Larsen and Toubro Ltd. v. Union of India
Written by CA Minal Buch, Chartered Accountant, Lead Brain and Founder
Reviewed by Adv Parth Mehta, Advocate, Lead Brain
Last reviewed 31 October 2026
Facts
L&T held a private bonded warehouse licence under Section 58 at its Hazira complex and permission under Section 65 to manufacture in it. Imported goods were issued into long manufacturing cycles under issue slips verified by Customs at site. The department demanded duty and interest under Sections 61(2) and 72(1)(b), treating the goods as warehoused goods kept beyond the permitted period without extension.
Decision
The High Court held that goods issued into a Section 65 manufacturing process are not, merely because the same premises is a bonded warehouse, "warehoused goods" that have overstayed the period in Section 61(2). No extension of the warehousing period was needed for goods subsumed in a long manufacturing process, so Section 72(1)(b) was not attracted and the demands were without authority of law. The petitions were allowed despite an available appeal remedy.
What it means in practice
For MOOWR units with long production cycles, goods taken into manufacture are treated differently from goods simply lying in storage. Keep issue slips and in-process records clean, because that documentation is what separates goods in manufacture from goods that could be said to have overstayed.
This summary is general information, not tax, legal or professional advice.