2017 (8) TMI 207 - HC - Customs

Jurisdiction - power to allow refund of the warehousing charges - Whether the CESTAT was justified in holding that the Respondent was not liable to pay rent/warehousing charges in view of the fact that the ownership of the goods remained with it? Held that - It is plain from the impugned order of the CESTAT, that there is no mention of the provision of law in terms of which the CESTAT has granted relief to the Respondent. This is a matter for concern since the CESTAT is a statutory tribunal. It derives its powers and jurisdiction from the specific provisions of the statutes it deals with, one of which, in the context of the present appeal, is the Customs Act 1962 (CA). Likewise, the Assistant Commissioner of Customs (Preventive) and the Commissioner of Customs (Appeals), have all to function within the scope of their powers as conferred by the CA. It is possible that in the exercise of such powers, they may have to refer to and/or apply other relevant statutory provisions. It is also possible that in terms of the specific provisions of the CA, they may have certain discretionary powers. But even these have to be exercised reasonably and within the ambit of the CA. In no instance can they perform their adjudicatory functions outside the scope and ambit of the enumerated powers under the concerned statutes. There appears to be no specific provision in the CA or the rules thereunder which contemplates refund of warehousing charges. The Court has also not been shown any regulation or circular which permits an application to made to an officer of the Customs exercising powers of adjudication powers, to entertain and grant the prayer for refund of warehousing charges. There is no provision in the CA or any other law that enabled the CESTAT to grant such a relief - appeal allowed - decided in favor of Revenue.

Summary

Issues:
- Whether CESTAT was justified in holding that the Respondent was not liable to pay rent/warehousing charges?
- Whether the CESTAT had the power to grant a refund of warehousing charges to the Respondent?

Analysis:
- The appeal by the Customs Department was against an order passed by CESTAT allowing the appeal filed by the Respondent regarding the liability to pay rent/warehousing charges. The Respondent imported goods with erroneous declarations, leading to seizure and subsequent investigations by the Directorate of Revenue Intelligence.
- The Commissioner of Customs confiscated the goods with redemption fines and penalties imposed. The Respondent appealed to CESTAT, seeking release of goods from the warehouse upon payment of fines and penalties. The Respondent paid warehousing dues under protest, seeking a refund later.
- The CESTAT set aside the orders of the Assistant Commissioner and Commissioner (Appeals), stating that the Respondent was not liable to pay rent. However, the CESTAT failed to cite any legal provision for granting relief.
- The Court highlighted the absence of provisions in the Customs Act for refunding warehousing charges. Referring to relevant sections, it emphasized that the CA does not contemplate refund of such charges.
- Drawing parallels with a previous case on demurrage charges, the Court clarified that Customs authorities lack the power to waive such charges without specific legal provisions. The Respondent's plea for refund was deemed unsupported by law.
- The Respondent's argument that warehousing was illegal and charges were paid under protest was rejected, emphasizing the lack of legal basis for refund. The Court ruled in favor of the Customs Department, setting aside CESTAT's order and disallowing the refund of warehousing charges.