2015 (1) TMI 622 - AT - Customs

Tribunal Affirms Customs Act Section 23(2) Relinquishment, Rejects Duty Demand

CC, Trichy Versus M/s. Caterpillar India Pvt. Ltd.

The Tribunal upheld the Commissioner (Appeals)'s decision, dismissing the Revenue's appeal and addressing the respondent's cross-objection. It affirmed ... Goods abandoned - Relinquishment of the warehoused goods - Demand of duty set aside by the Commissioner (A) - Held that:- warehousing period was expired on 15.03.2002. The respondent by letter dated 15.03.2002, requested the Chief Commissioner of Customs for abandoning of the imported goods as per Section 23(2) of Customs Act, 1962 - Though the imported (warehoused) stocks noted in the enclosed statement physically remain in the warehouse, the period of warehousing has already expired. In these circumstances, these stocks are to be considered as ‘Imported Goods’ as per Section 2 (25) of the Customs Act, 1962. The owners of the goods have the right to abandon the ‘Imported Goods’ as per Section 23 (2) of Customs Act, 1962 at any time before the order of clearance of the said goods for home consumption had been made or an order for deposit of the goods in the warehouse is made. - The Central Board of Excise & Customs in their letter (F.No. 473/88/72-Cus. III dated 15th Sep.1972 have upheld the right of the owners (Imported Goods) to abandon such goods (Goods which are in warehouse after the expiry of Bond period). Therefore, we exercise our right in terms of Boards circular and abandon the goods (details as per enclosed statement) under Section 23(2) of Customs Act, 1962. Chief Commissioner had allowed the relinquishment of the goods and the goods were auctioned and therefore, the demand of duty is not sustainable - no reason to interfere with the order of the Commissioner (Appeals) - Decided against Revenue. Issues Involved:1. Validity of the demand of duty under Section 72(1) of the Customs Act, 1962.2. Applicability of Section 23(2) of the Customs Act, 1962, for relinquishment of warehoused goods.3. Impact of the amendment to Section 68 of the Customs Act, 1962, effective from 14.05.2003.4. Validity of the show cause notice issued by the Superintendent of Customs.5. Relevance of the CBEC Circular dated 15.07.1972 regarding abandonment of warehoused goods.Issue-wise Detailed Analysis:1. Validity of the demand of duty under Section 72(1) of the Customs Act, 1962:The Revenue argued that the respondents did not remove the warehoused goods after the expiry of the warehousing period on 15.03.2002, thereby justifying the demand of duty under Section 72(1) of the Customs Act, 1962. The Adjudicating Authority enforced the provisions of the double duty bond executed by the respondents and demanded duty of Rs. 24,52,978/- along with interest under Section 61 till the date of payment of duty.2. Applicability of Section 23(2) of the Customs Act, 1962, for relinquishment of warehoused goods:The respondents applied for abandoning the imported goods under Section 23(2) of the Customs Act, 1962, before the amendment of Section 68. The Chief Commissioner of Customs directed the Commissioner of Customs (Seaport) to take possession of the goods for auctioning. The respondents contended that the show cause notice issued by the Superintendent of Customs did not consider the permission for relinquishment granted by the Chief Commissioner, rendering the notice invalid.3. Impact of the amendment to Section 68 of the Customs Act, 1962, effective from 14.05.2003:The Revenue argued that relinquishment of warehoused goods was only permitted after the amendment to Section 68 on 14.05.2003, and thus, the respondents were not eligible for relinquishment prior to this date. However, the Tribunal referenced the Karnataka High Court's decision in PSI Data Systems Ltd., which allowed the benefit of the amended provisions to cases pending before the authorities, ensuring the intention of the legislature to benefit the assessee.4. Validity of the show cause notice issued by the Superintendent of Customs:The Tribunal found that the show cause notice issued on 16.05.2002 by the Superintendent of Customs did not consider the Chief Commissioner's directive for auctioning the goods. The Assistant Commissioner of Customs, Pondicherry, confirmed that the goods were auctioned and released to the highest bidder. Therefore, the demand of duty was not sustainable as the relinquishment was permitted, and the goods were no longer available to the respondents.5. Relevance of the CBEC Circular dated 15.07.1972 regarding abandonment of warehoused goods:The Commissioner (Appeals) and the Tribunal relied on the CBEC Circular dated 15.07.1972, which clarified that importers could abandon warehoused goods even after the expiry of the bond period if the quality of the goods deteriorated. The Tribunal agreed with the Commissioner (Appeals) that the right to abandon goods could not be taken away, and the amended Section 68, effective from 14.05.2003, allowed for such relinquishment.Conclusion:The Tribunal upheld the findings of the Commissioner (Appeals), rejecting the Revenue's appeal and disposing of the respondent's cross-objection. The Tribunal concluded that the relinquishment of goods was valid under Section 23(2) of the Customs Act, 1962, and the demand of duty was not sustainable. The Tribunal emphasized that the legislative intent and the CBEC Circular supported the respondents' right to abandon the goods, and the auction proceeds could offset the duty loss to the department.