2016 (8) TMI 396 - HC - Customs

Warehousing application to be declared as sick company - inability to clear the warehoused goods re-export of imported goods warehouse license extended demand of duty and interest on warehoused goods detention of remaining goods for recovery of duty and interest by respondents auction of goods by respondents application before respondent to grant opportunity to export goods Circular dated 14.01.2003. Held that - if a request is made seeking permission to re-export the goods imported, the same may be allowed, even if the permitted period for bonding has expired and demand notice has been issued or it has been decided to put the goods under auction. However, while doing so, it is necessary to extend the period of warehousing under Section 61 of the Customs Act, to enable the importer to export the goods within the permitted period of warehousing. Appellant is permitted to make a representation to the respondents seeking permission to re-export the goods lying in the balance containers time limit for clearance granted is one year appeal allowed decided in favor of appellant.

Summary

Issues:
- Appellant's request to re-export goods from Customs Bonded Warehouse
- Applicability of Circular dated 14.01.2003 for re-export permission
- Rejection of Appellant's request by Single Judge
- Legal grounds for setting aside the Single Judge's order

Analysis:

Issue 1: Appellant's request to re-export goods from Customs Bonded Warehouse
The Appellant Company imported textile machinery and auxiliary equipment in 1996 but faced financial difficulties, leading to bonding the goods in a Customs Bonded Warehouse without paying duty. Efforts to clear the goods were hindered by financial crises and proceedings before the BIFR. Permission to re-export some containers was granted, but the remaining goods were not cleared. The Appellant's request to re-export the balance containers was rejected, leading to legal proceedings.

Issue 2: Applicability of Circular dated 14.01.2003 for re-export permission
The Circular dated 14.01.2003 allowed re-export of goods even after the bonding period had expired or auction proceedings had started, provided the warehousing period was extended. The Appellant argued that this Circular applied to their case, entitling them to re-export the remaining goods. The Court examined the Circular's provisions to determine its relevance to the Appellant's situation.

Issue 3: Rejection of Appellant's request by Single Judge
The Single Judge rejected the Appellant's request based on delay in seeking permission and a Supreme Court decision indicating the Circular's inapplicability once goods were auctioned. The Appellant's continuous efforts to find buyers and representations to the authorities were disregarded. The Court analyzed the grounds on which the Single Judge dismissed the Appellant's plea.

Issue 4: Legal grounds for setting aside the Single Judge's order
The High Court found that the Appellant had actively pursued re-export options and that the goods were not auctioned despite e-auction attempts. The Court disagreed with the Single Judge's interpretation of the Supreme Court decision and emphasized the Circular's provisions supporting the Appellant's request. Consequently, the High Court set aside the Single Judge's order, allowing the Appellant to represent their case for re-exporting the remaining goods within a specified timeframe.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, and the Court's reasoning for setting aside the Single Judge's decision in favor of the Appellant.