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Court not empowered to waive Payment of Interest under Customs Act as it is a Statutory Imposition: Kerala High Court

The Kerala High Court upheld that because interest is a statutory imposition, the high court does not have the authority to waive payment of interest under the Customs Act through THE HONOURABLE MR. JUSTICE GOPINATH P. in the case of Pomsy food products v. Union of India (WP(C) NO. 31060 OF 2013)

FACTS OF THE CASE:

The petitioner was a company registered under the Companies Act of 1956. As part of its business activities and to cater to the export market, the petitioner obtained an advance licence, which allowed the petitioner to import raw materials and packaging materials duty-free on the condition that the petitioner meets a specified export obligation in terms of both value and quantity.

The petitioner claims that due to circumstances beyond its control, it could not meet the export obligation within the given time frame and hence requested an extension of the validity period, which was denied by the 2nd respondent’s ruling dated 22-01-2008. 

Mr. C.K. Karunakaran, representing Pomsy Food Products petitioner, stated that the Policy Relaxation Committee’s proceedings show that a decision on the petitioner’s review petition was made arbitrarily. He would further argue that, in any case, the petitioner is not obligated to pay any interest for the time the review petition was pending before the competent authorities.

However, counsel for the respondents would argue that the terms and conditions under which the advance licence is issued under the EXIM policy are very clear and categorical and that failure to meet the export obligation required action against the petitioner, as contemplated by the policy. Concerning learned counsel for the petitioner’s contention that the petitioner is not obligated to pay interest for the period during which the Ext.P1 review petition was pending before the respondent, it is argued that interest is statutory. This court, exercising jurisdiction under Article 226 of the Indian Constitution, cannot waive statutory interest.

JUDGEMENT:

Despite being granted a 6-month extension, the single-judge bench of Justice Gopinath P. determined that the petitioner had made no exports within the original validity of the advance licensing authorization. Under the advance permission conditions, the petitioner was authorized to import items without paying customs duty. The petitioner was forced to pay customs duty on the imported material after failing to meet the export obligation. The petitioner was required to pay customs duty in 2006 because the export requirement period concluded in 2006 (despite the extension). Only in 2013 did the petitioner pay the customs charge. The petitioner could have chosen to pay the customs charge in protest. This was not the case.

The court stated that the inability of the statutory authority to exercise power vested in it could not automatically result in an order exempting the petitioner from paying interest for any time of excessive delay in exercising statutory power. Customs Act interest is statutorily mandated. The court stated, “There can be no waiver of such interest unless such waiver is allowed for in the provisions of the Customs Act itself.”

It was noticed that the failure of the statutory authority to exercise power conferred in it does not automatically result in an order exempting the petitioner from paying interest for any time of excessive delay in exercising statutory power.

Thus, the writ petition was dismissed accordingly.

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JUDGEMENT REVIEWED BY REETI SHETTY

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