Customs Act, 1962 Section 61 — Period for which goods may remain warehoused
Customs Act, 1962 · Period for which goods may remain warehoused
Plain-English Explanation
Overview
Section 61 of the Customs Act, 1962 governs the maximum time period that imported goods can remain stored in a customs warehouse. It is crucial for importers and warehouse operators as exceeding these time limits can trigger interest payments and other complications.
Who Does This Apply To?
This section applies to:
- Importers: Businesses and individuals importing goods and choosing to store them in a customs warehouse.
- Warehouse Operators: Those managing customs bonded warehouses where imported goods are stored before clearance.
- Customs Officers: Primarily the Proper Officer and Principal Commissioner of Customs/Commissioner of Customs responsible for overseeing warehousing activities and granting extensions.
- 100% Export Oriented Units (EOUs), Electronic Hardware Technology Park (EHTP) Units, and Software Technology Park (STP) Units: Businesses operating under these schemes have different warehousing rules.
How It Works
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General Rule (Other Goods): Warehoused goods can remain in the warehouse until the expiry of one year from the date the Proper Officer issues an order permitting warehousing under Section 60(1).
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EOUs, EHTPs, STPs (Capital Goods): Capital goods intended for use in 100% EOUs, EHTP units, or STP units (or warehouses where manufacture under Section 65 is permitted) can remain warehoused until their clearance. There is no time limit.
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EOUs, EHTPs, STPs (Other than Capital Goods): Goods other than capital goods intended for use in 100% EOUs, EHTP units, or STP units (or warehouses where manufacture under Section 65 is permitted) can remain warehoused until their consumption or clearance.
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Extension of Time: The Principal Commissioner of Customs/Commissioner of Customs may grant an extension of up to one year at a time for goods falling under the general one-year rule, provided sufficient cause is shown.
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Deteriorating Goods: If goods are likely to deteriorate, the Principal Commissioner of Customs/Commissioner of Customs can reduce the permitted warehousing period.
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Interest on Delayed Clearance: If goods subject to the one-year limit remain in the warehouse for more than 90 days from the Proper Officer's order under Section 60(1), interest becomes payable on the duty amount applicable at the time of clearance. The interest rate is determined by the Central Government under Section 47. Interest runs from day 91 until the duty is paid.
Important Conditions & Exceptions
- Condition 1: The extension of the warehousing period is discretionary and requires a valid reason.
- Condition 2: The interest rate is subject to change as notified by the Central Government.
- Exception: The Central Board of Indirect Taxes and Customs (CBIC) can waive interest in exceptional circumstances, or specify classes of goods exempt from interest or with interest accruing from the Section 60(1) order date.
Practical Example
ABC Importers imports machinery parts on January 1, 2024 and deposits them in a customs warehouse. The Proper Officer issues an order under Section 60(1) on the same day.
- Scenario 1: If ABC Importers clears the goods on December 31, 2024 (within one year), no interest is payable.
- Scenario 2: If ABC Importers clears the goods on March 1, 2025, then interest is payable. ABC Importers will pay interest on the duty owed from April 1, 2024 (91st day) to March 1, 2025 (date of payment). ABC Importers would have needed an extension under the law to avoid this.
- Scenario 3: ABC Importers imports the same machinery parts to be used as capital goods within its 100% EOU. ABC Importers can keep those parts in the warehouse until they are cleared, without any time limit.
Key Amendments
No major amendments since enactment.
No case laws found for this provision yet.
Browse all case laws →Frequently Asked Questions
What is the maximum period for which warehoused goods can remain in a warehouse under Section 61 of the Customs Act, 1962?
The maximum period varies depending on the nature of the goods and their intended use. Capital goods for 100% export-oriented units (EOUs) or units in electronic/software technology parks or warehouses with Section 65 manufacturing permissions can remain until clearance. Other goods for these units can remain until consumption or clearance. All other goods can remain for one year from the Section 60(1) order date, extendable by the Commissioner.
How can the initial one-year warehousing period for goods be extended under Section 61 of the Customs Act, 1962?
The Principal Commissioner of Customs or Commissioner of Customs can extend the one-year period for 'other goods' on showing sufficient cause. Extensions are granted for a maximum of one year at a time. However, if the goods are likely to deteriorate, the Commissioner can reduce the warehousing period (Section 61(1)(c)).
What is the rate of interest applicable on warehoused goods if they remain in the warehouse beyond 90 days from the Section 60(1) order date, according to Section 61(2)?
If warehoused goods (excluding those intended for EOUs or technology parks) remain in a warehouse beyond 90 days from the date of the Section 60(1) order, interest is payable on the duty amount. The interest rate is fixed by the Central Government under Section 47 and applies from the expiry of the 90-day period until the date of duty payment.
Are there any circumstances where the interest payable on warehoused goods under Section 61(2) can be waived?
Yes, the Board (CBIC) has the power to waive the whole or any part of the interest payable under Section 61 in the public interest. This waiver is granted via an order specifying exceptional circumstances. Also, the Board can specify classes of goods for which no interest will be charged or for which interest will be charged from the date of the Section 60(1) order, via notification.
How does Section 61 of the Customs Act, 1962, apply to goods intended for use in a 100% Export Oriented Undertaking (EOU)?
For goods intended for use in a 100% EOU, as defined in the Central Excise Act, 1944, the rules differ based on the type of goods. Capital goods can remain in the warehouse until their clearance from the warehouse (Section 61(1)(a)). For goods other than capital goods, they can remain in the warehouse until their consumption or clearance (Section 61(1)(b)).
What happens if warehoused goods are likely to deteriorate? Does Section 61 provide for this scenario?
