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WELL, 24 per cent interest rate is not for deposits, but would apply to warehoused goods, as per Customs law. Section 61 of the Customs Act deals with period for which goods may remain warehoused. Where any warehoused goods remain in a warehouse beyond the period specified, interest becomes payable, on the amount of duty payable at the time of clearance of the goods. Rate of interest, according to the section, shall not exceed the rate specified in Section 47.

Notification No. 28/2002-Customs (NT), dated May 13, 2002, prescribes an effective rate of interest at 15 per cent p.a. under Section 47. An earlier communiqué - Notification No. 10/2001-Customs (NT), dated March 1, 2001 - had fixed 24 per cent as the interest rate, for goods warehoused under Section 61. Naturally, it was argued on the part of the taxpayers that the higher rate would not be applicable.

"The matter has been examined by the Board," says a recent communiqué from the CBEC. It gives a bad news that 15 per cent rate would not apply to goods warehoused under Section 61, and the applicable rate would be 24. The lower rate of 15 is "for the specific purpose of Section 47 of Customs Act." To remove doubts about the Government's powers to demand a higher rate, the circular notes: "The Government is legislatively competent to do so as the said rate continues to be covered within the rates of 10 per cent to 36 per cent as prescribed in Section 47." (Circular No 68/2002 dated October 24, 2002)

PO balance: Post Office Savings Account (Third Amendment) Rules, 2002, have been notified by the Ministry of Finance and Company Affairs. In exercise of the powers conferred by Section 15 of the Government Savings Bank Act, 1873, the Central Government has announced, "In the Post Office Savings Account Rules, 1981, in rule 6, in sub-rule (9), in clause (b), for the words `fifty thousand rupees', the words `the maximum balance specified for single account in column (3) of the Table below rule 4', shall be substituted." This maximum is quite liberal with effect from February 28, 2000; it is Rs 1 lakh or Rs 2 lakh, depending on whether the account is single or joint. (Notification No GSR722 dated Oct 24, 2002)

Paise correction: Whenever there is an announcement about interest, it has become common for people to expect the worst. However, a recent notification from the Ministry of Finance and Company Affairs, which brings in the National Savings Certificates (VIII Issue) Second Amendment Rules, 2002, substitutes new interest amounts in Rule 16 in clause (iii) of sub-rule 4, which could apparently be making fine-tuning of paise. Accordingly, if the period from date of the certificate to the date of its encashment is three years or more, but less than three years and six months, amount payable inclusive of interest would be Rs 124.72; for three years and six months or more, but less than four years, Rs 129.39; and so on. For five years and six months or more, but less than six years, it is Rs 149.92. (Notification No GSR711 dated Oct 17, 2002).

D. Murali

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