2001 (8) TMI 204 - AT - Customs

Summary

Issues Involved:
1. Applicability of Section 15(1)(b) of the Customs Act, 1962.
2. Determination of the rate of duty for warehoused goods.
3. Status of the goods after payment of customs duty and clearance for home consumption.
4. Validity of the demand for additional customs duty and penalties.

Issue-wise Detailed Analysis:

1. Applicability of Section 15(1)(b) of the Customs Act, 1962:
The core issue was whether Section 15(1)(b) of the Customs Act applied to goods that had already been cleared from customs charge but remained in the warehouse. The appellant argued that once the customs duty was paid and the goods were cleared for home consumption, Section 15(1)(b) was irrelevant. The respondent contended that the rate of duty should be determined based on the actual date of removal from the warehouse, as the goods were still in the warehouse.

2. Determination of the rate of duty for warehoused goods:
The appellant paid customs duties based on the rate at the time of the ex-bond bill of entry assessment. However, the customs officers argued that the rate of duty applicable at the time of actual removal from the warehouse should apply, as per Section 15(1)(b). The Tribunal found that the goods, although stored in a warehouse, were no longer warehoused goods once cleared for home consumption, thus negating the application of Section 15(1)(b).

3. Status of the goods after payment of customs duty and clearance for home consumption:
The appellant maintained that the goods, after payment of customs duties and clearance for home consumption, were no longer under customs control and were stored in the warehouse due to practical constraints. The Tribunal agreed, noting that the storage tank was considered a godown by central excise authorities, and the goods were no longer warehoused goods under customs law.

4. Validity of the demand for additional customs duty and penalties:
The customs officers issued a show cause notice for unpaid basic and additional customs duties, leading to a demand of Rs. 12,78,116/- and a penalty of Rs. 5,000/-. The Tribunal found that the demand was unjustified as the goods had already been cleared for home consumption and the duty was paid. The Tribunal referenced the Orissa High Court's decision in Orissa Cement Ltd. and the Tribunal's own decision in Hindusthan Zinc Ltd., supporting the appellant's position that no further duty was owed once the goods were cleared for home consumption.

Conclusion:
The Tribunal concluded that the demand for additional customs duty and the penalties were unsustainable. It held that once the customs duty was paid and the goods were cleared for home consumption, they were no longer warehoused goods, and Section 15(1)(b) did not apply. The appeal was allowed, setting aside the impugned order and granting consequential relief to the appellants.