2017 (6) TMI 620 - AT - Central Excise

Tribunal reduces penalty for warehouse license violation, emphasizes procedural compliance and intent

M/s. Thiru Rani Logistics Pvt. Ltd. Versus CC, Chennai

The Tribunal reduced the penalty imposed on the appellants for violating licensing conditions related to operating warehouses. The case involved ... Clandestine removal - Department took the view that the movement/shifting of impugned bonded goods from the licensed warehouse premises to a non-licensed and non-permitted warehouse C amounts to illegal/improper/un-authorized removal of warehoused goods in contravention of the provisions of Section 71of the Customs Act, 1962 - Held that: - allegation is only concerning procedural violation in removal of licensed goods from the bonded warehouse to an adjacent shed. It is not the case that the goods have been removed clandestinely for illicit sale or disposal - it is a case of storing the goods outside the bonded warehouse without malafide intention - penalty imposable - appeal dismissed - decided against appellant. Issues:1. Imposition of penalty on the appellants for violation of licensing conditions.Analysis:The case involved the appellants holding a Public Bounded Warehouse License and operating multiple warehouses, with one warehouse not being a bonded warehouse. Following a fire accident in the non-bonded warehouse where bonded goods were stored, the Department alleged illegal removal of goods from licensed premises to a non-permitted warehouse. The original authority demanded customs duty for destroyed goods, reimbursement to importers, and imposed penalties. On appeal, the Commissioner reduced the penalty but upheld duty demand and interest liability.During the hearing, the appellant's advocate argued against the penalty, citing the absence of malafide intent. The Department supported the penalty, highlighting past discrepancies. The Tribunal considered the violation of licensing conditions, emphasizing the need for permission to remove goods from a bonded warehouse, which was not obtained in this case. Despite the procedural violation, the Tribunal noted the absence of clandestine removal for illicit purposes. The appellant's explanation of shifting goods temporarily due to space constraints was accepted. Ultimately, the Tribunal found a penalty of Rs. 2,00,000 appropriate, considering the circumstances and the ends of justice.In conclusion, the Tribunal disposed of the appeal by reducing the penalty imposed on the appellants for the violation of licensing conditions. The judgment emphasized the importance of following procedural requirements for the removal of goods from bonded warehouses, while also considering the circumstances and intentions behind the violation in determining the appropriate penalty amount.