2009 (4) TMI 681 - AT - Customs

Warehoused goods - Deemed removal - Departmental clarifications - Warehoused goods - Clearance of

Summary

Issues Involved:
1. Legality of the duty demand and penalty imposed by the Commissioner of Central Excise.
2. Applicability of Section 15(1)(b) versus Section 15(1)(c) of the Customs Act, 1962 for determining the rate of duty.
3. Validity of the Circular dated 12th July 1989 in light of subsequent legal developments and judicial rulings.
4. Legality of the confiscation of goods and imposition of interest and fine.

Issue-wise Detailed Analysis:

1. Legality of the Duty Demand and Penalty Imposed by the Commissioner of Central Excise:
The Commissioner of Central Excise, Indore, confirmed the demand for duty amounting to Rs. 3,99,255/-, directed payment of interest under Section 28AB of the Customs Act, 1962, and ordered confiscation of 264 packages valued at Rs. 48,79,776/- under Section 111 of the Customs Act, 1962, with an option for redemption on payment of a fine of Rs. 2,00,000/-. Additionally, a demand for customs duty amounting to Rs. 39,03,821/- was confirmed under Section 71 read with the proviso to Section 28A of the Customs Act, 1962, with interest amounting to Rs. 18,88,425/- on 264 packages from the date of warehousing until the date of detection of the shortage, and further interest on the duty under Section 28AB of the Customs Act, 1962, from the date of enforcement of the said Section until the actual payment of duty and penalty of Rs. 1,00,000/-.

2. Applicability of Section 15(1)(b) versus Section 15(1)(c) of the Customs Act, 1962 for Determining the Rate of Duty:
The appellants argued that the duty should be levied in terms of Section 15(1)(c) and not Section 15(1)(b) of the Customs Act, 1962, citing the decision of the Apex Court in Simplex Castings Ltd. and Circular No. 473/206/87-Cus.-VII. However, the respondent refuted this by relying on the decisions of the Apex Court in Kesoram Rayon and Commissioner of Central Excise, Bolpur v. Ratan Melting & Wire Industries, and Circular No. 31/97-Cus. The Tribunal noted that Section 15(1) of the Customs Act prescribes different modes for determining the rate of duty based on the situation, and Section 15(1)(b) applies to goods cleared from a warehouse under Section 68, while Section 15(1)(c) applies to any other goods on the date of payment of duty.

3. Validity of the Circular Dated 12th July 1989 in Light of Subsequent Legal Developments and Judicial Rulings:
The Tribunal observed that the law declared by the Apex Court is binding and overrides any Circular issued by the Department. The Apex Court in Kesoram Rayon held that goods remaining in a warehouse beyond the permitted period are deemed to have been improperly removed, and the rate of duty is determined based on the date of expiry of the permitted period, not the actual date of removal. The decision in Ratan Melting & Wire Industries further clarified that Circulars cannot override statutory provisions or judicial rulings. Consequently, the Circular dated 12th July 1989 could not be applied to the facts of the case.

4. Legality of the Confiscation of Goods and Imposition of Interest and Fine:
The Tribunal upheld the confiscation of 264 packages and the imposition of interest and fine, noting that the appellants admitted to removing the packages without clearance from the warehouse. The findings indicated no compliance with Sections 67, 68, or 69 of the Customs Act for the removal of the goods, and the permitted warehousing period had expired before the inspection. The Tribunal found no illegality in the determination of the rate of duty under Section 15(1)(b) and dismissed the appeal.

Conclusion:
The appeal was dismissed, and the Tribunal upheld the impugned order, confirming the duty demand, interest, penalty, and confiscation of goods. The Tribunal emphasized the binding nature of the Apex Court's rulings over departmental Circulars and the proper interpretation of the Customs Act provisions.