TaxTMI 
TaxTMI 
2013 (3) TMI 29
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....toms Department in relation to the goods destroyed during the cyclone. After disposal of the petition, the Customs Department issued a show-cause notice dated 12-4-2011 demanding customs duty, interest and penalty upon which the petitioners filed MCA No. 1635/2011 and sought revival of the petition. Such prayer was granted by an order dated 9-9-2011. That is how the petition came up for hearing before us once again. 2. The counsel for the petitioners pressed for the following reliefs :- (c) Your Lordships may be pleased to issue a writ of certiorari or writ in the nature of certiorari or any other appropriate writ, order or direction quashing and setting aside the letter dated 24-3-2000 (Annexure 'M') of the Customs, i.e. respondent No. 3 and be further pleased to direct the respondent No. 3 Customs to issue Certificate under Section 23 of the Customs Act in favour of the petitioner company; (d) Your Lordships may be pleased to issue a writ of prohibition or a writ in the nature of prohibition or any other appropriate writ, order or direction prohibiting the respondent No. 3 Customs from demanding duty in respect of the said goods d....
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....custody of the CWC, a cyclone hit the coastal areas of the State on 9-6-1998 and completely destroyed the goods of the petitioners. 5. On the premise that the CWC had insured the goods for its value as well as the duty, the petitioners demanded the value of the goods from CWC upon its destruction. CWC though had received the full payment of Rs. 2,14,04,621/- from the respondent No. 2 - insurance company on the basis of the surveyor's report, did not release such amount on the premise that the Corporation had to recover its warehousing dues of a sum of Rs. 22,41,990/-. The petitioners, therefore, filed the present petition and made multiple prayers. Prayer (a) was with respect to the direction to the CWC to make good the loss suffered by the petitioners upon destruction of the goods during cyclone. Under an interim order dated 15-1-2002, the respondent No. 1 - CWC was directed to pay to the petitioners the amount received from the insurance company after adjustment of Rs. 22,41,990/- towards their claim. This issue, therefore, was sorted out. 6. The case of the petitioners now surviving is that upon destruction of the goods, the petitioners were entitled to duty remi....
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....sonable period of time. In support of his contentions, the counsel relied on the following decisions :- (i) In case of Commr. of Cus., Bangalore v. i2 Technologies Software Pvt. Ltd. reported in 2007 (217) E.L.T. 176, wherein a Division Bench of Karnataka High Court held that when the importer had relinquished his title in the goods, the customs authorities could not demand duty under Section 72 of the Act. (ii) In case of Gokak Patel Volkart Limited v. Collector of Central Excise reported in 1987 (28) E.L.T. 53 wherein the Apex Court held that for the purpose of Section 11A of the Central Excise Act, period of limitation would be saved only upon the order of stay passed by the High Court. In the said case, the Karnataka High Court had merely stayed the collection of excise duty. The Apex Court held that this was a stage following the levy under the Central Excise Act and, therefore, there was no interim direction of the High Court for issuance of notice for levy of the duty. The notice was also, therefore, time-barred. (iii) In case of Government of India v. Citedal Fine Pharmaceuticals, Madras and Ot....
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....oods by the Supreme Court by the order dated 21-1-1997. Despite such order, the petitioners could not clear part of the consignment. On 9-6-1998, the goods were destroyed during cyclone. The petitioners, therefore, requested for duty remission under Section 23 of the Act. The customs authorities, however, insisted on collecting the duty under Section 72. 12. We may, therefore, notice relevant statutory provisions. Section 23 of the Act pertains to remission of duty on lost, destroyed or abandoned goods and reads as under :- 23. Remission of duty on lost, destroyed or abandoned goods. - (1) [Without prejudice to the provisions of section 13, where it is shown] to the satisfaction of the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] that any imported goods have been lost [(otherwise than as a result of pilferage)] or destroyed, at any time before clearance for home consumption, the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] shall remit the duty on such goods. [(2) The owner of any imported goods may, at any time before an order for clearance of goods for home consumption under section 47 or an order for permitting ....
