TaxTMI 
TaxTMI 
2023 (1) TMI 115
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....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? (iii) 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? (iv) 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." BRIEF BACKGROUND OF THE CASE: 2. Respondent is a public limited company engaged in a commercial production of Viscose Filament yarn i.e. Rayon Yarn. In the year 1995-96, respondent imported plant and machineries - equipment under Open General Licence (OGL) from Japan, Germany and Korea, after executing 21 bonds amounting to Rs.18,01,31,442/- and initially it was stored at Bombay and later on shifted to the private bonded warehouse a....
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....mported in the year 1995-96 is said to have not been installed and was still lying in bonded warehouse. 5. The respondent is said to have become Sick Industrial Unit under Section 15(1) of the Sick Industrial Companies (Special Provision) Act, 1985, which resulted in BIFR proceedings being initiated and factory of the petitioner was closed from June, 1999 to June, 2000 and from August, 2002 to December, 2003 and from August, 2008 till date thereafter. Respondent submitted representations for re-exporting the plant, equipment and machineries and also sought for consequential extension of warehouse period. Undisputedly, respondent admits said representations were not pursued vigorously on account of BIFR proceedings pending. 6. After a period of 16 years, respondent sought for extension of the warehousing period which came to be rejected on the ground that show cause notice and the demand issued earlier had stood confirmed upto the level of Tribunal. Not being satisfied with the same, respondent again approached the department requesting for reconsideration of their prayer for extending the warehousing period which culminated in communication dated 07.03.2019 being issued and i....
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....sel appearing for the department that appeal itself is not maintainable before the Tribunal as an appeal under Section 129(a) would lie to the Tribunal only against the order passed by the Principal Commissioner / Commissioner as an adjudicating authority and orders passed by the Commissioner (Appeals). By drawing the attention of the Court to the communication dated 19.12.2008 and 07.03.2009, he would contend that it is not an order of the Commissioner of Customs or Commissioner (Appeals) and as such, appeal before CESTAT was not maintainable. 9. He would elaborate his submissions by contending that Tribunal erred in allowing the appeal as it would amount to setting aside its own order passed earlier whereunder appeal filed by the respondent challenging the order in original had been dismissed whereby the duty demand had been confirmed and thereby the original order had attained finality. He would submit that impugned order would amount to tribunal reviewing its own order and thereby rendering its earlier order infructuous. 10. He would contend that Tribunal committed a serious error in arriving at a conclusion that goods are lying in the warehouse without being cleared for ....
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....nt and the order passed thereunder is an order passed by the adjudicating authority namely the authority which is competent to pass any order or take decision under the Act as defined under Section 2(1) and under the impugned communication, the Commissioner having decided the rights of the respondent by adjudicating the lis, an appeal filed assailing the correctness of the same by invoking Section 129(a) of the Act was fully justified. He would support the impugned order and to fortify his contention, he would rely upon the circular dated 14.01.2003 to contend that under Section 151A of the Act, the instructions issued to the Officers by way of circulars would be binding on them and as such, the Tribunal has rightly extended the benefit flowing from the circular dated 14.01.2003. He would submit that whether accepting the demand made by not challenging the order or such adjudicating authority having passed any order adjudicating the show cause notice even if it had reached Tribunal will have no effect and still the circular dated 14.01.2003 would be binding and qualitatively it does not make any difference. He would draw the attention of the Court to the words and expression "that ....
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.... for re-export was an issue which has already been decided, adjudicated and answered which has attained finality and thereby, respondent cannot rely upon said circular. He would also contend that payment of 2% differential duty was alternatively available to the respondent, as held by the Tribunal cannot be accepted as it involves two stages namely clearance of the goods and such stage having not occurred namely the goods having not being cleared, Tribunal could not have taken upon itself this issue which was never raised by the respondent before the Tribunal and on this ground also he seeks for the order of Tribunal being set aside and substantial questions of law being answered in favour of the revenue. 17. Having heard the learned advocates appearing for the parties and proceed to answer the substantial questions of law, we deem it necessary to sate the factual background in brief. BRIEF BACKGROUND OF THE CASE : 18. Petitioner is a public limited company and commenced its commercial production of Viscose Filament Yarn i.e. Rayon Yarn in 1962. Petitioner is said to have diversified its activities by starting Nylon Plant in 1974 and thereafter established its Polyester Pl....
