TaxTMI 
TaxTMI 
2026 (8) TMI 865
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....t, 1962. Since the goods had already been released provisionally under bond and bank guarantee, redemption fine of Rs. 80,00,000/- under section 125 of the Customs Act and penalty of Rs. 9,00,000/- under Section 112(a) of the Act were imposed upon appellant. 2. The Commissioner (Appeals), after examining the statutory provisions, evidence and rival submissions affirmed the findings of the Adjudicating Authority. Aggrieved by the said order, the appellant has preferred the present appeal before this Tribunal. 3. The fact in brief is that the appellant imported 5500 MT of Manganese Ore of Gabon Origin through Visakhapatnam Port and filed Warehouse Bill of Entry No. 9065422 dated 04.12.2023 seeking warehousing of the imported goods in Public Bonded Warehouse (PBWH) No. 05/2023 (Code-VTZ1U093). For the said purpose, the appellant executed a statutory warehouse bond under Section 59 of the Customs Act, 1962 and obtained permission from the proper Officer under Section 60 of the Act for removal of the goods from the Customs area solely for the purpose of depositing the same in the designated bonded warehouse. 4. The permission granted under Section 60 of the Customs Act was spec....
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....ption fine was imposed under Section 125 and penalty under Section 112(a) was imposed upon the appellant. 9. The appellant carried the matter in appeal before the Commissioner (Appeals). The Commissioner (Appeals), after independently examining the statutory provisions and the evidence on record, concurred with the Adjudicating Authority that the imported goods had admittedly not been deposited in the designated Public Bonded Warehouse and instead had been diverted to a Private Yard. The Appellate Authority further held that such diversion constituted clear violation of the warehousing provisions of the Customs Act and upheld the confiscation, redemption fine and penalty. 10. It is against the aforesaid Appellate order that the present appeal has been filed before this Tribunal. 11. Learned Counsel for the appellant assailed the impugned orders on facts as well as on law. It was contended that there was no deliberate intention on the part of the appellant to evade customs duty or to illegally clear the goods into the domestic market. According to the Learned Counsel, the imported cargo continued to remain under the effective control of the warehouse operator and there was ....
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.... proceedings are not in serious dispute. The Warehouse Bill of Entry specifically mentioned Public Bonded Warehouse No. 05/2023 (Code VIZ1U093) as the destination warehouse. The appellant had executed the warehousing bond under Section 59 undertaking to comply with all provisions of the Customs Act and the Regulations. Nevertheless, instead of transporting the imported cargo to the notified bonded warehouse, the goods were admittedly transported and stacked in Dolphin Yard, a private open yard belonging to M/s Green Energy Resources, which was never approved as the warehouse specified in the Warehouse Bill of Entry. 16. Learned AR further submitted that the investigation was based not merely upon intelligence but upon overwhelming documentary and oral evidence. Statements of the warehouse keeper, yard supervisor, employees of the appellant, representatives of M/s Green Energy Resources and other connected persons were recorded under Section 108 of the Customs Act. These statements consistently establish that the goods were never physically received in the designated Public Bonded Warehouse but were transported directly from Customs area WQ-6 to Dolphin Yard. These statements are....
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....r Section 138C was stated to be devoid of merit. According to the Revenue, the electronic evidence is only corroborative in nature. The principal evidence consist of the undisputed fact that the goods were never deposited in the designated bonded warehouse and the consistent statements of the concerned persons recorded under Section 108 of the Customs Act. Even, if the electronic evidence is excluded from consideration, the remaining evidence is more than sufficient to establish the contravention alleged in the Show Cause Notice. 21. Learned AR further submits that the appellant has wrongly relied upon the decisions in Vamsee Overseas Marine Pvt Ltd., and M/s Bisco Ltd., supra. The factual matrix of those cases is entirely different. In those matters, the Competent Customs Authorities had either granted permission for the storage arrangement or the dispute related to storage even approved premises. In the present case, however, the goods were admittedly diverted to a completely different private yard which was neither approved nor notified as the designated bonded warehouse. Thus, those decisions have no application to the present controversy. 22. It was further argued that S....
