2015 (10) TMI 1774 - HC - Customs

Clearance of where-housed goods - Effective rate of duty on Ex-Bond clearance - rate of duty changed after out of charge order issued - Whether it was lawful on part of Respondent in demanding differential amount of duty on the basis of notification dated 03.08.2001 on balance quantity of consignment covered by Ex-Bond Bills of Entry Nos.2915, 3167 and 3199 dated 04.07.2001, 20.07.2001 and 23.07.2001 respectively? Revenue states that the contention that Ext.P6 notification came into force only on 03.08.2001 is no more available to the Respondents Petitioner contends that it has obtained out of charge from Customs, much prior to 06.08.2001, the date on which Ext.P6 notification No.36/2001-CUS (NT) issued; thus not liable to pay differential duty. Held That - Having obtained out of charge order for home consumption issued by proper officer in compliance of Section 68 of the Act and licence of private warehouse stood cancelled before 06.08.2001, the date of which Ext.P6 notification dated 03.08.2001 issued by Respondent, petitioner is not liable to pay differential duty - Respondent shall pass appropriate orders releasing the bank guarantee for differential duty amount in terms of orders of this Court, within a period of one month Decision made in the case of Priyanka Overseas (P) Ltd. s case (supra) 1990 (11) TMI 145 - SUPREME COURT OF INDIA followed Decided in favour of the assessee.

Summary

Issues Involved:
1. Validity and applicability of Notification No.36/2001-CUS (NT) dated 03.08.2001.
2. Lawfulness of demanding differential duty based on the said notification.
3. Determination of the effective date of the notification.
4. Compliance with Section 68 of the Customs Act, 1962.

Issue-Wise Detailed Analysis:

1. Validity and Applicability of Notification No.36/2001-CUS (NT) dated 03.08.2001:
The petitioner challenged the validity of Ext.P6 notification, which fixed the tariff value per MT of RBD Palmolein at US$ 372. The petitioner sought a declaration that the goods imported and for which duty had already been paid should be released without further duty based on the new notification. The High Court referenced the Supreme Court's decision, which stated that the notification came into force only on 06.08.2001, as it was offered for sale on that date. Thus, the notification's applicability from 03.08.2001 was invalid.

2. Lawfulness of Demanding Differential Duty Based on the Said Notification:
The 2nd respondent refused to release the balance quantities of the consignment, demanding differential duty based on the new tariff value. The Court held that such a demand was unlawful, as the notification was not effective on the dates when the duty was paid and accepted (06.07.2001, 23.07.2001, 24.07.2001, and 04.08.2001). The Supreme Court's decision clarified that the notification could not retroactively affect goods cleared before 06.08.2001.

3. Determination of the Effective Date of the Notification:
The Court reiterated the Supreme Court's finding that for a notification to be effective, it must be published and offered for sale. In this case, the notification was published late on 03.08.2001 and offered for sale on 06.08.2001. Therefore, the effective date was 06.08.2001, and any demand for differential duty based on an earlier date was invalid.

4. Compliance with Section 68 of the Customs Act, 1962:
The Court examined whether the petitioner complied with Section 68, which involves paying duty and obtaining an 'out of charge' order from the proper officer. It was found that the petitioner had paid the duty and obtained the necessary clearances before the effective date of the new notification. The Court cited precedents, including Biecco Lawrie Ltd. and Priyanka Overseas (P) Ltd., to affirm that once duty is paid and clearance is granted, the goods are no longer considered warehoused, and the new tariff rates do not apply.

Conclusion:
The High Court declared that the petitioner was not liable to pay the differential duty for the balance quantities of the consignment as the notification was not in force when the duty was paid and clearance obtained. The Court ordered the release of the bank guarantee/bond furnished by the petitioner for the differential duty amount, provided the 'out of charge' order and cancellation of the private warehouse license were obtained before 06.08.2001.