Special Warehouse Licence cancellation overturned after duty-free shop relocated within airport premises under customs supervision

CESTAT Bangalore allowed the appeal and set aside the Commissioner's order cancelling the Special Warehouse Licence. The appellant operated a duty-free shop at Trivandrum International Airport and relocated to larger premises within 15 days of original allocation without amending the licence. The tribunal found no illegality as goods were stored and removed under customs supervision throughout. Re-warehousing certificates confirmed all entries and exits occurred with customs officers' knowledge. The tribunal directed the Commissioner to restore the original licence and consider amending it to incorporate the new 154 sq. mtr. premises in accordance with law.

---

---

Issues Involved:
1. Operating duty-free shop without possessing a Special Warehouse licensed premises.
2. Sale of duty-free goods directly from the duty-free shop without warehousing the same in the Special Warehouse.
3. Transferring a special warehouse licensed premises without the knowledge of the Department.
4. Non-appointment of a warehouse keeper and non-compliance with Regulation 6(2) and 10 of Special Warehouse (Custody and Handling of goods) 2016.

Summary:

Issue 1: Operating duty-free shop without possessing a Special Warehouse licensed premises
The appellant, M/s. Plus Max Duty Free Pvt. Ltd., was issued a Special Warehouse Licence No. 1/2017-18 dated 31.08.2017 u/s 58A of the Customs Act, 1962, for a space measuring 35.89 sq. meters at Trivandrum International Airport. However, within 15 days, a larger space of 154 sq. meters was allotted, and the appellant started operating from the new premises without amending the licence. The Customs Officers supervised the storage and removal of goods from the new premises, thus the appellant did not operate without Customs supervision. The Tribunal found no evidence of goods being stored or removed without Customs supervision and set aside the Commissioner's order canceling the licence.

Issue 2: Sale of duty-free goods directly from the duty-free shop without warehousing the same in the Special Warehouse
The Tribunal observed that the goods were stored and moved under the supervision of Customs officers. The Mahazar drawn on 21.12.2017 confirmed that the process of transfer from outside the warehouse to inside was supervised by Customs officers, and necessary entries were made in the registers. Therefore, the appellant cannot be alleged with any illegality in this regard.

Issue 3: Transferring a special warehouse licensed premises without the knowledge of the Department
The appellant did not amend the licence to reflect the new premises. However, the Customs officers were aware and supervised the operations from the new premises. The Tribunal noted that the Commissioner's order mentioned taking necessary action against the concerned officers, acknowledging their awareness of the new premises. Therefore, the Tribunal found no fault with the appellant in this regard.

Issue 4: Non-appointment of a warehouse keeper and non-compliance with Regulation 6(2) and 10 of Special Warehouse (Custody and Handling of goods) 2016
The Tribunal found that Shri. P. Madhan was appointed as a location Manager responsible for the warehouse, thus there was no violation regarding the appointment of a warehouse keeper. Other allegations related to statutory returns and documents pertained to the Duty-Free Shop and were separate from the Special Warehouse operations.

Conclusion:
The Tribunal set aside the impugned order and directed the Commissioner to restore the original Special Warehousing Licence and consider amending the licence to incorporate the space of 154 sq. meters, in accordance with the provisions of law. The appeal was allowed by way of remand to the Commissioner.

(Order pronounced in Open Court on 14.06.2024.)

---