Public bonded warehouse license suspension overturned after proper customs permissions proved for tank operations

CESTAT Mumbai allowed the appeal of public bonded warehouse licensees against suspension of their license. The department had suspended the license claiming bonded goods were stored in non-bonded tanks, seeking confiscation under Sections 111(h) and 111(j) of Customs Act, 1962. CESTAT found that appellants had obtained proper permissions from customs authorities for all warehouse activities including movement of goods between tanks. All operations were conducted under departmental supervision with necessary approvals. Since no statutory provisions were violated and goods were not liable for confiscation, penalties under Sections 112, 114AA, and 117 were also not attracted. The tribunal set aside the impugned order including suspension of warehousing operations.

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Issues Involved:
1. Storage of bonded goods in non-bonded tanks.
2. Storage of non-bonded goods in bonded tanks.
3. Storage of goods imported by the licensee in their own public bonded warehouse.
4. Storage of bonded goods in excess of approved duty limits.
5. Non-reporting of time-expired bonds.
6. Lack of audit trail facility in software.
7. Revocation of suspension of warehousing operations.

Summary:

1. Storage of Bonded Goods in Non-Bonded Tanks:
The appellants were found to have stored bonded goods in non-bonded tanks, violating Section 60 read with Section 71 of the Customs Act, 1962. The adjudicating authority imposed penalties and fines under Sections 111(j), 112(b)(ii), and 114AA of the Customs Act. However, the Tribunal found that the appellants had obtained discharge permissions from the Customs department for the storage of bonded goods in non-bonded tanks, and thus, there was no violation of the licensing conditions.

2. Storage of Non-Bonded Goods in Bonded Tanks:
The appellants stored non-bonded goods in bonded tanks on 31 occasions. The Tribunal noted that the appellants had obtained necessary permissions from the Customs department for these activities, and such activities were monitored by Customs officers. Therefore, the Tribunal held that there was no contravention of the provisions under the statute.

3. Storage of Goods Imported by the Licensee in Their Own Public Bonded Warehouse:
The goods covered under two Warehouse Bills of Entry were stored in the public bonded warehouse of the appellants. The Tribunal found that the goods were discharged from the vessel through high-pressure pipelines under Customs supervision, and necessary permissions were obtained. Thus, there was no violation of the Customs Act.

4. Storage of Bonded Goods in Excess of Approved Duty Limits:
The Tribunal found that the appellants had obtained necessary permissions for the storage of goods and that all activities were carried out under Customs supervision. Therefore, the conditions under the warehousing license were not violated.

5. Non-Reporting of Time-Expired Bonds:
A penalty was imposed for non-reporting of time-expired bonds for one consignment. The Tribunal did not find any evidence to support this charge and held that the appellants had complied with the statutory provisions.

6. Lack of Audit Trail Facility in Software:
A penalty was imposed for not having an audit trail facility in their software. The Tribunal did not find any evidence of non-compliance with the statutory provisions and held that the appellants had complied with the requirements.

7. Revocation of Suspension of Warehousing Operations:
The Tribunal set aside the order for revocation of suspension of warehousing operations, as the appellants had complied with all statutory provisions and obtained necessary permissions from the Customs department.

Conclusion:
The Tribunal set aside the impugned order dated 08.01.2024, holding that the appellants had not violated any provisions of the Customs Act, 1962, and the related regulations. The appeal was allowed in favor of the appellants, with consequential relief as per law.

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