2023 (1) TMI 115 - HC - Customs

Court rules in favor of appellant, deems Tribunal appeal not maintainable. Customs duty liability clarified.

COMMISSIONER OF CUSTOMS, AHMEDABAD Versus BARODA RAYONS CORPORATION LTD.

The Court found in favor of the appellant on all issues. It held that the appeal before the Tribunal was not maintainable under Section 129A of the ... Levy of duty on expiry of warehoused goods - Whether the tribunal was justified in holding that, even though the duty was confirmed by adjudication process, the same is payable only when goods are cleared for home consumption? - re-export of the goods without payment of duty - extension of warehousing period - board circular 03/2003-Cus dated 14/1/2003 - review of order. Whether the Hon’ble Tribunal was justified in entertaining an appeal against the Chief Commissioner’s letter under Section 129A of the Act which mandates appeal against the Order of Commissioner /Commissioner (Appeals)? - HELD THAT:- In the instant case, the thrust of the arguments of the learned counsel appearing for the revenue is that there was no order adjudicating right of the parties which gave cause of action for the respondent herein to file an appeal before the CESTAT by invoking Section 129A of the Act. He has drawn the attention of the Court to the communication dated 07.03.2019 which was impugned before the Tribunal whereunder the Additional Commissioner of Customs with the approval of the Chief Commissioner has referred to the communications dated 14.02.2019 and 15.02.2019 addressed by the respondent herein requesting for reconsideration of the request for extension of the warehousing period and held such consideration would not arise as the matter had already attained finality - The Tribunal entertained the appeal under Section 129A(1) of the Act and impugned order was set aside and matter was restored to the Commissioner of Customs for deciding the issue afresh. Challenging the said decision, an appeal under Section 130A of the Customs Act was filed and it is in this background, High Court of Bombay has held that Section 110A of the Act is required to be viewed and the decision in the letter dated 25.09.2017 is in terms of Section 110A. A taxing statute is to be strictly construed. In a taxing statute, one has to look merely what is clearly said in the provision. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing has to be read in, nothing is to be implied. One can look only fairly at the end use - substantial question of law will have to be answered in the negative that is in favour of the appellant revenue and against the respondent. Whether in the facts and circumstances of the case and law, the Tribunal was justified in holding that even though the duty was confirmed by adjudication process, the same is payable only when goods are cleared for home consumption, considering the provisions of section 72 of the Customs Act, 1962? - HELD THAT:- In the instant case, undisputedly the goods remained in the warehouse beyond the period of extension granted and the prayer for further extension was not acceded to or in other words not granted and as such they did not qualify to be construed as goods warehoused in due compliance of Section 72 and in the facts obtained in the present case it would also emerge from the records that on account of such goods having continued in the warehouse beyond the period permitted it is deemed to have been removed improperly attracting the penal provision which resulted in show cause notice being issued and same being adjudicated which resulted in orders being passed and assailed by the respondent before the appellate authority and also before the Tribunal which had resulted in its dismissal is a clear mirror to the fact that duty demand had been confirmed and as such, Tribunal was not justified in arriving at a conclusion that though duty demand was confirmed by adjudicating process, same would become payable only when it is cleared for home consumption. The Tribunal was not justified in holding that even though the duty was conferred by adjudication process, section 69 would be applicable and as such finding recorded by the Tribunal requires to be set aside. Hence, the substantial question of law answered in the negative namely in favour of Revenue and against the respondent. Whether in the facts and circumstances of the case and law, the Tribunal was justified in holding that in terms of the board circular 03/2003-Cus dated 14/1/2003, the Respondent was entitled to re-export of the goods without payment of duty and consequently also entitled for extension of warehousing period? - Whether in the facts and circumstances of the case and law, the Tribunal was justified in entertaining and allowing the appeal which is against its own Order dated 25.11.2002 that had attained finality and thus reviewing their own order? - HELD THAT:- In the instant case that entire adjudicating process with regard to liability of respondent to pay duty - penalty had got crystallised and had attained finality and as such by taking aid of the circular dated 14.01.2003 and reading the same disjunctively, no undue benefit could have been extended to the respondent by impugned order. Hence, we are of the considered view that Tribunal committed a gross error in entertaining the prayer of the respondent. A taxing statute is to be strictly construed. The Courts have stated greater latitude to the legislature is to be extended in formulating its tax policy either directly or by delegated legislation - The appellant has made out a strong case to accept the appeal. Hence, substantial questions of law are answered in the negative viz. in favour of the Revenue and against the respondent. Application disposed off. Issues Involved:1. Maintainability of appeal before Tribunal under Section 129A of the Customs Act.2. Applicability of Section 72 of the Customs Act regarding customs duty liability.3. Entitlement to re-export of goods without payment of duty under Board Circular 03/2003-Cus.4. Tribunal's authority to review its own final order.Detailed Analysis:Issue 1: Maintainability of Appeal Before TribunalThe primary contention was whether the appeal before the Tribunal was maintainable under Section 129A of the Customs Act. The appellant argued that the communication dated 07.03.2019 was not an order passed by the Principal Commissioner or Commissioner as an adjudicating authority, hence not appealable. The Court held that the communication was merely an intimation and did not adjudicate any rights. Therefore, it did not qualify as an appealable order under Section 129A. The Court emphasized that a taxing statute must be strictly construed and the appeal was not maintainable. Thus, the substantial question of law was answered in favor of the appellant.Issue 2: Applicability of Section 72 of the Customs ActThe Tribunal had held that customs duty was payable only when goods were cleared for home consumption. However, the Court found that under Section 72, goods not removed from a warehouse within the permitted period are deemed to have been improperly removed, making the owner liable for full customs duty, interest, and penalties. The Court cited the Supreme Court's decision in SBEC Sugar Limited to support this interpretation. The Court concluded that the Tribunal erred in applying Section 69, which pertains to re-export without payment of duty, as Section 72 had already mandated duty payment. Thus, the substantial question of law was answered in favor of the appellant.Issue 3: Entitlement to Re-export Without Payment of DutyThe Tribunal relied on Board Circular 03/2003-Cus to allow re-export without payment of duty. The Court noted that the circular must be read in conjunction with Section 61, which mandates payment of duty and interest for extending the warehousing period. The Court held that the circular cannot override statutory provisions and that the Tribunal's reliance on the circular was misplaced. The circular did not exempt the owner from paying duty, interest, and penalties once the warehousing period expired. Thus, the substantial question of law was answered in favor of the appellant.Issue 4: Tribunal's Authority to Review Its Own OrderThe Court observed that the Tribunal had previously dismissed the respondent's appeal on the merits, confirming the duty demand. By allowing the appeal based on the circular, the Tribunal effectively reviewed and nullified its own final order. The Court held that this was impermissible as the Tribunal does not have the authority to review its final orders. Thus, the substantial question of law was answered in favor of the appellant.Conclusion:The Court allowed the tax appeal filed by the Revenue, setting aside the Tribunal's order and dismissing the respondent's appeal. Consequently, the Special Civil Application seeking re-export permission was also dismissed. The Court reiterated that statutory provisions must be strictly followed and circulars cannot override the law. All pending civil applications were consigned to records.