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....the appeal on merits. On account of noncompliance of the same, the appeal was not taken up for hearing on merits. 21. Thereafter the petitioner submitted an application on 26.10.2006 requesting the department for permitting transfer of the bonded plant and machinery / equipment lying in the private bonded warehouse outside the factory premises to inside factory premises at Surat. The department by reply dated 19.01.2007 informed the petitioner and since the request for extension of the warehousing period has been rejected in 1998 and show cause notices of consignment were already issued, permission was not granted. Despite there being no permission accorded, petitioner shifted plant and machinery / equipment inside the factory during 23- 26.10.2007 and sought to justify its action by relying upon the representation submitted on 09.02.2007. 22. On 23.06.2008, petitioner requested the department to accord permission for re-export of consignment by relying upon the board's circular dated 3/03-COSs dated 14.01.2003. After having kept quite for 5 years, petitioner renewed its request vide letter dated 22.07.2008 and 06.10.2008 seeking permission for re-export. Again after period o....
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....d 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. For the purposes of convenience and necessity, we deem it proper to extract the contents of the said letter and it reads thus: "Please refer to your letters dated 14.2.2019 and 15.2.2019 in the subject matter requesting for reconsideration of your request for extension of warehousing period. 2. In this regard, it is to intimate that as far as extension of warehousing period is concerned, this stage is already over once a show cause notice was issued and demand was dated 14.01.2003 mentioned in your letters, your representation does not merit any consideration now since the matter has already attained finality as the issue was already decided by the Hon'ble Tribunal. 3. This issues with the approval of the chief Commissioner. Yours Sincerely (Sushant Ku....
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.... of goods for purposes of assessment is in issue or is one of the points in issue, the difference in duty involved or the duty involved; or (iii) the amount of fine or penalty determined by such order, does not exceed 5 [two lakh rupees]. [(1A) Every appeal against any order of the nature referred to in the first proviso to sub-section (1), which is pending immediately before the commencement of section 40 of the Finance Act, 1984 (21 of 1984), before the Appellate Tribunal and any matter arising out of or connected with such appeal and which is so pending shall stand transferred on such commencement to the Central Government and the Central Government shall deal with such appeal or matter under section 129DD as if such appeal or matter were an application or a matter arising out of an application made to it under that section.] [(1B) (i) The Board may, 8 [by order], constitute such Committees as may be necessary for the purposes of this Act. (ii) Every Committee constituted under clause (i) shall consist of two Chief Commissioners of Customs or two Commissioners of Customs, as the case may be.] (2) [The Committee of Commissioners of Customs may,....
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....t presenting it within that period. [(6) An appeal to the Appellate Tribunal shall be in such form and shall be verified in such manner as may be specified by rules made in this behalf and shall, irrespective of the date of demand of duty and interest or of levy of penalty in relation to which the appeal is made, be accompanied by a fee of,- (a) where the amount of duty and interest demanded and penalty levied by any officer of customs in the case to which the appeal relates is five lakh rupees or less, one thousand rupees; (b) where the amount of duty and interest demanded and penalty levied by any officer of customs in the case to which the appeal relates is more than five lakh rupees but not exceeding fifty lakh rupees, five thousand rupees; (c) where the amount of duty and interest demanded and penalty levied by any officer of customs in the case to which the appeal relates is more than fifty lakh rupees, ten thousand rupees: Provided that no such fee shall be payable in the case of an appeal referred to in sub-section (2) or a memorandum of cross-objections referred to in sub-section (4). (7) Every application made before the Appell....
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....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. 27. High Court of Bombay has also referred to the Full Bench judgment of the Tribunal in the case of Gaurav Pharma wherein it has been held that an order of provisional release is a stand alone order irrespective of the final outcome of the investigation or adjudication. Hence, the owner has to have a remedy which is statutorily provided under Section 129A. Whereas in the instant case, we have noticed that under the communication dated 07.03.2019, the authority has neither adjudicated nor examined the claim of the respondent or the prayer of the respondent in the capacity of an adjudicating authority and as such, the signatory to the said communication cannot be held to fall within the definition of 'Adjudicating Authority' as defined under Section 2(1) of the Act so as to bring such communication within the s....
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....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 officer may, without prejudice to any other remedy, cause to be detained and sold, after notice to the owner (any transfer of the goods notwithstanding) such sufficient portion of his goods, if any, in the warehouse, as the said officer may select." 30. A plain reading of the above provision would clearly indicate that when the goods are cleared from the warehouse after the expiry of the permitted period or its permitted extensio....
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....n, by reason of their remaining in the warehouse beyond the permitted period or its permitted extension, the goods have been deemed to have been improperly removed from the warehouse under Section 72." 24. xxx xxx xxx 25. xxx xxx xxx 26. We are, therefore, of the opinion that the decision in Pratibha Processors on which heavy reliance is placed by learned counsel for the appellants, is clearly distinguishable on facts inasmuch as apart from the fact that in that case the clearance of goods was under Section 68 of the Act, the import of Section 72(1)(b) of the Act was not considered. On the contrary, the dictum laid down in Kesoram Rayon (supra) is on all fours on facts at hand, and therefore, the decision of the High Court cannot be faulted with." 31. 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 good....