Yes, Section 61 specifically addresses goods likely to deteriorate. The Principal Commissioner of Customs or Commissioner of Customs can reduce the warehousing period for such goods to a shorter period he deems fit. This is an exception to the general warehousing period and its potential extensions (Proviso 2 to Section 61(1)(c)).
What is the meaning of 'proper officer' mentioned in Section 61(1)(c) and Section 60(1) of the Customs Act, 1962, and how does their order impact the warehousing period?
The 'proper officer' refers to the customs officer assigned the relevant function by the Board or Commissioner. Section 61(1)(c) clearly states that the period of one year is counted from the date on which the proper officer has made an order under Section 60(1), which relates to the deposit of goods in a warehouse, marking the start of the permissible warehousing period.
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Capital goods for specific units: No time limit | Capital goods intended for use in 100% export oriented undertakings, electronic hardware technology park units, software technology park units, or warehouses permitted under section 65 can remain warehoused until their clearance. |
| Goods for specific units: Until Consumption or Clearance | Goods (other than capital goods) intended for use in 100% export oriented undertakings, electronic hardware technology park units, software technology park units, or warehouses permitted under section 65, can remain warehoused until their consumption or clearance. |
| General goods: One-year limit | Other goods have a warehousing period limit of one year from the date the proper officer makes an order under section 60(1). |
| Extension of time limit | The Principal Commissioner or Commissioner of Customs can extend the one-year warehousing period for general goods by up to one year at a time, given sufficient cause. |
| Deteriorating goods: Shorter period | If goods are likely to deteriorate, the Commissioner can reduce the warehousing period to a shorter duration. |
| Interest on delayed clearance | Interest is payable on the duty amount if general goods remain warehoused beyond 90 days from the section 60(1) order, calculated from the 90th day until the date of duty payment. |
| Interest waiver possible | The Board can waive the whole or part of the interest payable under specific circumstances of an exceptional nature. |
| Exemption from interest | The government may specify class of goods that are exempt from interest payments. |
Amendment History
Substituted for section 61 (w.e.f. 14-5-2016) by section 128 of the Finance Act, 2016 (28 of 2016). Earlier section 61 was amended by section 9 of Act 25 of 1978, (w.e.f. 1-7-1978); by section 50 of Act 11 of 1983 (w.e.f. 13-5- 1983); by section 38 of Act 21 of 1984, (w.e.f. 11-5-1984); by section 5 of Act 80 of 1985, (w.e.f. 27-12-1985); and by section 8 of Act 55 of 1991, (w.e.f. 23-12-1991); and was substituted by section 60(6) of Act 32 of 1994, (w.e.f. 13-5-1994) and amended by section 50 of Act 22 of 1995, (w.e.f. 26-5-1995); by section 106 of Act 14 of 2001, (w.e.f. 1-6-2001); by section 113 of Act 32 of 2003, and by section 78 of Act 25 of 2014, (w.e.f. 6-8-2014). Section 61, before substitution by the Finance Act, 2016, read as under: "
Period for which goods may remain warehoused.-(1) Any warehoused goods may be left in the warehouse in which they are deposited or in any warehouse to which they may be removed,- (a) in the case of capital goods intended for use in any hundred per cent. export oriented undertaking, till the expiry of five years; (aa) in the case of goods other than capital goods intended for use in any hundred per cent. export-oriented undertaking, till the expiry of three years; and (b) in the case of any other goods, till the expiry of one year, after the date on which the proper officer has made an order under section 60 permitting the deposit of the goods in a warehouse: Provided that- (i) in the case of any goods which are not likely to deteriorate, the period specified in clause (a) or clause (aa) or clause (b) may, on sufficient cause being shown, be extended- (A) in the case of such goods intended for use in any hundred per cent. export-oriented undertaking, by the Principal Commissioner of Customs or Commissioner of Customs, for such period as he may deem fit; and (B) in any other case, by the Principal Commissioner of Customs or Commissioner of Customs, for a period not exceeding six months and by the Principal Chief Commissioner of Customs or Chief Commissioner of Customs for such further period as he may deem fit; (ii) in the case of any goods referred to in clause (b), if they are likely to deteriorate, the aforesaid period of one year may be reduced by the Principal Commissioner of Customs or Commissioner of Customs to such shorter period as he may deem fit: Provided further that when the licence for any private warehouse is cancelled, the owner of any goods warehoused therein shall, within seven days from the date on which notice of such cancellation is given or within such extended period as the proper officer may allow, remove the goods from such warehouse to another warehouse or clear them for home consumption or exportation. (2) Where any warehoused goods- (i) specified in sub-clause (a) or sub-clause (aa) of sub-section (1), remain in a warehouse beyond the period specified in that sub-section by reason of extension of the aforesaid period or otherwise, interest at such rate as is specified in section 47 shall be payable, on the amount of duty payable at the time of clearance of the goods in accordance with the provisions of section 15 on the warehoused goods, for the period from the expiry of the said warehousing period till the date of payment of duty on the warehoused goods; (ii) specified in sub-clause (b) of sub-section (1), remain in warehouse beyond a period of ninety days, interest shall be payable at such rate or rates not exceeding the rate specified in section 47, as may be fixed by the Board, on the amount of duty payable at the time of clearance of the goods in accordance with the provisions of section 15 on the warehoused goods, for the period from the expiry of the said ninety days, till the date of payment of duty on the warehoused goods: Provided that the Board may, if it considers it necessary so to do in the public interest, by order and under circumstances of an exceptional nature, to be specified in such order, waive the whole or part of any interest payable under this section in respect of any warehoused goods: Provided further that the Board may, if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette, specify the class of goods in respect of which no interest shall be charged under this section. Explanation.-For the purposes of this section, "hundred per cent. export-oriented undertaking" has the same meaning as in Explanation 2 to sub-section (1) of section 3 of the Central Excises and Salt Act, 1944 (1 of 1944)."