2014 (12) TMI 608 - HC - Customs

Expiry of warehousing period - amount realized through auction could not meet the dues of the Government, demand raised for recovery of balance demand - Held that - appellant was aware that the permission of the warehousing of the goods was for a period of one year and the same had already been expired, however, neither cleared the cargo nor sought extension of warehousing period in the prescribed manner in spite of the Department sending more than one communication. In such circumstances the order passed by the CESTAT is perfectly justified. Section 28 of the Act will have relevance only when there is no levy or short levied as has been stated in Section 28 of the Customs Act. On the admitted fact position that there was provisional levy already made in respect of the goods and the same were brought under double duty bond, we have no hesitation in holding that the proceedings now initiated under Section 72 read with 142 of the Customs Act as by way of recovery of the amount, payable by the importer is well in accordance with the provisions of the Act. The contention of the assessee that there was no notice issued prior to the sale of the bonded goods has nothing to do with the recovery of the amount due and payable by the importer. - Decided against assessee.

Summary

Issues:
1. Interpretation of provisions of Section 72(2) of the Customs Act, 1962.
2. Validity of the show cause notice issued under Section 72 and 142 of the Customs Act, 1962.
3. Justification of reversing the order of Lower Authorities under Section 72(2) of the Customs Act, 1962.

Issue 1: Interpretation of Section 72(2) of the Customs Act, 1962
The appellant imported 'whole areca nut' and warehoused it without clearing or extending the bonding period. The Department auctioned the goods due to non-compliance. The Assistant Commissioner dropped the demand, citing lack of duty liability options for the importer and time bar under Section 28 of the Act. The Appellate Authority rejected the Department's appeal, leading to the CESTAT allowing the appeal and confirming the duty demand. The appellant argued that the show cause notice was time-barred and lacked a pre-sale notice, contrary to Section 72(2). The Court held that the duty demand was valid under the Act since the appellant didn't clear the goods within the bond period.

Issue 2: Validity of show cause notice under Section 72 and 142 of the Customs Act, 1962
The Department issued a show cause notice demanding duty and penalties under Sections 72 and 142 of the Act after auctioning the uncleared goods. The appellant failed to extend the bonding period despite reminders. The Original and Appellate Authorities incorrectly considered the notice time-barred under Section 28. The Court clarified that the notice was valid under Section 72 for demanding duty on uncleared goods after the bond period, emphasizing the machinery provision for recovering sums due to the Government.

Issue 3: Reversal of Lower Authorities' Order under Section 72(2) of the Customs Act, 1962
The Lower Authorities dropped the demand, focusing on the time bar and lack of duty liability options for the importer. The CESTAT reversed this decision, upholding the duty demand. The appellant argued against the lack of pre-sale notice and time bar. The Court emphasized that the duty demand was valid as the appellant didn't clear the goods within the bond period, rejecting the appellant's contentions. The Court confirmed the CESTAT's order, dismissing the Civil Miscellaneous Appeal.

This comprehensive analysis of the judgment highlights the interpretation of relevant legal provisions and the Court's reasoning behind upholding the duty demand and dismissing the appeal.