2024 (8) TMI 481 - AT - Customs

Private Bonded Warehouse License cancellation overturned despite violations under section 58B - penalties reduced and license restored

CESTAT New Delhi allowed the appeal against cancellation of Private Bonded Warehouse License under section 58B of Customs Act, 1962. The appellant ... Cancellation of the Private Bonded Warehouse License in terms of section 58B of the Customs Act, 1962 - address of the licensed premises was not indicated as either the principal place of business or additional place of business in the GST registration - non-compliance of CBIC Circular No. 34/2019 dated 1.10.2019 - non-submission of relevant documents on online portal - neither have any goods been imported into the Customs Bonded Warehouse nor has any manufacturing activity taken place in it for the entire period of 9 months. Not mentioning the licensed premises as principal or additional place of business under the GST as required by CBIC’s circular No. 34/2019 dated 1.10.2019 - HELD THAT:- While it is a serious typographical error to mention the wrong address in an application for the Customs warehouse licence, evidence on record shows that the correct address is Khasra No. 15/22. According to the appellant, this is also the address in its IEC which is the primary document for all imports and exports. It does appear that the appellant committed a mistake and the officer issuing the licence also did not notice - However, it is not that, this is not such a serious violation as to warrant cancellation of licence. Not registering and uploading documents on the website as required under CBIC Circular No. 34/2019 - HELD THAT:- The appellant admits that it had not done so but pleads that it was due to ignorance and after learning about this requirement, it had registered on the portal. It is not that this is a curable violation. Not importing any goods into the warehouse and not starting any manufacturing activity in it - HELD THAT:- This is not a violation of any provision of the law but the question arises as to what is the purpose of the licence if it is not being operated. The appellant’s submission is that it is in touch with several people and will import into the customs warehouse and also manufacture in it. The appellant had violated some conditions of licence including mentioning the wrong address of the premises to obtain the licence. It is common practice for the officers to examine the blueprint or map of the premises and visit the premises to check its safety and other features before issuing the licence. Therefore, there could be no doubt about which premises were licenced. According to the appellant, the correct address of the premises was also in its IEC and in its GST registration and mentioning of the wrong address in its application and also in the licence issued by the department is only a typographical error in typing ‘24’ instead of ‘22’. The officers were apparently also not careful enough and issued licence with the wrong address - it is not why the address cannot be corrected and if that is done, the correct address will match with the additional place of business declared in the GST registration. It was also careless of the appellant not to have obtained registration and uploaded documents as required on the portal. The penalty imposed on Shiv Probuild under section 117 is reduced to Rs. 50,000/- - On payment of the above fine, its private bonded warehouse licence under section 58 of the Customs Act and its manufacturing and other operations licence under section 65 of the Customs Act shall be restored and the address of the premises shall be corrected - the penalties imposed on Kuldeep and Rajkumar under section 117 of the Customs Act are set aside. Appeal allowed. Issues:- Violation of conditions of licences- Proportionality of punishmentAnalysis:The case involved an appeal against the order-in-original passed by the Commissioner of Customs, Air Cargo Complex, New Delhi, canceling a Private Bonded Warehouse License and imposing penalties on the company and its directors for contravention of license terms. The appellants, Shiv Probuild Private Ltd. and its directors, challenged the order on various grounds. The main issues to be decided were whether the appellants violated license conditions and if the punishment imposed was proportionate to the violations.The appellants contended that the incorrect address mentioned in the license application was a typographical error, as the actual address was different and correctly registered in other documents. They argued that the failure to upload documents online was due to ignorance, which was rectified once they became aware of the requirement. Additionally, they explained that no goods were imported or manufacturing activities initiated due to ongoing correspondence for imports and setting up a manufacturing unit.On the other hand, the Revenue argued that the violations were established, as the appellants failed to comply with the conditions specified in the Circulars issued by the Board. The Commissioner relied on Section 58B of the Customs Act for canceling the license and imposing penalties under Section 117. The Revenue supported the impugned order as a well-reasoned decision based on the violations found.After considering the submissions and evidence, the Tribunal found that while there were violations, they were not severe enough to warrant cancellation of the license. The incorrect address mentioned was deemed a typographical error, and the failure to register online was considered a curable violation. The Tribunal modified the impugned order by reducing the penalty imposed on Shiv Probuild and restoring their licenses upon payment of the fine. The penalties on the directors were set aside, and consequential relief was granted to the appellants.In conclusion, the Tribunal allowed all three appeals to the extent indicated, emphasizing the importance of correcting errors, ensuring compliance with regulations, and maintaining proportionality in punishments imposed for violations.