2014 (5) TMI 85 - HC - Customs

Bonded warehouse license suspension upheld due to stock discrepancies; petitioner's challenge dismissed, investigation timeline set.

LAXMI MARINE Versus UNION OF INDIA & 4

The court upheld the suspension of a bonded warehouse license due to significant discrepancies in stock levels found during a customs investigation. The ... Seizure of foreign made alcohol - Excess of registered stock - 79,000 bottles of different foreign made liquor – Allowance to Private Ware house to store alcoholic beverages without payment of duty – Whether the suspension of licence of the petitioner is required to be continued or not – Held that:- AC & DC of Customs has power to suspend the licence pending enquiry whether such licence should be cancelled on the ground envisaged under clause (b) of subsection (2) of Section 58, namely, that the licensee has contravened any provision of the Act or the Rules or Regulations or committed breach of any of the conditions of the licence - It is not even the case of Assessee that if stock far in excess of the registered stock is found from the warehouse, the same may not be amounting to breach of conditions of the license – This Court is not at this stage required to comment on any possible action that the customs authorities may finally take in terms of Section 58(2). In view of major discrepancy in the registered stock and the physical stock prima–facie found by the customs authorities during the early investigation, the competent authority had every right to suspend the licence of assessee in terms of Section 58 (3) - Customs authorities must also complete the investigation so as to put an end to the ongoing suspense – Matter is remanded back to the authorities for fresh decision – Decided in favour of assesse. Issues:Challenge to suspension of bonded warehouse license under Customs Act, 1962 based on discrepancies in stock found during investigation.Detailed Analysis:The petitioner, a proprietary concern operating a bonded warehouse, challenged the suspension of their license by the Assistant Commissioner (Bonded Section), Customs House, Kandla, due to discrepancies in stock found during a surprise visit by customs authorities. The authorities found a significant excess of foreign-made alcohol stock compared to the registered stock, raising concerns about breach of license conditions. The petitioner contended that the authorities were influenced by police pressure and denied any violation of the Act, Rules, or license conditions.The court examined Section 58 of the Customs Act, which empowers customs officials to grant, cancel, or suspend licenses for private warehouses. Subsection (3) of Section 58 allows for suspension pending an enquiry into potential license cancellation if violations are found. The court noted that the authorities had the right to suspend the license based on the substantial discrepancy in stock levels found during the investigation, indicating a potential breach of license conditions.While upholding the suspension, the court directed the customs authorities to complete the investigation within six weeks to resolve the matter promptly. The petitioner agreed to cooperate with the investigation, and the competent authority was instructed to review the situation after the investigation and decide on the continuation of the license suspension. The petitioner was granted the right to challenge any adverse decision following due process.Regarding allegations against police authorities for unauthorized actions, the court refrained from delving into those aspects, focusing solely on the suspension of the warehouse license. With these directions, the petition was disposed of, providing a clear timeline and procedural framework for the investigation and decision-making process regarding the license suspension.