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....following issues arise for determination: (i) Whether the diversion of the imported goods from the designated Public Bonded Warehouse to a Private Yard amounts to contravention of Sections 59 and 60 of the Customs Act, 1962 read with the Warehouse Goods (Removal) Regulations, 2016 ? (ii) Whether said contravention renders the goods liable to confiscation under Section 111(j) of the Customs Act ? (iii) Whether the appellant can escape liability by contending that the diversion was solely the act of its warehouse operator or whether Section 147 fastens responsibility upon the importer ? (iv) Whether the objections regarding the legality of the search and admissibility of electronic evidence vitiate the proceedings ? (v) Whether the redemption fine imposed under Section 125 and the penalty imposed under Section 112(a) are legally sustainable ? 27. Before adverting to the rival contentions, it would be appropriate to examine the statutory scheme governing warehousing of imported goods under the Customs Act, 1962. Chapter IX of the Act creates a self-contained code regulating warehousing of imported goods. Under Section 59, an importer see....
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....oncern while acting within the scope of the authority entrusted to it by the appellant. The statutory responsibility to ensure compliance with the warehousing provisions continued to remain upon the importer. An importer cannot avoid statutory obligations merely be delegating operational activities to an agent or contractor. Secondly, Section 147 of the Customs Act creates a statutory fiction, whereby, every act done by an agent acting on behalf of owner or importer, is deemed to have been done with the knowledge and consent of such owner or importer unless the contrary is established. The burden of rebutting the statutory presumption squarely lies upon the importer. Except making a bald assertion that the warehouse operator independently diverted the goods, the appellant has not produced any contemporaneous correspondence, written instructions or other material to demonstrate that the acts of the warehouse operator were beyond the scope of its authority or contrary to the appellant's express directions. 31. On the contrary, both the Adjudicating Authority and the Commissioner (Appeals) have referred to the statements recorded under Section 108 and the contemporaneous communicat....
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.... from the notified Public Bonded Warehouse to unauthorised private yard. 35. The next question requiring consideration is whether such diversion attracts Section 111(j) of the Customs Act. Section 111(j) provides for confiscation of goods removed or admitted to be removed contrary to the permission granted by the proper Officer or otherwise then in accordance with the provisions of the Act. The Legislative intent behind this provision is to ensure that imported goods remain under Customs control until they are dealt with strictly in accordance with the law. Where permission under Section 60 authorises removal only to a specified bonded warehouse, transportation of the goods to altogether different and unauthorised premises clearly amounts to removal contrary to the permission granted by the proper Officer. 36. The submissions of the appellant that Section 111(j) contemplates only clandestine removal or diversion for home consumption cannot be accepted. The language employed by the Legislature does not restrict the provision only to cases involving clandestine clearance. The decisive factor is whether the movement of the goods conforms to the permission granted under the Act. ....
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.... Yard was under the control of the same warehouse operator and, therefore, the goods substantially remained under its custody also deserves to be rejected. Customs law does not recognise the concept of "substantial compliance" in matters concerning warehousing. What the statute requires is deposit of the imported goods in the warehouse specifically approved and licensed under the Customs Act. Storage of warehouse goods in any premises other than the approved bonded warehouse cannot be treated as compliance merely because both premises were under the management of the same operator. 41. We also find no merit in the appellant's submission that the Department was required to establish mens rea before invoking Section 111(j) of the Customs Act, 1962. Confiscation proceedings under Chapter XIV of the Customs Act are civil proceedings intended to enforce the statutory obligations. Where the statute itself provides that goods removed contrary to the permission granted by the proper Officer shall be liable to confiscation, the existence or absence of a deliberate intention to evade duty is not the decisive consideration. The admitted factual contravention is sufficient to attract the st....
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....) is of wide amplitude and covers not only positive acts but also failure to discharge statutory obligations imposed under the Act. 46. In the present case, the appellant, being the importer, was under a statutory obligation to ensure that the imported goods were transported and deposited in the designated Public Bonded Warehouse in accordance with the permission granted under Section 60. The admitted failure to ensure compliance with this statutory obligation directly resulted in the goods becoming liable to confiscation under Section 111(j). The omission on the part of the appellant, therefore, squarely attracts the provisions of Section 112(a) of the Customs Act. 47. We are equally unable to accept the appellant's plea that penalty cannot be imposed because the actual physical diversion was carried out by M/s Green Energy Resources. As already noticed, Section 147 creates a statutory deeming fiction whereby, the acts of authorised agent are attributable to the importer unless the importer establishes that such acts were wholly beyond the scope of authority and without his knowledge or consent. No convincing material has been produced before us to rebut this statutory presu....