contention was rejected for the reasons set out in paragraphs 24, 25 and 26, which are reproduced below:

“24. We respectfully concur with the enunciation of law on the point. It is plain that Section 15(1)(b) would be applicable only when the goods are cleared from the warehouse under Section 68 of the Act i.e. within the initially permitted period or during the permitted extended period. It is trite to say that 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 under Section 72(1)(b) of the Act, with the consequence that the rate of duty has to be computed according to the rate applicable on the date of expiry of the permitted period under Section 61.

25. While it is true that Condition 6 of the licence granted under the EPCG Scheme was valid against goods which had already been shipped but not cleared, but, we have no hesitation in holding that the benefit of exemption granted under the Scheme to the already imported goods would be available only in respect of those goods which are cleared under Section 68 of the Act. In our opinion, any other interpretation of the said clause would render Section 72 of the Act otiose, and would result in the said Scheme operating as an amnesty scheme, granting an unintended and undue advantage to the importer, which is ordinarily to be avoided. [See State of Maharashtra v. Swanstone Multiplex Cinema (P) Ltd. [(2009) 8 SCC235 ]. It is also a cardinal principle of construction that the provisions of a notification have to be harmoniously construed so as to prevent any conflict with the provisions of the statute. (See Gudur Kishan Rao v.Sutirtha Bhattachaarya [(1998) 4 SCC189:

1998. SCC (L&S) 1064]. .) 26. We are, therefore, of the opinion that the decision in Pratibha Processors[(1996) 11 SCC101 on which heavy reliance is placed by the learned counsel for the appellants, is clearly distinguishable on facts inasmuch as apart from the fact that in that case the clearance of goods was under Section 68 of the Act, the import of Section 72(1)(b) of the Act was not considered. On the contrary, the dictum laid down in Kesoram Rayon [Kesoram Rayon v. Collector of Customs, (1996) 5 SCC576 is on all fours on facts at hand, and therefore, the decision of the High Court cannot be faulted with.”

17. Paragraph 6.6 of Chapter VI of Exim Policy applicable in the case of SBEC Sugar Limited (Supra) containing EPCG Scheme was worded differently and operated in different circumstances. Paragraph 65 of the Advance Licences under the Import & Export Policy, 199297 quoted above applied, as noted above, to prior imports and Advance Licenses could be utilised irrespective of the date of issue, which could be subsequent in the point of time. The ratio in SBEC Sugar Limited (supra) is therefore, not applicable.

18. This is apparent and the only way we can reconcile the ratio enunciated in the Supreme Court decisions. Pratibha Processors (Supra) primarily rests its ratio on the General Exemption 147 and the effect thereof. In case the respondents felt that the decision or ratio had gone beyond or had extended benefit beyond what was intended, the subsequent notifications could have been worded differently. Nothing to the said effect has been brought to our notice by the respondents.

19. In view of the aforesaid discussion it is held as under:i. Advance Licences could have been utilized against earlier imports in terms of paragraph 65 of the policy as the goods had not been cleared from the customs. ii. On furnishing of advance licences along with the DEEC Book, the petitioner was entitled to exemption from customs duty to the extent specified and available and no interest was payable on “exempt duty” but interest would be payable in respect of duty for which advance licences were not submitted 20. In view of the aforesaid finding, the respondents had erred and had wrongly rejected advance licence submitted by petitioner along with DEEC Book.

21. By Interim Order dated 25th February, 1999, the petitioner was permitted to clear the goods for home consumption against payment of duty without interest. It was further directed that if petitioner succeeds and it is held, they were entitled to pay duty and clear the goods against DEEC Book read with Duty Free Licence, the respondents will refund the amount of duty paid alongwith interest in accordance with law.

22. On the question of relief, during the course of hearing, learned counsel for the petitioner had indicated that they would be satisfied if the customs duty paid by them in view of the interim order is accepted as final without levy of interest. Having considered the factual position and as the petitioner has already paid custom duty in terms of the interim order, we do not think it will be appropriate to ask petitioner to furnish advance/duty free licences with DEEC book at this stage. This may also not be in the interest of the respondents as they will have to refund duty paid, with interest. Accordingly, it is directed that customs duty paid by the petitioner in terms of the interim order dated 25th February, 1999 will be treated as final and binding and “no interest for delayed payment will be recoverable”. Writ petition is accordingly disposed of without any orders as to costs. (SANJIV KHANNA) JUDGE (SANJEEV SACHDEVA) JUDGE DECEMBER18h, 2013 VKR