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....s would forthwith be required to pay, the full amount of duty chargeable on account of such goods whether with interest, fine and penalty payable in respect of such goods. Undisputedly, in the instant case, the goods remained in warehouse beyond permitted period. Thus, the owner of the goods would be liable to pay full amount of duty with interest and penalty, as if the goods are to be cleared from home consumption. In the instant case, the owner of the goods has not complied with this statutory mandate. Clause (b) of sub-section (1) of Section 72 clearly mandates where warehoused goods have not been removed from the warehouse at the expiry of the period, then proper officer would be empowered to demand and the owner of the goods would be liable to pay full amount of the duty chargeable on account of such goods together with interest, fine and penalty. In the instant case, the action relating to the impugned goods had been initiated and had reached finality. Thus, when liable to pay duty, penalty and interest had already arisen on the owner as per section 72(1)(b), we are of the considered view that section 69 would not be applicable. Section 72 provides for clearance of the goods ....
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....llant's financial condition is very bad and as such they are not in a position to deposit the amounts towards duty, penalty etc. He submitted that appellants have imported 16 consignments of new machinery for making further improvement in their factory. The total duty amount - against the said consignments is Rs.6,80.93,056/-. 2. Shri. M. K. Gupta, learned It. CDR stated that the appellants have been given four extensions and still they have failed to pay the duty etc. and remove the goods. Section 72 with Section 47 and 15(1)(b) provide that where warehoused goods have not been removed from the warehouse on expiration of period during which such goods are permitted under Section-61 to remain in the warehouse, the proper officer may demand and 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 Thus the legal position is very clear. It is also is seen from the Commissioner's order that the appellants have not disputed their duty liability, In these circumstances we find that there is no merit in the appeals as well as the st....
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.... in Board's Circular no. 47/2002-Cus., dated 29.07.2002, on the above subject and to say that some references have been received in the recent past seeking Board's clarification whether the goods imported and bounded in a warehouse can be permitted to be cleared for the purpose of export under Section 69 of the Customs Act, 1962 have been issued by the Customs authority demanding duty, interest and other charges upon expiry of the initial or extended period of warehousing. 2. The matter has been examined in the Board. It has been decided that in case an importer makes a request to permit re-export of the goods under Section 69 of the Customs Act, 1962, such a request may be allowed even if the permitted period for bonding has expired and demand notice has been issued, or it has been decided to put the goods under auction. Before permitting re-export in each such case, however, it will be necessary to extend the period of warehousing under Section 61 of the Customs Act to enable the importer to export the goods within the permitted period of warehousing. 3. Chief Commissioners are, therefore, requested to consider/decide such requests from the importers keeping in ....
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....in [sub-clause (a) or sub-clause (aa)] of sub-section (1), remain in a warehouse beyond the period specified in that subsection 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 the Board, 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 ninety days, till the date of payment of duty on the warehoused goods: Provided that the Board may, if it considers it necessary so to do in the public interest, by order and under circumstances of an exceptional nature, to be specified in such or....
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....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. For this proposition, judgments the Hon'ble Apex Court in case of R.K. Garg vs. Union of India and others, reported in AIR 1981 SC 2138 and in case of M/s. Satnam Overseas (Export) vs. State of Haryana and another, reported in AIR 2003 SC 66 can be looked up. 43. Viscount Simon quoted with approval a passage from Rowlatt J. Cape Brandy Syndicate v. IRC, (1921) 1 KB 64, also referred to in Canadian Eagle Oil Co. Ltd. v. R, (1945) 2 ALL ER 499 expressing said principle in the following words: "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." 44. In fiscal legislation a transaction cannot be taxed on any doctrine of 'the substance of the matter' as distinguished from its legal signification, for a subject is not liable to tax on supposed 'spirit of the law' or 'b....
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....he interpretation of revenue statutes. 47. In the teeth of aforesaid propositions of law, we notice 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 in the background of our aforesaid discussion. We are also of the view that reliance placed by the Tribunal on the aforesaid circular was impermissible in the background of facts obtained in the present case. If taking recourse to the said circular, that too by reading it in isolation, it would have the effect of nullifying the adjudicating process under law which had attained finality, then such interpretation has to be necessarily held bad in law. Hence, we are of the clear opinion that order passed by the Tribunal is erroneous and unsustainable in law. 48. In view of this background of facts, judgments which have been cited a....