2007 (2) TMI 158 - HC - Customs

For relinquishment of title of warehoused goods, discretion of proper officer is immaterial but conditions must be fulfilled i.e order for clearance for home consumption should not been made & rent, interest, penalties etc. should have been paid conditions fulfilled so no improper removal of goods

Summary

Issues Involved:
1. Application of proviso to Section 68 of the Customs Act, 1962.
2. Relationship between Section 68 and Section 72 of the Customs Act, 1962.
3. Liability of the importer for customs duty, rent, interest, and other charges.
4. Interpretation of Supreme Court's decision in Kesoram Rayon v. Collector of Customs, Calcutta.

Issue-wise Detailed Analysis:

1. Application of Proviso to Section 68 of the Customs Act, 1962:
The primary issue revolves around the petitioners' application under the proviso to Section 68 of the Customs Act, which allows the owner of warehoused goods to relinquish their title to the goods upon payment of rent, interest, other charges, and penalties, thereby absolving them from the liability to pay customs duty. The petitioners argued that since no order for clearance of goods for home consumption had been made, they were entitled to relinquish their title under the proviso to Section 68. The court agreed, noting that the proviso to Section 68, inserted on 14-5-2003, operates independently of Section 72 and allows for relinquishment of goods still lying in the warehouse without the need to pay customs duty.

2. Relationship between Section 68 and Section 72 of the Customs Act, 1962:
The court examined the interplay between Section 68 and Section 72. Section 72(1)(b) allows the proper officer to demand full duty on warehoused goods that have overstayed their permitted period. However, the court found no disharmony between Sections 68 and 72. It held that while Section 72 enables the proper officer to charge duty on overstayed goods, Section 68 provides the owner with an option to relinquish the goods before an order for home consumption is made. This relinquishment absolves the owner from paying customs duty, although other liabilities such as rent, interest, and penalties remain.

3. Liability of the Importer for Customs Duty, Rent, Interest, and Other Charges:
The court clarified that relinquishment under the proviso to Section 68 does not absolve the importer from all liabilities. While the importer is not liable to pay customs duty upon relinquishment, they remain liable for rent, interest, and other charges. The court emphasized that the relinquishment transfers the title of the goods to the revenue, allowing the revenue to recover other dues from the importer.

4. Interpretation of Supreme Court's Decision in Kesoram Rayon v. Collector of Customs, Calcutta:
The court addressed the Revenue's reliance on the Supreme Court's decision in Kesoram Rayon, which dealt with the rate of duty applicable to goods overstaying in a warehouse. The court distinguished the present case, noting that the Supreme Court's decision did not address the proviso to Section 68, which was inserted after the judgment. The court held that the Supreme Court's decision was not relevant to the issue of relinquishment under Section 68, as it focused on the rate of duty for goods deemed to be improperly removed under Section 72(1)(b).

Conclusion:
The court allowed the petition, quashing the impugned order dated 17-3-2005. It held that the petitioner was entitled to relinquish the title to the goods under the proviso to Section 68, thereby absolving them from the liability to pay customs duty. However, the petitioner remained liable for payment of rent, interest, and other charges.