Charkha Spinning Mills Ltd imported polyester fibre from Turkey on 10th July, 2025. The said goods entered in the territorial waters of India on…
CA Final · Indirect Tax Laws · PYQS · May 2026
Charkha Spinning Mills Ltd imported polyester fibre from Turkey on 10th July, 2025. The said goods entered in the territorial waters of India on 25th July, 2025 and were stored in a bonded warehouse on the same day. The goods were wholly exempt from levy of customs duty vide a notification issued by the Central Government under section 25(1) of the Customs Act, 1962. The said goods were removed from the bonded warehouse on 25th September 2025, on which date the exemption notification had been rescinded and the exemption granted thereunder was withdrawn and the goods were leviable to 25% duty. The Customs Department demanded duty of 25% as per the new notification. The company argued that since the goods entered the territorial waters on 25th July 2025 on which date the goods were exempted from levy of customs duty, no duty is leviable when the goods were removed from the warehouse. Whether the company is correct in its stand? Discuss with the help of the decided case law if any, along with relevant legal provisions under the Customs law in brief. Note: Citation of the case law is not required.
Suggested Answer and Working Notes:
Supreme Court, in a landmark judgment, held that in case of warehoused goods, import gets completed only when goods cross customs barriers and not when goods land in India or enter territorial waters. In case of warehoused goods, import takes place only when the goods are cleared from the warehouse. Duty is leviable once the import gets completed. Further, section 15 of the Customs Act provides that relevant date for determining rate of duty is date on which a bill of entry for home consumption in respect of such goods is presented. In view of the above, since the goods are leviable to 25% duty on the date of removing the goods from the warehouse, applicable rate on such goods is 25% and thus, the stand taken by the company is not correct.
Topics: Customs: Warehousing
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