2007 (4) TMI 87 - AT - Customs

Warehoused goods - Re-classification of goods is not permissible while filing ex-bond BOE for the purpose of remaining goods from warehouse in ordinary course - BOE filed after expiry of warehousing period is of no legal consequence

Issues Involved:
1. Demand of duty on uncleared goods.
2. Appropriation of amount paid.
3. Demand of interest under Section 72 of the Customs Act.
4. Imposition of penalty under Section 117 of the Customs Act.
5. Classification and valuation of design documents.
6. Eligibility for refund of excess duty paid.

Issue-wise Detailed Analysis:

1. Demand of Duty on Uncleared Goods:
The Assistant Commissioner confirmed a duty demand of Rs. 3,07,65,945/- on 11 packages (actually 9) of parts of ASP and design documents that remained uncleared beyond the warehousing period. The Commissioner (Appeals) upheld this demand, agreeing with the original authority's findings that the warehoused goods were valued at Rs. 22,94,76,040/- and were to be cleared on payment of duty on this value.

2. Appropriation of Amount Paid:
The Show Cause Notice proposed to appropriate the amount of Rs. 3,07,65,945/- paid by SISCOL on 29-8-2003. The Assistant Commissioner confirmed this appropriation, and the Commissioner (Appeals) upheld this decision, noting that the duty had been correctly paid on the warehoused goods.

3. Demand of Interest Under Section 72 of the Customs Act:
The Assistant Commissioner demanded Rs. 4,14,22,762/- as interest on the duty for the period from the expiration of the warehousing period till 29-8-2003. The Commissioner (Appeals) upheld this demand, referencing the Supreme Court's decision in Kesoram Rayon v. Collector, which established that interest is payable as compensation for the delay in duty payment. The Tribunal found that the interest demand was correctly calculated based on the appellants' declarations and upheld the lower authorities' decision.

4. Imposition of Penalty Under Section 117 of the Customs Act:
The Assistant Commissioner imposed a penalty of Rs. 10,000/- on SISCOL under Section 117 for failing to comply with warehousing provisions. The Commissioner (Appeals) upheld this penalty, and the Tribunal agreed, noting that Section 117 applies where the Act does not provide for a specific penalty. The Tribunal also referenced the Punjab & Haryana High Court's decision in CCE, Delhi-III v. M/s. Electrolus Kelvinator Ltd., which reversed the immunity from penalty in cases of duty payment before the issuance of a Show Cause Notice.

5. Classification and Valuation of Design Documents:
SISCOL challenged the classification of design documents under CTH No. 8419.06 and sought re-classification under CTH No. 49.06, claiming exemption under Notification No. 21/02-Cus. The Assistant Commissioner rejected this claim, finding that the design documents were part of the plant and machinery imported and should be cleared on payment of duty on the total value of Rs. 22,94,76,040/-. The Commissioner (Appeals) upheld this decision, citing the Tribunal's decision in VBC Industries Ltd. v. CC, Chennai, which held that the classification of warehoused goods could not be altered at the time of ex-bond clearance. The Tribunal agreed, finding that the classification and valuation of warehoused goods should not be altered unless there was a misdeclaration or a change in the tariff entry wording.

6. Eligibility for Refund of Excess Duty Paid:
SISCOL claimed a refund of Rs. 2,69,58,955.56, arguing that the design documents were classifiable under CTH 49.06 and attracted a 'nil' rate of duty. The Assistant Commissioner and Commissioner (Appeals) rejected this claim, finding that the value of the warehoused goods could not be revised at the time of clearance for home consumption. The Tribunal upheld this decision, referencing the Supreme Court's decision in Kesoram Rayon v. Collector and the Madras High Court's decision in Commissioner of Customs, Chennai v. Tungabhadra Fibres Ltd., which established that the valuation at the time of warehousing was not sacrosanct but could not be altered unless there was a change in the rate of duty or tariff valuation.

Conclusion:
The Tribunal upheld the impugned order, dismissing the appeal and confirming the demand of duty, appropriation of amount paid, demand of interest, imposition of penalty, and rejection of the re-classification and refund claims. The Tribunal found that the lower authorities' decisions were based on sound legal grounds and supported by relevant judicial authorities.

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