Dalmia Cement (Bharat) Ltd. v. Commissioner of Customs (Port), Kolkata
Written by CA Minal Buch, Chartered Accountant, Lead Brain and Founder
Reviewed by CA Minal Buch, Chartered Accountant, Lead Brain and Founder
Last reviewed 31 October 2026
Facts
Dalmia imported a cooler gearbox into its Section 65 (MOOWR) bonded warehouse, intending to fit it into its clinker cooling process. For commercial reasons it was never installed, and it was cleared to another unit on payment of the deferred duty. Customs additionally demanded interest under Section 61(2) on the ground that the goods had never been used.
Decision
The Tribunal held that no interest under Section 61(2) is payable on capital goods cleared from a MOOWR warehouse, even if they were never installed or used. Relying on State of Haryana v. Dalmia Dadri Cement and the Delhi Bench's ACME Aklera ruling, it confirmed that Section 61(1)(a) requires goods to be "intended for use", not "actually used". A change in commercial plan does not retrospectively turn duty deferment into delayed payment. The Bench also noted that CBIC's 2019 Circular and 2020 FAQ contradict each other on this point.
What it means in practice
Layout changes, redeployment or shelved installation plans should not, on this reasoning, trigger interest years after import. The protection is not automatic: you must be able to show a genuine intention to use the goods at the time of import. Keep records made at the time, such as project reports, the licence application, board approvals, technical evaluations, purchase documents, engineering plans, a note explaining why the goods were not installed, and the ex-bond clearance papers. Points remain open: this is a Single Member order; the argument that Section 61(2) may not cover clause (a) capital goods at all was not tested; and partly used or obsolete machinery, transfers between bonded warehouses, valuation after long warehousing, and delays from force majeure or regulatory hold-ups still lack clear guidance. The new proviso to Section 65(1) also excludes solar power imports from MOOWR. Expert commentary: Manoj Mishra, Grant Thornton Bharat, "MOOWR gets taxpayer-friendly clarity: CESTAT reinforces the intended use test for capital goods" (14 August 2026), https://www.grantthornton.in/insights/articles/moowr-gets-taxpayer-friendly-clarity/
This summary is general information, not tax, legal or professional advice.