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....the licence for any private warehouse is cancelled, the owner of any goods warehoused therein shall, within seven days from the date on which notice of such cancellation is given or within such extended period as the proper officer may allow, remove the goods from such warehouse to another warehouse or clear them for home consumption or exportation. (2) [Where any warehoused goods - (i) specified in [sub-clause (a) or sub-clause (aa)] of sub-section (1), remain in a warehouse beyond the period specified in that sub-section by reason of extension of the aforesaid period or otherwise, interest at such rate as is specified in section 47 shall be payable, on the amount of duty payable at the time of clearance of the goods in accordance with the provisions of section 15 on the warehoused goods, for the period from the expiry of the said warehousing period till the date of payment of duty on the warehoused goods; (ii) specified in sub-clause (b) of sub-section (1), remain in warehouse beyond a period of [ninety days], interest shall be payable at such rate or rates not exceeding the rate specified in section 47, as may be fixed by ....
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.... removed from warehouse etc. and reads as under :- 72. Goods improperly removed from warehouse, etc. - (1) In any of the following case, that is to say,- (a) where any warehoused goods are removed from a warehouse in contravention of section 71, (b) where any warehoused goods have not been removed from a warehouse at the expiration of the period during which such goods are permitted under section 61 to remain in a warehouse; (c) where any warehoused goods have been taken under section 64 as samples without payment of duty; (d) where any goods in respect of which a bond has been executed under [section 59] and which have not been cleared for home consumption or exportation are not duly accounted for to the satisfaction of the proper officer, the proper officer may demand, and the owner of such goods shall forthwith pay, the full amount of duty chargeable on account of such goods together with all penalties, rent, interest and other charges payable in respect of such goods. (2) If any owner fails to pay any amount demanded under sub-section (1), the proper of....
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.... where any goods in respect of which a bond has been executed and such goods are not duly accounted for to the satisfaction of the proper officer. 15. Section 72 thus provides for the power to collect duty under circumstances other than regular clearance of goods for home consumption. Under clause (b) of sub-section (1), the authorities have power to collect duty when it is found that the goods warehoused have not been removed even after the period permitted under Section 61 has expired. In the present case, admittedly, this clause would apply. By virtue of the Supreme Court order dated 21-1-1997, the petitioners had the permission to clear the goods for home consumption. Therefore, even if we accept this date as the starting point for the purpose of Section 61(1), for a full period of one year thereafter, the petitioners did not lift the goods. Under Section 61(1) of the Act, therefore, the maximum period for which such goods could have been warehoused expired. Upon completion of such period, therefore, the liability of the petitioners to pay the duty in terms of clause (b) of sub-section (1) of Section 72 thus arose. We may recall that the cyclone destroyed such goo....
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....ections 72 and 23 of the Act. 19. We would, at this stage, like to deal with the third contention ahead of the second contention of the petitioners. This is in respect to the petitioners' insistence that whatever the duty liability, must be paid over by the CWC and the insurance company. We are not inclined to give any such direction for the following reasons :- (1) that such liability has still not yet been worked out. The Customs Department has only issued a show-cause notice. The question of payment of duty is still not decided. The amount is not ascertained. Such prayer is, therefore, premature. (2) Such claim of the petitioners arise out of contractual relationship between the petitioners and CWC. There is no privity of contract between the petitioners and the insurance company. For enforcement of such contractual liability, this writ petition would not be maintainable. (3) Even the insurance company is entitled to raise all its objections and defences, if ultimately the question of its liability arises. For example, the insurance company could contend that the terms of the insurance polic....
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....elessly belated. Nothing has been brought on record to suggest that due to pendency of the petition and out of due deference to the court in view of pending disputes, the Department did not issue the show-cause notice. In any case, there was no stay against issuance of show-cause notice or even against recovery of the duty. Quite apart from total inaction on part of the respondents to issue such a notice during the pendency of the petition, four years had passed before the petition was filed. During such period no steps were taken at all. 23. Section 28 of the Customs Act provides for the limitation of one year for collection of unpaid duty unless it is occasioned due to reasons of collusion or wilful mis-statement or suppression of facts in which case extended period of limitation of five years would be available. In this case, even if we may not pin down the customs authorities with such statutory time-limit, as held by series of decisions cited by the counsel for the petitioners and noted by us, such action cannot be initiated after an indefinite period of time. In absence of any statutory time-limit for recovery of duty, action should be initiated within reasonable time....