2024 (4) TMI 917 - AT - Customs

Suspension of license of public bonded warehouse - bonded goods were stored in non-bonded tanks - appellants pleaded that the disputed goods cannot be confiscated, when subsequent permission for bonding of tanks was given by the department - Sub-section (2) of Section 58B of the Customs Act, 1962 - HELD THAT - It is an admitted fact on record that the appellants have obtained the public bonded warehousing license from the competent authorities for carrying out the activities therein. Whenever the imported goods were required to be stored in the warehouse, the appellants have taken necessary permission from the competent authority for movement of goods from the customs station for the purpose of depositing in the warehouse. The activities of removal of goods from one warehouse to the other were always within the knowledge of the department and such activities were undertaken by the appellants with due permission from the department. Reading of the above statutory provisions vis- -vis the activities undertaken by the appellants as the warehouse licensee, it is found that none of the said provisions have been contravened or violated by the appellants inasmuch as in respect of all the B/Es listed above, the activities were carried out with the approval and necessary permission given by the department as well as under supervision of Customs. In view of the statutory provisions regarding the warehoused goods and the instructions issued by the CBEC, it is amply clear that movement of goods within the bonded warehouse is permissible, subject to the condition that such activities should be within the knowledge of the department and necessary approval for such activities should be obtained by the warehouse licensee - the appellants have complied with such statutory provisions in carrying out the activities within the warehousing station(s). Therefore, it cannot be said that the goods dealt with by the appellants are liable for confiscation and accordingly, the appellants cannot be exposed to penal consequences provided under the statute. The impugned order dated 08.01.2024 has invoked the provisions of Section 111(h) and 111(j) ibid for confiscation of the goods and for imposition of the redemption fine on the appellants. The provisions of Section 111(h) ibid are attracted for confiscation in the eventuality, when any dutiable or prohibited goods unloaded or attempted to be unloaded in contravention of the provisions of Section 33 ibid or Section 34 ibid. It is not the case of Revenue that the appellants had not obtained the permission from the department for carrying out the activities within the bonded area - It is a fact on record that the bulk liquid cargo dealt with by the appellants are not prohibited for importation and that the appellants had obtained due permission from the customs department for carrying out the activities within the warehousing premises, which is evident from the above tables, mentioning the date of permissions issued by the department including the specific tank numbers for which such permissions were being issued by them - the provisions of Section 111(j) ibid are not attracted for confiscation of goods in the circumstances of the present case. Since there is no improper importation of goods and more specifically, the goods are not liable for confiscation as per the provisions under Section 111 ibid, the provisions of Section 112 ibid shall not be attracted for imposition of penalty on the appellants. Further, the provisions of Section 114AA ibid cannot also be invoked in the present case, inasmuch as there is no mis-declaration, nor any forged documents were presented by the appellants with the intent to evade payment of customs duty - There is nothing on record in the form of any evidence to show that proper accounting for receipt, transfer or removal of the goods in the warehouse was not maintained by the appellants in terms of extant Regulations dealing with warehousing of goods - Furthermore, all the activities were under the direct supervisions and control of the customs officers posted in the warehouse. Similarly, the penalty clause contained in Section 117 ibid cannot also be attracted in the case in hand, inasmuch as no licensing conditions were violated by the appellants. There are no merits in the impugned order dated 08.01.2024, insofar as it has ordered for confiscation of goods, imposed redemption fine and penalties on the appellants. Since there are no substance in confirmation of the adjudged demands towards fine and penalties, the impugned order passed for revocation of suspension of warehousing operation shall also not be sustained - the impugned order is set aside - appeal allowed in favour of appellants.

Summary

Issues Involved:
1. Storage of bonded goods in non-bonded tanks.
2. Storage of non-bonded goods in bonded tanks.
3. Storage of goods imported by the licensee in their own public bonded warehouse.
4. Storage of bonded goods in excess of approved duty limits.
5. Non-reporting of time-expired bonds.
6. Lack of audit trail facility in software.
7. Revocation of suspension of warehousing operations.

Summary:

1. Storage of Bonded Goods in Non-Bonded Tanks:
The appellants were found to have stored bonded goods in non-bonded tanks, violating Section 60 read with Section 71 of the Customs Act, 1962. The adjudicating authority imposed penalties and fines under Sections 111(j), 112(b)(ii), and 114AA of the Customs Act. However, the Tribunal found that the appellants had obtained discharge permissions from the Customs department for the storage of bonded goods in non-bonded tanks, and thus, there was no violation of the licensing conditions.

2. Storage of Non-Bonded Goods in Bonded Tanks:
The appellants stored non-bonded goods in bonded tanks on 31 occasions. The Tribunal noted that the appellants had obtained necessary permissions from the Customs department for these activities, and such activities were monitored by Customs officers. Therefore, the Tribunal held that there was no contravention of the provisions under the statute.

3. Storage of Goods Imported by the Licensee in Their Own Public Bonded Warehouse:
The goods covered under two Warehouse Bills of Entry were stored in the public bonded warehouse of the appellants. The Tribunal found that the goods were discharged from the vessel through high-pressure pipelines under Customs supervision, and necessary permissions were obtained. Thus, there was no violation of the Customs Act.

4. Storage of Bonded Goods in Excess of Approved Duty Limits:
The Tribunal found that the appellants had obtained necessary permissions for the storage of goods and that all activities were carried out under Customs supervision. Therefore, the conditions under the warehousing license were not violated.

5. Non-Reporting of Time-Expired Bonds:
A penalty was imposed for non-reporting of time-expired bonds for one consignment. The Tribunal did not find any evidence to support this charge and held that the appellants had complied with the statutory provisions.

6. Lack of Audit Trail Facility in Software:
A penalty was imposed for not having an audit trail facility in their software. The Tribunal did not find any evidence of non-compliance with the statutory provisions and held that the appellants had complied with the requirements.

7. Revocation of Suspension of Warehousing Operations:
The Tribunal set aside the order for revocation of suspension of warehousing operations, as the appellants had complied with all statutory provisions and obtained necessary permissions from the Customs department.

Conclusion:
The Tribunal set aside the impugned order dated 08.01.2024, holding that the appellants had not violated any provisions of the Customs Act, 1962, and the related regulations. The appeal was allowed in favor of the appellants, with consequential relief as per law.