1987 (1) TMI 89 - HC - Customs

Private Bonded Warehouse Licenses Protected by Law: Renewal Cannot Be Denied Due to Public Warehouses

The court held that private bonded warehouse licenses cannot be cancelled or renewal refused solely because public warehouses exist. The Assistant ... Warehousing - Private warehousing licence Issues Involved:1. Legality of cancelling or refusing renewal of private bonded warehouse licenses.2. Applicability of Section 58 of the Customs Act, 1962.3. Interpretation of provisions related to warehousing stations and public/private warehouses under Sections 9, 57, and 58 of the Customs Act.4. Consideration of precedents from Gujarat and Madhya Pradesh High Courts.Detailed Analysis:1. Legality of Cancelling or Refusing Renewal of Private Bonded Warehouse Licenses:The petitioners, licensees of private bonded warehouses, challenged the cancellation or refusal of renewal of their licenses by the Assistant Collector, Central Excise, Udaipur. The action was based on the construction of public bonded warehouses by the Warehousing Corporation of India. The court held that the licenses granted to private bonded warehouses cannot be cancelled or their renewal refused solely because public warehouses have been constructed. The Assistant Collector must consider each renewal application on its merits, including comparative facilities, rather than automatically favoring public warehouses.2. Applicability of Section 58 of the Customs Act, 1962:Section 58 allows the Assistant Collector of Customs to license private warehouses for dutiable goods and to cancel such licenses by giving one month's notice or if the licensee contravenes any provision of the Act. The court emphasized that this power cannot be exercised merely due to the existence of public warehouses. The decision to cancel or refuse renewal must be based on a thorough consideration of the merits of each case.3. Interpretation of Provisions Related to Warehousing Stations and Public/Private Warehouses:Sections 9, 57, and 58 of the Customs Act provide the framework for declaring warehousing stations and appointing public and private warehouses. The court noted that declaring a place as a warehousing station is meant to facilitate the deposit of imported goods without payment of duty. If public warehouses are unavailable at a warehousing station, private warehouses must be licensed to maintain the station's purpose. The court cited precedents from the Gujarat and Madhya Pradesh High Courts, which held that the existence of public warehouses at different warehousing stations cannot justify the refusal of private warehouse licenses.4. Consideration of Precedents from Gujarat and Madhya Pradesh High Courts:The court referred to the Gujarat High Court's decision in M/s. Baroda Rayons Corporation v. Superintendent, Customs, which ruled that authorities cannot compel licensees of private bonded warehouses to use public warehouses solely because they exist. The Madhya Pradesh High Court in Asbestos Cement Limited v. Union of India similarly held that the availability of public warehouses at different stations cannot be a ground for refusing private warehouse licenses. The Rajasthan High Court agreed with these observations and applied them to the present case.Conclusion:The court allowed the writ petitions, setting aside the orders refusing renewal of petitioner No. 1's license and the conditional renewal of petitioner No. 2's license. The Assistant Collector of Customs, Udaipur, was directed to reconsider the renewal applications afresh, providing the petitioners an opportunity to be heard and considering the observations made by the court. The facilities available to the petitioners were to continue until the applications were decided anew. No order as to costs was made.