SuperArc Paper Mills Ltd. imported 500 tons of bamboo pulp paper rolls on 5 th April. It warehoused the said rolls in its private bonded warehouse,…

As per section 72 of the Customs Act, 1962, the proper officer may demand, the full amount of duty chargeable on account of warehoused goods together with interest, fine and penalties payable in respect of such goods, where any warehoused goods have not been removed from a warehouse at the expiration of the period during which such goods are permitted. In case of Kesoram Rayon v. CC 1996 (86) ELT 464 (SC), it was held that goods which are not removed from the warehouse after the expiry of the period permitted for warehousing or extended, are deemed to be improperly removed in terms of section 72. The rate of duty applicable in such case will be the rate in force on the date of deemed removal, i.e. the date on which the permitted period or its permitted extension comes to an end. When the demand notice is issued is not relevant for determining the rate of duty. Section 15 (1) (b) has no application in such cases where the goods are removed from warehouse beyond the permitted period of warehousing; it is applicable only to the cases where a bill of entry is presented for removal from warehouse under section 68, i.e. only when goods are cleared from the warehouse within the permitted period or its permitted extension. In the given case, the date of deemed removal will be 15 th September, being 5 months from 15 th April. Accordingly, the applicable rate of duty will be 5%. Hence, neither SuperArc Paper Mills Ltd. nor the proper officer is correct.