AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 115
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.... 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 at Surat. On expiry of the warehousing period, respondent sought fo....
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.... 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 intimating the respondent that consideration for extension of the warehousi....
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.... 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 home consumption and therefore no custom duty would be payable, though Section 72 ....
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.... 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 till the goods are auctioned" found in the circular to buttress his arguments that a right....
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....hereby, 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 Plant and Nylon Tyre Cord Plant in the year 1981. 19. Petitioner had imported plant and machinery / equipment in 1995-96 und....
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....er 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 of 10 years, i.e. on 15.11.2018, petitioner renewed its request by submitting a representation to the Chief Commissioner of Customs,....
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....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 Kumar) Additional Commissioner" 25. A plain reading of the above communication would indicate that the representations made by the petitioner on 14.02.2019 and 15.0....
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.... 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, if it is] of opinion that an order passed by the Appellate 2 [Principal Commissioner of Customs or Commissioner of Customs] under section 128, as it stood immediately before the appointed day, or by the 3 [Commissioner (Appeals)] under section 128A, is not legal or proper, di....
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....l 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 Appellate Tribunal,- (a) in an appeal 1 *** for rectification of mistake or for any other purpose; or (b) for restoration of an appeal or an application, shall be accompanied by a fee of five hundred rupees: Provided that no such fee shall be payable in the case of an application filed by or on behalf of the 2 [Principal Commissioner o....
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....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 sweep of the provisions of either order or decision as indicated in Section 129A. 28. A taxing statute is to be strictly construed. In a taxing statute, one has to look merely what is clearly said in the provision. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing has to be read in, nothin....
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....e 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 extension, the goods are deemed to have been improperly removed. On a plain reading of the Clause (a) it would indicate that where any goods are removed from a warehouse in contravention of Section 71 or 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 or where any warehoused go....
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....acts 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 goods having continued in the warehouse beyond the period permitted it is deemed to have been removed improperly attracting the penal provision which resulted in show cause notice being issued and same being adjudicated which resulted in orders being passed and assailed by the respondent before the appellate authority and also before the Tribunal which had resulted in its dismissal is a clear mirror to the fact that duty demand had been confirme....
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....s 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 by the importer within a stipulated period either for home consumption or for reexport and in the eventuality of such importer failing, then it is deemed that such goods are to be cleared for home consumption and thereby the importer would be liable to make payment of applicable customs duty with interest and penalty. In other words, section 69 would be attracted prior to applicability of section 72 and not thereafter. In that view of the matter also, we are of the considered view tha....
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....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 stay petitions filed by the applicant. Accordingly, we dismiss the stay petitions as well as the appeals at the stay stage itself. (Dictated in Court) (C. SATAPATHY) Member (Technical) (KRISHNA KUMAR) Member (Judicial)" 34. As can be seen from the aforesaid order of the Appellate Tribunal passed in 2002, respondent herein, had projected financial crunch and contended it is not in a position to deposit the amount towards duty and penalty, etc. in respect of 16 consignments, as indicated, and total duty was....
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....ded 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 view the aforesaid guidelines of the Board and also taking into consideration all the relevant rules/regulations for export. 4. The contents of this Circular may be suitably brought to the notice of the field formations and the Trade under your jurisdiction. 5. This issues in partial modification of Board's earlier circular under reference." 37. It is a settled proposition of law that circular cannot have an overriding effect on a statutory provision. This well settled proposition of law is propounded by the Hon'ble Apex Court in the case of....
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....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 order, waive the whole or part of any interest payable under this section in respect of any warehoused goods: Provided further that the Board may, if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette, specify the class of goods in respect of which no interest shall be charged under this section. Explanation.- For the purposes of this section, "hundred per cent. export- oriented undertaking" has the same meaning as in Explanation 2 to subsection (1) of section 3 of the Central Excises and Salt Act, 1944 (1 of 1944)." 40. Thus, it would be manda....
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....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 'by inference or by analogy'. In IRC vs. Duke of Westminster, (1936) AC 1, Lord Tomlin while refuting the doctrine of 'the substance of the matter' observed thus: "It is said that in revenue cases there is a doctrine that the court may ignore the legal position and regard what is called 'the substance of the matter'. This supposed doctrine seems to rest for its support upon a misunderstanding of language used in some earlier cases. The sooner this misunderstanding is dispelled, and the supposed doctrine given its quietus, the better it will be for all concerned, for the doctrine seems to involve substituting 'the uncertain and crooked....
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....nal 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 and relied upon by the learned senior counsel for respondent herein are of no assistance and it is a settled law that if there is no similarity of facts and even one additional fact would make a world of difference in applying the ratio precedent would not arise. Hence, in view of the discussion made herein-before, we hold that decisions relied upon by the learned senior counsel for the respondent herein are of no assistance and we are of the opinion that appellant has made out a strong case to accept the appeal. Hence, substantial questions of law (iii) and (iv) are answered in the negative viz. in favour of the Revenue and against the respondent. 49. Specia....