2006 (12) TMI 427 - AT - Central Excise

Summary

Issues: Liability of importer for duty on shortage of goods while in bonded warehouse custody. Applicability of Customs Act provisions Sec. 28 and Sec. 72.

Liability of Importer for Duty on Shortage of Goods:
The case involved a dispute regarding the liability of an importer for payment of duty on the shortage of goods while they were in the custody of a public bonded warehouse, Central Warehousing Corporation (CWC). The importer had imported Di-Isobutylene and warehoused it at Kandla, following which a portion was transferred to CWC, Khopoli. A shortage was discovered when the importer sought clearance, leading to demands for customs duty and special excise duty. The importer argued that they were not liable for duty on the shortage as CWC was the custodian and should bear the responsibility. However, both authorities confirmed the duty liability on the importer for the shortage goods.

Applicability of Customs Act Provisions:
The appellant relied on a previous judgment in the case of Essar Oil Ltd. v. Commissioner of Customs (Prev.), Jamnagar, regarding the applicability of Customs Act provisions. They argued that Sec. 28 was not applicable as no order permitting clearance for home consumption was issued. Additionally, they contended that Sec. 72 was also not applicable based on a different case law. The court acknowledged the doubt surrounding the applicability of Sec. 72 to situations where goods were not properly accounted for by the custodian, CWC. Considering the facts and circumstances, the court found a prima facie case in favor of the importer, suggesting that the responsibility for duty payment might lie with the custodian. As a result, the court waived the pre-deposit and granted a stay on recovery pending appeal disposal.

In conclusion, the judgment addressed the importer's liability for duty on shortage goods in a bonded warehouse and analyzed the applicability of relevant Customs Act provisions. The decision highlighted the importance of proper custodial accountability and raised questions about the responsibility for duty payment in such cases, ultimately granting relief to the importer based on a prima facie case in their favor.