2013 (11) TMI 245 - AT - Customs

Warehousing - Applicability of Circular No. 128/95-Cus. - Applicability to private sector warehouses or public sector warehouse - Held that - On perusal of Section 45 of the Customs Act, 1962, it appears that custody of the imported goods shall be of such person as may be approved by the Commissioner until those are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. Sub-section (2) of Section 45 cases certain responsibilities on the custodian who is approved under Sub-section (1) of Section 45 by the Commissioner. The said section does not specify about penal consequence of law. Once there is no penal consequence prescribed under the law and that has not been invoked in Para 35 of the impugned order, there cannot be mechanical imposition of penalty because there was circular issued by the Board. Section 35 also does not throw light about guidelines to be issued by the Board. But it is mandate of that section that approval of the Commissioner is necessary to the custodian of the goods. Even that section does not empower the Commissioner to prescribe any condition or restriction. Therefore, intention of the Circular cannot be confused with the mandate of Section 45 of the Customs Act, 1962. Hon ble High Court of Andhra Pradesh accordingly held that the Circular is to be read in the context of private sector participation which probably is the situation calling for approval under Section 45 of the Customs Act, 1962. In view of the clear distinction between the two sectors, mandate of Section 45 of Customs Act, 1962 and finding of no prejudice caused to Revenue, appellant succeeds on all these grounds - Following decision of Sujana Steels Ltd. v. CCE, Hyderabad 2000 (9) TMI 82 - HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYD. - Decided in favour of assessee.

Summary

Issues:
Interpretation of Circular No. 128/95-Cus. in relation to public sector warehouses' compliance, Responsibilities of custodian of goods under Section 45 of the Customs Act, 1962, Imposition of penalty based on circular guidelines, Distinction between private and public sector warehouses.

Analysis:

1. Interpretation of Circular No. 128/95-Cus.:
The appellant argued that the Adjudicating Authority's actions were contrary to Circular No. 128/95-Cus., citing a decision of the Hon'ble Andhra Pradesh High Court in a specific case. The appellant contended that as a public sector warehouse, they should be governed by the Andhra Pradesh High Court's decision, which held that the circular guidelines applied to private sector warehouses. The Tribunal noted the distinction between private and public sector warehouses and agreed with the appellant's interpretation, ultimately allowing the appeals.

2. Responsibilities of Custodian under Section 45 of the Customs Act, 1962:
The Revenue argued that a responsible custodian of goods cannot deny compliance with the circular guidelines. The Tribunal examined Section 45 of the Customs Act, 1962, which specifies the custody of imported goods and the responsibilities of the approved custodian. It was noted that the section does not prescribe penal consequences, and the mere existence of a circular does not warrant mechanical imposition of penalties. The Tribunal emphasized the necessity of Commissioner approval for custodians but found no grounds for penalizing the appellant.

3. Imposition of Penalty based on Circular Guidelines:
The Tribunal scrutinized the absence of penal consequences in Section 45 of the Customs Act, 1962, and highlighted that the imposition of penalties should not be automatic based on circular guidelines. It was emphasized that the approval of the Commissioner is crucial for custodians, but this section does not empower the Commissioner to impose conditions or restrictions. The Tribunal concluded that no prejudice was caused to the Revenue by the appellant, leading to the allowance of all appeals.

4. Distinction between Private and Public Sector Warehouses:
The Tribunal delved into the distinction between private and public sector warehouses, emphasizing that the Circular in question was intended for private sector participation in warehousing facilities. By differentiating the mandates of the Circular and Section 45 of the Customs Act, 1962, the Tribunal aligned with the Andhra Pradesh High Court's view that the Circular should be interpreted in the context of private sector participation. This distinction, coupled with the lack of prejudice to Revenue, led to the success of the appellant in all appeals.

In conclusion, the Tribunal's judgment clarified the application of Circular No. 128/95-Cus., the responsibilities of custodians under the Customs Act, the limitations on penalty imposition based on circular guidelines, and the distinction between private and public sector warehouses, ultimately ruling in favor of the appellant on all grounds.