2005 (8) TMI 223 - AT - Customs

Demand (Customs) - interest and penalty - Bonded Warehoused goods - department seeking details of goods in working and non-working condition - HELD THAT - We find that the appellants are not contesting the duty liability appropriated by the department with regard to an amount of Rs 1,89,120/-, the contest is to the extent of Rs. 19,90,450/- which has been appropriated by the Department even before the issuance of show cause notice. The contention of the assessee has already been noted supra that they have abandoned the goods when their application for extension of warehousing period was still subsisting and hence question of paying duty, interest and penalty does not arise. It is seen from the judgment of CCE v. Garden Silk Mills Ltd. 1999 (12) TMI 280 - CEGAT, MUMBAI and Mafatlal fine Spinning Mills 1986 (12) TMI 33 - HIGH COURT OF JUDICATURE AT BOMBAY that the demand of duty is invalid when importer relinquishes his title to ownership of goods before the order of clearance for home consumption is passed, even if the warehousing period has expired. As the appellants have abandoned the goods on 3-9-03 even before the issuance of an order for home clearance was made or demands raised in the show cause notice, therefore in terms of these two judgments of the Tribunal and Bombay High Court, the appellants contention is required to be accepted by setting aside the order demanding duty of Rs 19,90,450/-. The Kesoram Reyons case 1996 (8) TMI 109 - SUPREME COURT deals only with the question of rate of duty at the time of clearance of warehoused goods. It does not pertain to abandonment of title of goods and liability to pay duty. The reliance of learned Commissioner on this judgment is not proper. In the light of the judgments cited by the appellants the confirmation of demand on the goods which were abandoned is not proper and is required to be set side. As the duty is not demandable on abandoned goods, therefore the prayer of the appellant for setting aside the interest and penalty is justified in the light of subsequent judgment on this point rendered in the case of Rashtriya Ispat Nigam Ltd. 2003 (5) TMI 509 - SC ORDER , the appellants appeal and the prayer made is accepted. Appeal is allowed with consequential relief, if any.

Summary

Issues:
Confirmation of demand for warehoused goods, abandonment of goods under Section 68, duty liability, interest, and penalty.

Confirmation of Demand for Warehoused Goods:
The appellant contested the confirmation of demand of Rs 19,90,450/- along with interest and penalty for warehoused goods in 71 bonds. The dispute arose when the appellants abandoned and relinquished their right and title to the goods under Section 68 while their application for extension of the warehousing period was pending. The Commissioner directed them to pay duty on the goods in non-working condition under Section 72, leading to a show cause notice seeking interest, penalty, and confiscation of the abandoned goods. The appellant argued that once goods are abandoned, the duty liability does not apply, citing relevant judgments like Mafatlal Fine Spinning & Manufacturing Company Ltd. v. UOI and Phoenix International Ltd. v. CC.

Abandonment of Goods under Section 68:
The Tribunal analyzed the timing of abandonment by the appellants, which occurred before any order for home clearance was issued or demands were raised. Referring to judgments like CCE v. Garden Silk Mills Ltd. and Mafatlal Fine Spinning Mills, the Tribunal concluded that relinquishing ownership before clearance for home consumption invalidates duty demands, even if the warehousing period has expired. The Tribunal accepted the appellant's contention, setting aside the demand of Rs 19,90,450/-, but noted that rent, interest, and other charges are still applicable under the proviso to Section 68.

Duty Liability, Interest, and Penalty:
Regarding duty liability, interest, and penalty, the Tribunal ruled in favor of the appellant, highlighting that duty is not demandable on abandoned goods. Citing judgments like Pratibha Processors and Rashtriya Ispat Nigam Ltd., the Tribunal emphasized that interest is chargeable based on the actual duty payable at the time of physical clearance of goods. The Tribunal accepted the appellant's plea to set aside interest and penalty, aligning with previous judgments like Srikirshna Pipes and Machino Montell. Consequently, the appeal was allowed with appropriate relief granted.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Bangalore underscores the complex legal considerations surrounding the confirmation of demand for warehoused goods, abandonment under Section 68, and the applicability of duty liability, interest, and penalty in such scenarios.