2005 (4) TMI 573 - HC - Customs

Summary

Issues Involved:
1. Remission of duties on expired beer under Section 23 of the Customs Act, 1962.
2. Prohibition against recovery of duty or interest on expired beer.
3. Temporary restraint on recovery of duty or interest pending final resolution.
4. Permission to destroy expired beer.
5. Whether the petitioner firm is vicariously liable for penalties imposed on its employees.

Issue-Wise Detailed Analysis:

1. Remission of duties on expired beer under Section 23 of the Customs Act, 1962:
The petitioner, a partnership firm trading in Marine Stores, imported 823 cases of beer stored in a licensed private bonded warehouse. The warehousing license was suspended and later canceled, but the Tribunal set aside the cancellation and penalties. The petitioner sought remission of duties under Section 23(1) of the Customs Act, 1962, arguing that the beer had become unfit for human consumption and thus should be destroyed. Section 23(1) states that if imported goods are lost or destroyed before clearance for home consumption, the Assistant Commissioner or Deputy Commissioner of Customs must remit the duty. The court found that the goods had deteriorated and were unfit for human consumption, thus satisfying the criteria for remission under Section 23(1).

2. Prohibition against recovery of duty or interest on expired beer:
The petitioner argued that no duty should be levied as the goods were not cleared for home consumption. The court noted that the goods were stored in a licensed bonded warehouse, and duty would only be payable if the goods were taken out for home consumption. Since the goods had deteriorated and were not removed for home consumption, the court held that the respondent authorities could not demand any duty.

3. Temporary restraint on recovery of duty or interest pending final resolution:
Pending the final resolution of the petition, the petitioner sought to restrain the respondents from recovering any duty or interest. The court granted this interim relief, preventing the respondents from taking any action against the petitioner based on the letter dated 3-2-2004.

4. Permission to destroy expired beer:
The petitioner sought permission to destroy the expired beer, which had become unfit for human consumption. The court directed the respondent authorities to allow the petitioner to destroy the goods in the presence of a proper officer within two weeks. The destruction process was to be carried out in compliance with environmental laws to avoid pollution or degradation.

5. Whether the petitioner firm is vicariously liable for penalties imposed on its employees:
The respondent argued that the petitioner firm was vicariously liable for penalties imposed on its employees for violating various provisions of the Customs Act. However, the Tribunal had set aside the penalties and the cancellation of the warehousing license, finding no contravention of the Act by the petitioner. The court held that the petitioner was not liable for the penalties, as the Tribunal's findings had become final.

Conclusion:
The petition was allowed, directing the respondent authorities to permit the destruction of the expired beer and remit the duty under Section 23(1) of the Customs Act, 1962. The court emphasized that no duty was payable as the goods were not cleared for home consumption, and the petitioner was not vicariously liable for the penalties imposed on its employees. The rule was made absolute, with no order as to costs.