1994 (10) TMI 78 - HC - Customs

Summary

Issues Involved:

1. Legality of the demand for payment of warehousing charges.
2. Applicability of Section 49 of the Customs Act.
3. Responsibility for warehousing charges.
4. Impact of the confiscation and subsequent release of goods on ownership and liability.

Issue-wise Detailed Analysis:

1. Legality of the demand for payment of warehousing charges:

The petitioner challenged the demand for warehousing charges amounting to Rs. 4,11,612.50, arguing that the goods were detained by customs authorities and not voluntarily warehoused. The court found that the Assistant Collector of Customs and the Central Warehousing Corporation had not properly examined the relevant issues, leading to the issuance of the notice of demand. The demand notice dated 22-5-1990 was quashed, and the matter was remanded to the Assistant Collector of Customs for reconsideration.

2. Applicability of Section 49 of the Customs Act:

The petitioner argued that the goods should be considered under Section 49 of the Customs Act, which allows for the storage of goods in a public warehouse pending clearance, without deeming them as warehoused goods for the purposes of the Act. The court noted that the petitioner had made applications under Section 49 on 5-12-1987 and 3-1-1988, but no action was taken by the Assistant Collector. The court emphasized that the Assistant Collector had a statutory duty to record satisfaction and permit storage under Section 49, which was not fulfilled.

3. Responsibility for warehousing charges:

The court examined whether the goods were warehoused under the provisions of Chapter IX of the Customs Act, which would attract warehousing charges under Section 63. The court found that the goods were initially detained by customs authorities and later shifted to Ghaziabad. The petitioner believed that its application under Section 49 had been allowed, as it was not rejected. The court highlighted that the Assistant Collector had not properly addressed the petitioner's application under Section 49, leading to confusion about the applicability of warehousing charges.

4. Impact of the confiscation and subsequent release of goods on ownership and liability:

The court noted that the goods were confiscated on 29-12-1987 under Section 111(m) of the Customs Act, with an option for the petitioner to pay a redemption fine and penalty. The confiscation order was later set aside by the Customs, Excise, and Gold (Control) Appellate Tribunal, and the proceedings were dropped. The court emphasized that the ownership of the goods remained in suspended animation during the appeal, and upon the confiscation order being set aside, the ownership was restored with unbroken continuity. The court also addressed the issue of interest on customs duty, which was waived by the Board of Central Excise and Customs on the ground that the petitioner was not responsible for the detention of goods.

Conclusion:

The court allowed the petition, quashed the demand notice dated 22-5-1990, and remanded the matter to the Assistant Collector of Customs for a fresh decision on the issues involved. The Assistant Collector was directed to pass an order on the application under Section 49 dated 3-1-1988 and then decide other matters in accordance with the law. The court also emphasized the need for a thorough examination of the facts and legal issues by the Assistant Collector.