2015 (3) TMI 776 - HC - Customs

Extension of warehousing period - petitioner failed to discharge its duty by not paying the duty due on the warehoused goods as undertaken by it - detained goods were sold in e-auction - said sale proceedings came to be cancelled since the bidder had not fulfilled the terms. - Held that - request for re-export of the goods could be allowed even if the maximum period of warehousing had expired and demand notices had been issued and even if it had been decided to put the goods to auction - circular would not apply to the present case, inasmuch as the warehoused goods were not only decided to put on auction, but also they were already put to e-auction held on 23.12.2011 and sold for ₹ 2,26,55,556/- to one Sri Shiva Impex, Chennai, which stood as highest bidder. Of-course, it is true that the said sale proceedings were subsequently cancelled, but, this cannot make any favour to the petitioner company to claim for extension of the period. It is no doubt true that warehousing is permissible even beyond the period fixed by the statute, subject to payment of interest on the amount of duty on the warehoused goods towards permissible period, however, it is to be noted that mere seeking for extension of the period does not serve the purpose and there should be a reasonable cause has to be shown for such extension. In this case, the petitioner company, right from the inception, has been seeking for extension of the warehousing period from time to time though citing reasons that the company was declared sick, etc., but there was no genuineness in its attempt in clearing the goods even after expiry of extended period. Petitioner company had no intention, whatsoever to clear the goods, but has been attempting throughout one and half a decade long period to stall the disposal of these uncleared time-expired bonded goods. - writ petition is liable to be dismissed for want of merits. - Following decision of Union of India v. Shakti LPG Ltd. 2008 (2) TMI 25 - SUPREME COURT - Decided against assessee.

Summary

Issues Involved:
1. Legality of the detention and auction of imported goods.
2. Applicability of the Circular dated 14.1.2003 for re-export of warehoused goods.
3. Extension of warehousing period under Section 61 of the Customs Act, 1962.
4. Compliance with the conditions for re-export under Section 69 of the Customs Act, 1962.

Detailed Analysis:

1. Legality of the detention and auction of imported goods:

The petitioner imported textile machinery and auxiliary equipment in 1996 but could not clear the goods due to financial difficulties. The goods were bonded in a Customs Bonded Warehouse as per the Customs Act, 1962. The petitioner failed to clear the goods within the permissible one-year period, leading to a demand notice for customs duty and interest under Section 72(1) of the Act. Despite requests for extension, the goods remained uncleared for over 16 years. Consequently, the second respondent issued a detention notice under Section 72(2) and later sold the goods in an e-auction. The court found that the petitioner had no genuine intention to clear the goods and was merely attempting to delay the proceedings.

2. Applicability of the Circular dated 14.1.2003 for re-export of warehoused goods:

The petitioner relied on the Circular dated 14.1.2003, which allows re-export of goods even if the warehousing period had expired and demand notices were issued. However, the court held that this circular did not apply to the present case because the goods had already been put to auction. The court referenced the Supreme Court's decision in Union of India v. Shakti LPG Ltd., which clarified that the circular could not authorize re-export once the goods were auctioned.

3. Extension of warehousing period under Section 61 of the Customs Act, 1962:

The petitioner sought multiple extensions of the warehousing period, citing financial difficulties and the company's status as a sick unit. However, the court noted that the petitioner failed to provide concrete evidence or documents to support the request for extension. The court emphasized that mere requests for extension without genuine reasons do not serve the purpose and only delay the proceedings. The court found that the petitioner had been dragging the proceedings for over 16 years without any intention to clear the goods.

4. Compliance with the conditions for re-export under Section 69 of the Customs Act, 1962:

The court highlighted that the petitioner did not comply with the conditions for re-export under Section 69 of the Customs Act, 1962. The warehousing period had expired in 1997, and no application for extension was filed in the prescribed format. The court referenced the Supreme Court's decision in M/s. Kesoram Rayon v. Commissioner of Customs, Calcutta, which held that goods cease to be warehoused goods once the warehousing period expires. The third respondent's order mentioned that the petitioner failed to discharge the duty due on the warehoused goods and delayed the payment of customs duty and other charges for 16 years.

Conclusion:

The court concluded that the writ petition lacked merit and dismissed it. The court found that the petitioner had no genuine intention to clear the goods and was merely attempting to delay the proceedings. The court also ruled out the applicability of the Circular dated 14.1.2003, as the goods had already been put to auction. The court emphasized that the petitioner failed to comply with the conditions for re-export under Section 69 of the Customs Act, 1962, and did not provide sufficient reasons for extending the warehousing period. Consequently, the court dismissed the writ petition and closed the connected miscellaneous petition.