Warehousing - Waiver of interest on the Customs duty - Delegation of Boards Powers to Principal Collectors.

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F.No.475/82/92-LC Government of India Ministry of Finance (Department of Revenue) (Central Board of Excise of Excise and Customs) To New Delhi, the 27 Dec.1993. All Principal Collectors of Customs & Central Excise Subject: - Warehousing - Waiver of interest on the Customs duty- Delegation of Board’s Powers to Principal Collectors- Reg. I am directed to refer to Notification No. 59/93 (NT)-Customs dated the 26th November, 1993 (copy enclosed) delegating powers of Central Board of Excise and Customs to the Principal Collectors of Customs and Central Excise for granting waiver of interest on the Customs duty under section 61 of the Customs Act,1962 in cases where the amount of interest does not exceed Rs.15 lakhs and to say that presently, the cases relating to waiver of interest on warehoused goods are being decided by the Board in accordance with certain guidelines framed over a period of time. It is desirable that these guidelines are kept in mind by the Principal Collectors while deciding the cases for waiver of interest. This would ensure a certain amount of uniformity of approach. 2. The guidelines where the interest would generally be waived have been made keeping in mind the fact that for certain specified categories of imports such as ship stores and others, the import duty is finally not payable as the goods are either to be re-exported or used in such products as are finally meant for re- export. In certain other cases, it was considered that in view of the production programme or nature of activity of the importers such as Ship Building Industry, Power Generating Project, the imported goods have to be generally retained for a longer period of time. Charging of interest would escalate the costs unnecessarily. In essence, the guidelines cover the following cases. This would however, be also subject to the individual merits of a case:- (i) Goods supplied as ship stores/ aircraft stores. (ii) Goods supplied to the diplomats. (iii) Goods used in the units operating under manufacture-in-bond scheme. (iv) Goods imported by 100% EOUs. (v) Goods warehoused and sold through duty free shops. (vi) Machinery, equipment and raw materials imported for building and fitment to ships. (vii) Petroleum products. (viii) Plant and machinery imported for projects. (ix) Machinery equipment and raw-materials imported for manufacture and installation of power generation units. (x) Goods imported under OGL and warehoused for subsequent clearance against valid advance licenses/ Import-Export Pass Book Scheme or any similar scheme. (xi) Goods imported in bulk by canalizing agencies/public sector trading or service agencies and warehoused for subsequent release for export production. (xii) Goods warehoused and subsequently re-exported under section 69 of the Customs Act, 1962 subject to the conditions that:- (a) The re-export realizes the full foreign exchange spent in import (in hard currency, in case the import is paid for in that currency: and (b) The import in the first instance was not unauthorized or in contravention of the Import-Export Policy. 3. In respect of cases 2(i) & (ii) above the waiver of interest is normally to be considered only after ex-bond clearance of goods for the said purpose. For cases at 2(iv), the waiver of interest shall be considered on completion of the export obligation period and for cases at 2(vi), 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. Finally, as regards goods at 2(xii), it is to be generally ensured that the condition specified namely realization of foreign exchange spent on import and that the import was not unauthorized in the first instance are satisfied before the interest waiver can be considered. 4. In all cases, which have been discussed in the preceding Para, the demand for interest are to be raised, when due. The same are, however, not to be enforced, and on fulfillment of the purpose of import the waiver of interest is to be decided within 6 months. In other words, the activity of the importers is to be allowed to continue, which includes clearance of the goods from the warehouse, for the purpose of use, and only at the last stage after the goods have been cleared or at the time of de-bonding in case of 100% EOUs, the waiver of interest issue is to be decided. This approach is necessary since, by and large, the interest demanded may finally merit waiver and the importer should be spared the hardship of first paying the interest and then the waiver, seeking refund. 5. Cases which are not covered by the guidelines mentioned in Para 2 above should be referred to the Board for a decision. Similarly, cases relating to interest accrued on scrap generated during the manufacturing activity of 100% EOUs, should not be decided by the Principal Collectors. These should be referred to the Board for a decision. 6. A monthly report giving the details of the cases in which interest has been waived may be sent to the Board regularly. Receipt of this letter may please be acknowledged. Yours faithfully, Sd/- (S.M.Bhatnagar) Under Secretary Central Board of Excise & Customs

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