2024 (10) TMI 990 - HC - Customs

Suspension of the warehousing operation of the Respondent - alleged breach of conditions for operating a public bonded warehouse - imposition of redemption fine and penalty. Whether the Hon'ble CESTAT correct in law in setting aside Order in Original solely on the ground that permissions were issued by Customs Department for unloading/storing of goods and/or such activities were done under the supervision of Customs Department without looking into factual aspects and conditions of each such permissions/supervisions of activities of the Respondent? - HELD THAT - The record bears out, and the Tribunal, in its detailed order, has held that there was no breach of any of the conditions of the licence. This is purely a finding of fact, and such finding is supported by the material on record. Accordingly, not even a ground alleging perversity or otherwise to assail this finding of fact was even proposed in this Appeal. The CESTAT has not only taken due note of the circumstances in which the goods are discharged through a high-pressure pipeline from the vessel directly into the tanks but has taken cognisance of the permissions granted by the Customs Authorities from time to time. The allegation that such permissions have been misinterpreted or misconstrued is without basis - On a conjoint reading of the applications made by the Respondent and the permissions granted thereon, there is no case of breach of the licence s conditions made out by the Appellant. The first substantial question of law, does not arise and, in any event, if the same arises, will have to be held against the Appellant and favouring the Respondent. Whether in the facts and circumstances of the case, the Hon'ble CESTAT was correct in law in overlooking the procedures outlined in JNCH Public Notice No. 155/2016 and the Board's Circular No. 08/2021 regarding advance discharge permission and the mandatory filing of Bills of Entry before the vessel's arrival? - HELD THAT - Such a question was not even raised before the CESTAT. Therefore, it is incorrect to state that the procedure outlined in the JNCH Notice and Board s Circular regarding advance discharge permission or the mandatory filing of Bills of Entry before the vessel's arrival was overlooked by the CESTAT. A substantial question of law has to arise from the proceedings. Such a question does not arise. In any event, whether the procedures were complied with or not also involves a factual element. Without any precise particulars, such a question cannot be entertained at this stage. As noted earlier, an Appeal under Section 130 of the Customs Act can be entertained only if it involves a substantial question of law. Whether in the facts and circumstances of the case, the Hon'ble CESTAT was correct in law in setting aside the imposition of penalties under Sections 117 and 112 (b) (ii) of the Customs Act, 1962 for violations including non-reporting of time-expired bonds, storage of non-bonded goods in bonded tanks, and lack of audit trail facilities? - HELD THAT - Once it is held that there was no breach of any of the terms and conditions of the licence and that the goods themselves were not liable for confiscation, there was no question of imposing any fines or penalties - In any event, the Tribunal has recorded the findings that there were no breaches, and consequently, there was no case of inferring any improper importation or confiscation of goods. In such circumstances, it is not necessary to go into the question of whether a redemption fine could be imposed even if the goods were not available. Thus, no substantial question of law arises in this Appeal, and accordingly, this Appeal is liable to be dismissed. This Appeal is accordingly dismissed.

Summary

Issues:
Appeal challenging CESTAT order | Breach of conditions for operating a public bonded warehouse | Interpretation of permissions by Customs Department | Imposition of penalties under Customs Act

Analysis:
The appeal under Section 130 of the Customs Act challenged the CESTAT order setting aside the Principal Commissioner's order revoking suspension of warehousing operation. The key issues raised were the alleged breach of conditions for operating a public bonded warehouse and the imposition of penalties under the Customs Act.

The Appellant contended that substantial questions of law arose regarding the correctness of CESTAT's decision in setting aside the order solely based on permissions issued by the Customs Department without considering the factual aspects of each permission. Additionally, the Appellant questioned the overlooking of procedures outlined in JNCH Public Notice and Board's Circular regarding advance discharge permission and mandatory filing of Bills of Entry. Moreover, the Appellant challenged the setting aside of penalties under Sections 117 and 112 (b) (ii) of the Customs Act for various violations.

The Respondent argued that there was no breach of license conditions and highlighted the permissions granted by Customs Authorities for unloading goods under supervision. The Respondent emphasized the necessity of permissions due to the nature of operations involving high-pressure pipeline discharge of goods. The Respondent asserted that the Tribunal's findings favored them, and no substantial questions of law were raised regarding breach allegations.

The High Court analyzed the facts and found no breach of license conditions by the Respondent. The Court noted that permissions granted by Customs Authorities were legitimate and necessary for the operational requirements. The Court emphasized that the Tribunal's findings were well-supported by the material on record, and no perversity was alleged against them. Consequently, the Court dismissed the appeal, stating that no substantial question of law arose.

The Court also disapproved of the Principal Commissioner's approach in invoking penalties under Section 117 of the Customs Act when no breaches were established. The Court referenced the Supreme Court's decision in BISCO Limited, highlighting the importance of permissions granted for specific operational needs. The Court concluded that no substantial question of law existed, leading to the dismissal of the appeal and the interim application.

In conclusion, the High Court dismissed the appeal, emphasizing the lack of substantial questions of law and supporting the Tribunal's findings regarding permissions and breach allegations. The Court's decision highlighted the importance of factual findings and compliance with operational procedures under the Customs Act.