2020 (4) TMI 422 - AT - Customs

Tribunal overturns Customs Commissioner's decision on Overseas Warehousing approval.

The Tribunal set aside the Commissioner's decision to revoke approval granted to Overseas Warehousing Private Limited (OWPL) under the Customs Act, 1962, ... Revocation of approval granted to Overseas Warehousing Private Limited to act as custodian of the imported goods - auction of goods - Department proceeded against the appellant alleging that by auctioning the goods appellants have contravened the provisions of regulation 5 and 6 of HCCAR for which action was warranted in terms of Regulation 11 and 12 ibid - principles of natural justice - HELD THAT:- Undisputedly appellants is working as Custodian as per Section 45 of the Customs Act, 1962 for operating as a “Custom Cargo Service Provider” under HCCAR and is bound to function as per the provision of the Customs Act, 1962 and the HCCAR. In case of any contravention of the provisions of Custom Act, 1962 or the HCCAR, action has to betaken against him in terms of the said regulations. From the provisions of the Customs Act, 1962 and HCCAR, it is quite evident that Custodian appointed in terms of Section 45 ibid, do not hold the title to the goods whether before or after the order of the clearance made in terms of Section 47. He holds the goods as custodian of the goods and is bound to follow these provisions while handling the goods while they are in his custody. He could not have dealt with the goods in any manner including sale/ auction of the goods without obtaining written authorization in this respect from the Customs Authority - Undisputedly in the present case the appellant has by his action of auctioning the goods which were in his custody acted without putting the importer to notice and without informing/ seeking permission from the Custom Officer has contravened the provisions of Section 48 of the Customs Act, 1962. Principles of natural justice - HELD THAT:- Commissioner has also failed to take note of certain correspondences between the custom authorities, appellant and the importer in the present case while adjudging the case against the appellant. He has failed to record his findings in respect of these correspondences which were relied upon by the appellants in the proceedings initiated against him. All such correspondences which appellant wish to rely upon in his defence merit consideration and finding recorded - Since it is held that duty in respect of the goods in custody of the custodian if not cleared for home consumption as provided for by in terms of Section 47, needs to be paid by the custodian, amount of ₹ 25 lakhs deposited by the appellant in escrow account to be maintained with the Custom Authority will continue to be in deposit in the said escrow account till finalization of these proceedings in remand. The appeal filed is allowed by setting aside the impugned order and remitting back the matter to the Commissioner for de novo adjudications. Issues Involved:1. Revocation of approval granted to Overseas Warehousing Private Limited (OWPL) under Section 8 and Section 45 of the Customs Act, 1962.2. Imposition of penalty on OWPL under Regulation 12(8) of Handling of Cargo in Customs Areas Regulation, 2009 (HCCAR).3. Enforcement of bond and recovery of sale proceeds from OWPL.4. Auctioning of goods by OWPL without permission from Customs Authorities.5. Compliance with principles of natural justice by the Commissioner.Detailed Analysis:1. Revocation of Approval:The Commissioner revoked the approval granted to OWPL under Section 8 and Section 45 of the Customs Act, 1962, citing misconduct. The appellant argued that revocation was disproportionate to the alleged misconduct and highlighted their long-standing role as a custodian since 1998. The Tribunal noted that while OWPL had acted beyond their authority by auctioning goods without proper authorization, the Commissioner’s decision to label OWPL as a habitual offender contradicted their AEO status. The Tribunal found that the Commissioner failed to consider relevant correspondences and evidence, thus violating principles of natural justice. Consequently, the matter was remitted back to the Commissioner for fresh adjudication.2. Imposition of Penalty:The Commissioner imposed a penalty of Rs. 50,000 on OWPL under Regulation 12(8) of HCCAR for failing to comply with the regulations. The Tribunal upheld the necessity of compliance with the Customs Act, 1962, and HCCAR but emphasized that the Commissioner must consider all relevant evidence and correspondences in re-adjudication.3. Enforcement of Bond and Recovery of Sale Proceeds:The Commissioner enforced the bond for breach of conditions and sought recovery of Rs. 60 lakhs from OWPL, adjusting Rs. 25 lakhs deposited in an escrow account as per the High Court’s directions. The Tribunal maintained that the Rs. 25 lakhs should remain in the escrow account until the completion of fresh proceedings. The Tribunal directed the Commissioner to reconsider the enforcement of the bond and recovery of sale proceeds in light of all evidence and submissions.4. Auctioning of Goods Without Permission:OWPL auctioned goods without informing Customs Authorities or obtaining permission, contravening Section 48 of the Customs Act, 1962, and Regulation 6(1) of HCCAR. The Tribunal acknowledged this misconduct but highlighted the need for the Commissioner to reassess the situation considering all relevant correspondences and evidence.5. Compliance with Principles of Natural Justice:The Tribunal found that the Commissioner did not record findings on various correspondences and submissions made by OWPL, thus violating principles of natural justice. The Tribunal emphasized the need for the Commissioner to provide a fair hearing, consider all evidence, and record findings on each issue afresh.Conclusion:The Tribunal set aside the impugned order and remitted the matter back to the Commissioner for de novo adjudication. The Commissioner was instructed to decide the issue within six months, provide a fair hearing, and consider all evidence and submissions. The intervention application filed by the importer was disposed of as infructuous. The Tribunal directed OWPL to cooperate in the fresh proceedings and avoid unnecessary adjournments.