Appeals Allowed Against Customs Duty Demand and Penalty Imposition on De-bonding of Goods

The appeals were filed against a common impugned order by the Commissioner (A) regarding the de-bonding of goods from a private bonded warehouse. The appellants, manufacturers of plastic processing machines, faced potential violation of Section 72(b) of the Customs Act, 1962 due to expired validity of warehoused goods. The appellant's argument, supported by Circular No.7 of 2005-Cus. and a previous Tribunal decision, prevailed. The Judicial Member held that the warehousing period automatically extended until 5.7.2014, making the duty demand and penalty imposition legally unsustainable. Consequently, the impugned order was set aside, and the appeals were allowed.

---

---

Issues:
Appeal against common impugned order dated 18.1.2018 passed by Commissioner (A) regarding violation of provisions of Section 72(b) of the Customs Act, 1962 in de-bonding of indigenous capital goods and raw materials under 100% EOU scheme.

Analysis:
The appeals were filed against a common impugned order by the Commissioner (A) where the appellants, manufacturers of plastic processing machines under Chapter 84 of the Central Excise Tariff Act, sought de-bonding of goods from their private bonded warehouse. The issue arose as the validity period of the warehoused goods had expired, and no extension was sought, potentially violating Section 72(b) of the Customs Act, 1962. Show-cause notices were issued, leading to confirmation of demand by the original authority, prompting the appeals.

The appellant's counsel argued that the impugned order failed to consider facts, departmental Circular, and binding judicial precedents. They contended that the warehousing license had been extended until July 2014, automatically extending the warehousing period of capital goods. Reference was made to Circular No.7 of 2005-Cus. and a previous Tribunal decision supporting this stance.

In response, the learned AR supported the impugned order. Upon review and considering Circular No.7/2005-Cus. dated 14.2.2005, the Judicial Member opined that since the warehousing license was renewed until 2014, as evidenced by the appellants, the bonded warehousing period automatically extended until 5.7.2014. Consequently, at the time of de-bonding, both licenses were valid, rendering the duty demand and penalty imposition legally unsustainable. As a result, the impugned order was set aside, and the appeals of the appellants were allowed.

The operative portion of the order was pronounced in Open Court on 25/10/2018.

---