TaxTMI 
TaxTMI 
2024 (3) TMI 1001
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....oner of Customs and Central Excise, Indore (for short 'the Commissioner' hereinafter). 2.1 By the aforesaid order dated 28.04.2005, the Commissioner had confirmed the duty demand of Rs.3,99,255.00 in respect of 27 cases not found in the warehouse and imposed penalty of Rs.1 lakh on the appellant under Section 112 of the Customs Act. That apart, the appellant was directed to pay interest on the duty confirmed in terms of Section 28AB of the Customs Act from the date of enforcement of the said section till the date of actual payment of duty. The Commissioner had also confiscated 264 cases of imported goods valued at Rs.48,79,776.00 seized from within the factory premises of the appellant but outside the approved warehouse under Section 111 of the Customs Act. However, the confiscated goods were permitted to be redeemed on payment of fine of Rs. 2 lakhs. Thirty days' time was granted to the appellant to exercise the option for redeeming the goods. Further, the Commissioner had confirmed customs duty amounting to Rs.39,03,821.00 in terms of Section 71 read with the proviso to Section 28A of the Customs Act. The appellant was also required to pay interest amounting to Rs.18,88,425.00....
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.... found outside the warehouse but within the industrial/factory premises of the appellant; remaining 27 cases were not found either inside the warehouse or outside the warehouse within the industrial/factory premises. 8. As no documents showing clearance of the goods contained in the 264 cases from within the warehouse but lying outside the warehouse on payment of duty and interest as required under Section 71 of the Customs Act could be produced, the said goods were seized in terms of Section 110 of the Customs Act. The value of the goods seized was estimated at Rs.48,79,776.00. 9. In his statement recorded under Section 108 of the Customs Act on 07.08.1992, Sh. Yashwant Singh Bisht, Project Officer (Commercial) of the appellant stated that the 264 cases of imported goods were kept outside the bond under a shed as the trailers transporting the goods could not enter the notified warehouse in view of the soil becoming very sluggish on account of heavy rains and also because of paucity of space. The Collector, therefore, opined that the appellant had removed the 264 cases of warehoused goods valued at Rs.48,79,776.00 attracting duty of Rs.39,03,821.00 and interest of Rs.18,88,42....
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....that the goods were still under the bonded warehouse and could not be said to have been cleared. In this connection, reference to and reliance was placed on Section 15 of the Customs Act. This position was clarified by Sh. Yashwant Singh Bisht in his statement recorded on 07.08.1992. The appellant, therefore, requested the authority to drop the proceedings. 14. It may be mentioned that the Central Warehousing Corporation (for short 'the Corporation' hereinafter) had also submitted its reply dated 19.12.1993. In the reply it was stated that an open area of 2,000 sq. meters in the premises of the appellant having fencing and a gate with locking arrangement was approved by the customs and central excise authorities as a public bonded warehouse. Appellant vide letter dated 30.08.1989 sought permission from the Superintendent, Customs and Central Excise, Range-III, Pithampur for unloading the cargo covered by Bond No.T-1592 dated 31.05.1989 outside the said warehouse on account of heavy rains, etc. It was pointed out that the trailers carrying the consignment could not enter the said warehouse because those got stuck in the soil outside the said warehouse as the soil had got sluggish....
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....e Commissioner dated 31.12.2002, appellant preferred appeal before the CESTAT. In its order dated 08.10.2003, CESTAT observed that the Commissioner had not looked into the additional documents which were part of the record. CESTAT, therefore, opined that the matter should be remanded back to the adjudicating authority for fresh adjudication after taking into consideration the documents produced by the appellant, including those produced before the CESTAT. Thus, by the order dated 08.10.2003, CESTAT allowed the appeal of the appellant by remanding the matter back to the Commissioner for re-adjudication after affording an opportunity of hearing to the appellant. 19. The matter was taken up by the Commissioner afresh on remand. By a detailed order dated 28.04.2005, the Commissioner directed as under: (i) demand of Rs.3,99,255.00 leviable on the 27 cases found not warehoused was confirmed for recovery from the appellant in terms of the conditions of transit bond. (ii) appellant should pay interest on the duty confirmed in terms of Section 28AB of the Customs Act from the date of enforcement of the said section till the date of actual payment of duty. The interest a....
