2014 (10) TMI 299 - AT - Customs

Confiscation of goods - Relinquishment of title of goods - Interest on warehoused goods - Held that - Section 72 (1) (b) states that any warehoused goods not removed from a warehouse at the expiration of the period permitted under Section 71 are considered as goods improperly removed and the owner of such goods is required to pay, the full amount of duty chargeable together, with all penalties, rent, interest and other charges payable in respect of such goods. 1 st proviso to Section 68 introduced w.e.f. 14.5.2003, provides for relinquishment of title of warehoused goods at any time before clearance of goods for home consumption. Section 72 (1) (b) does not stipulate filing of Bill of Entry for payment of duty. Further, since the goods are considered as improperly removed from the warehouse, the same cannot be considered as warehoused goods. Appellant has sent a letter for relinquishing title of the goods after more than ten years of the expiry of the warehousing period. We also note that even when the letter for relinquishing the title was sent the appellants have not made payment of rent, interest and other charges and penalties. We also note that the second proviso to Section 68 of the Customs Act, 1962 which was introduced with effect from 18.4.2006 also provides that relinquishment shall not be allowed where offence appears to have been committed. In this case in the impugned order goods have been held to be confiscated under Section 111 (m) of the Customs Act, 1962 and are confiscated. - Decided against assessee.

Issues Involved:
1. Valuation of imported goods.
2. Relinquishment of title to warehoused goods.
3. Liability for customs duty, interest, and penalties.
4. Applicability of Section 68 and Section 72 of the Customs Act, 1962.
5. Confiscation of goods under Section 111(m) of the Customs Act, 1962.

Detailed Analysis:

1. Valuation of Imported Goods:
The appellant imported eight consignments of plant and machinery during October 1994 to September 1995. The goods were kept in a Bonded Warehouse, and intelligence indicated that additional amounts relating to the technical knowledge fee were to be paid to the supplier. The Commissioner initially dropped the Show Cause Notice, but the Tribunal remanded the matter for de novo adjudication. The Tribunal directed that the valuation of into Bond BE has to be arrived at as per the law and orders on the loading on pro rata or otherwise of the knowhow fee were required to be arrived at.

2. Relinquishment of Title to Warehoused Goods:
The appellant submitted a letter to the Commissioner of Customs relinquishing the title of the goods. The adjudicating authority accepted the relinquishment for two Bills of Entry but rejected it for the remaining six. The appellant argued that under the proviso to Section 68 of the Customs Act, 1962, they could relinquish the title before the goods were cleared for home consumption. The appellant cited the Tribunal's decision in Essar Oils Ltd vs CC and RPG Cables Ltd vs CC to support their contention.

3. Liability for Customs Duty, Interest, and Penalties:
The adjudicating authority confirmed a duty amount of Rs. 7,15,28,985/- under Section 68 read with Section 72 of the Customs Act, 1962, and held that the appellants were liable to pay interest on the warehoused goods under Section 61 after the expiry of 90 days from the initial warehousing period. The plant and machinery were confiscated under Section 111(m), and a penalty of Rs. 25 lakhs was imposed.

4. Applicability of Section 68 and Section 72 of the Customs Act, 1962:
The learned A.R. argued that once the warehousing period is over, the goods are deemed to be improperly removed from the warehouse under Section 72, and hence, the proviso to Section 68 is not applicable. The Tribunal noted that Section 68 allows relinquishment of title before clearance for home consumption, but Section 72 requires payment of duty, penalties, and other charges for goods not removed within the permitted period.

5. Confiscation of Goods under Section 111(m) of the Customs Act, 1962:
The goods were confiscated under Section 111(m) as the declared value was enhanced, considering the proportionate technical knowhow fee. The Tribunal upheld the confiscation and the penalty imposed.

Conclusion:
The Tribunal dismissed the appeal, holding that once the warehousing period has expired, the goods are deemed to be improperly removed from the warehouse and cannot be considered as warehoused goods. The appellants are required to pay duty under Section 72(1)(b) of the Customs Act, 1962, irrespective of their intention to relinquish the title. The Tribunal also noted that the appellant's letter for relinquishing the title was sent more than ten years after the expiry of the warehousing period, and the second proviso to Section 68, introduced on 18.4.2006, prevents relinquishment where an offense appears to have been committed. The appeal was dismissed, and the duty, interest, and penalties were upheld.

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