2026-VIL-1336-CESTAT-KOL-CU
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CUSTOMS CESTAT Cases

Customs - Interest under Section 61(2) Customs Act for Capital goods transferred to MOOWR warehouse cleared for home consumption - Difference between intended for use and actual use - Appellant imported cooler (gearbox) under MOOWR licensed warehouse with intention to use in manufacturing process but subsequently cleared for home consumption due to operational and commercial considerations - Show Cause Notice issued demanding interest along with deferred duty and levy of interest - Whether interest is payable on capital goods cleared for home consumption from Section 65 warehouse when such goods were imported with intention to use but not actually used - HELD - The statutory requirement contained in Section 61(1)(a) is that capital goods must be intended for use in warehouse where manufacturing operations permitted under Section 65. Provision does not stipulate that goods must necessarily be installed or actually used before qualifying for benefit of deferred payment of customs duty without interest. When the Notification speaks of ‘intended for use’ simpliciter, the same cannot be read to adduce the meaning that the Notification calls for actual ‘usage’ of the capital goods within the warehoused premises - In present case imported Cooler (Gear Box) was covered under MOOWR license application as goods permitted to be imported for use in manufacturing operations. Appellant imported subject goods with intention to use in process of manufacturing which is evident from application made to CBIC under MOOWR Scheme. The subject goods were subsequently cleared for home consumption due to operational and commercial considerations - Demand of interest based on ground that capital goods have not been used and cleared for home consumption - Clarifications issued by Customs authorities through public notices and trade facilitation advisories stated that no interest is leviable on ex-bond bills of entry filed for clearance of goods for home consumption from Section 65 warehouse - CBIC issued updated FAQ dated 27.10.2020 clarifying that capital goods can be cleared for home consumption as per Section 68 read with Section 61 of Customs Act on payment of applicable duty without interest – The impugned order stands set aside and the appeal is allowed
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