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....nt has justified the order dated 28.04.2005 which was affirmed by the CESTAT vide order dated 30.04.2009. 23. It may be mentioned that appellant has brought on record two additional documents. Appellant had sought for information from the Central Warehousing Corporation under the Right to Information Act, 2005 vide letter dated 22.09.2009 regarding payment of custom establishment charges by the Corporation. Appellant was informed by the Central Warehousing Corporation vide letter dated 18.12.2009 that the Corporation had deposited a sum of Rs.56,10.294.00 under the head of 'Pithampur Warehousing (Bhanu Iron and Steel Company Limited along with wind up Warehouse) custom establishment charges' for the financial year 1992-1993 to 2007-2008. 24. Learned counsel for the appellant submits that CESTAT had failed to consider the fact that it was on the basis of specific permission granted to the appellant by the proper officer that the impugned goods were found outside the warehouse but within the industrial/factory premises of the appellant. Therefore, in terms Section 64(d) of the Customs Act respondent could not have treated the said goods as having been removed from the warehouse....
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.... 26. Submissions made have been duly considered. 27. We may now refer to some of the relevant provisions of the Customs Act. Section 2(43) defines a 'warehouse' to mean a public warehouse licensed under Section 57 or a private warehouse licensed under Section 58 or a special warehouse licensed under Section 58A of the Customs Act. 'Warehoused goods' has been defined under Section 2(44) to mean goods deposited in a warehouse. 28. Section 12 of the Customs Act deals with dutiable goods. Sub-Section(1) thereof says that duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 on goods imported into or exported from India. 29. Date for determination of rate of duty and tariff valuation of imported goods is dealt with in Section 15. Sub- Section(1) of Section 15 says that the rate of duty and tariff valuation, if any, applicable to any imported goods shall be the rate and valuation in force- (a) in the case of goods entered for home consumption under Section 46, on the date on which a bill of entry in respect of such goods is presented under that section; (b) in the case of goods cleared from a warehouse under Se....
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.... (a) in the case of capital goods intended for use in any hundred percent export-oriented undertaking, till the expiry of five years; (aa) in the case of goods other than capital goods intended for use in any hundred percent export-oriented undertaking, till the expiry of three years; and (b) in the case of any other goods, till the expiry of one year; after the date on which the proper officer has made an order under Section 60 permitting the deposit of the goods in a warehouse. However, proviso (i) (B) says that in the case of any goods which are not likely to deteriorate and which are not intended for use in any hundred percent export oriented undertaking, the period specified in clauses (a), (aa) or (b) may, on sufficient cause being shown, be extended by the Principal Commissioner or Commissioner of Customs for a period not exceeding six months and by the Principal Chief Commissioner or Chief Commissioner of Customs for further period as he may deem fit. 35. Section 64 deals with owner's right to deal with warehoused goods. Section 64, as it stood at the relevant point of time, read as under: 64. Owner's right to deal with warehoused goods.-....
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....goods improperly removed from warehouse, etc. As per sub- Section(1)(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, 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. 40. Once the goods covered by any bond executed under Section 59 have been cleared for home consumption or exported or transferred or are otherwise duly accounted for, and when all amounts due on account of such goods have been paid, the proper officer shall cancel the bond as discharged in full and deliver the same after cancellation to the person who has executed or is entitled to receive it. 41. Section 110(1) of the Customs Act empowers the proper officer to seize any goods if he has reason to believe that such goods are liable to confiscation under the Customs Act. 42. As per Section 111(j), any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehous....
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....lector of Customs, Calcutta, (1996) 5 SCC 576. The question for consideration in Kesoram was the rate at which customs duty was to be levied on goods that remained in a bonded warehouse beyond the permitted period. A two judge bench of this Court after referring to various provisions of the Customs Act held that Section 15(1)(b) would apply to the case of goods cleared under Section 68 from a warehouse upon presentation of a bill of entry for home consumption; payment of duty, interest, penalty, rent and other charges; and an order for home clearance. This Court clarified that provisions of Section 68 and consequently Section 15(1)(b) would apply only when goods have been cleared from the warehouse within the permitted period or its permitted extension and not when by reason of their remaining in the warehouse beyond the permitted period or its permitted extension, the goods would be deemed to have been improperly removed from the warehouse under Section 72. In the facts of that case, it was found that there was nothing on record to suggest that clearance of the goods in question under Section 68 was ordered and, therefore, Section 15(1)(b) had no application. Finally, this Court h....
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....at the aforesaid circular dated 12.07.1989 was withdrawn by the subsequent circular dated 14.08.1997. But, at the relevant point of time, the circular dated 12.07.1989 was holding the field. Thus, the appellate order passed by the Collector of Customs (Appeal) could not be said to be in anyway illegal or erroneous and, therefore, it was not open to the Department to challenge the said order before the CEGAT in contravention of the circular dated 12.07.1989. 48. The decision in Kesoram was approved and applied by a coordinate bench of this Court in SBEC Sugar Ltd versus Union of India, (2011) 4 SCC 668. This Court held that Section 15(1)(b) would be applicable only when the goods are cleared from the warehouse under Section 68 of the Customs Act i.e. within the initially permitted period or during the permitted extended period. When the goods are cleared from the warehouse after expiry of the permitted period or its permitted extension, the goods are deemed to have been improperly removed under Section 72(1)(b) of the Customs Act with the consequence that the rate of duty has to be computed according to the rate applicable on the date of expiry of the permitted period under Secti....
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.... Rs.3,99,255.00 leviable on the 27 cases found not warehoused was confirmed. Appellant was also directed to pay interest on the said duty in terms of Section 28AB of the Customs Act. The 264 cases of imported goods found outside the notified warehouse were confiscated but option of redemption was given to the appellant on payment of fine of Rs.2,00,000.00. For the goods covered by the 264 cases, customs duty amounting to Rs.39,03,821.00 was directed to be recovered from the appellant in terms of Section 71 read with the proviso to Section 28A of the Customs Act. That apart, appellant was directed to pay interest of Rs.18,88,425.00 on the aforesaid quantum of customs duty in respect of the 264 cases from the date of warehousing till the date of detection of the shortage in the warehouse. Further, appellant was directed to pay interest under Section 28AB in respect of the 264 cases from the date of enforcement of the said section to till the date of actual payment of the duty. Penalty of Rs.1,00,000.00 was also imposed on the appellant under Section 112 of the Customs Act. 49.3. In appeal, CESTAT by the impugned order affirmed the aforesaid decision of the Commissioner. 50. We ....
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....hich permission was neither cancelled nor revoked, question of warehousing the goods covered by the 264 cases within the notified public bonded warehouse did not arise. As a corollary, the further question of improperly or unauthorisedly removing the 264 cases from the notified warehouse to outside the said area but within the factory premises of the appellant attracting Section 71 and the consequences following the same did not arise. Inference drawn by the respondent that the permission granted by the Superintendent was only temporary and therefore, the rigor of Section 71 would be attracted, in our view, would not be a correct understanding of the situation and the law. 54. Having said that, we find that there is no explanation on the part of the appellant qua the missing 27 cases. Therefore, the view taken by the respondent and affirmed by the CESTAT that those 27 cases were improperly or unauthorisedly removed from the notified public bonded warehouse is correct and requires no interference. 55. Reverting back to the 264 cases, we are of the view that in a case of this nature, Section 15(1)(b) would have no application. Rather, Section 15(1)(c) would be attracted. 56.....