1991 (2) TMI 217 - AT - Customs

Summary

Issues Involved:
1. Validity of the Order-in-Appeal confirming the Order-in-Original.
2. Determination of the applicable rate of duty for warehoused goods.
3. Applicability of Section 15 vs. Section 72 of the Customs Act.
4. Legality of the demand for differential duty.
5. Timeliness of the show cause notice.
6. Interpretation of warehoused goods and the warehousing period.

Comprehensive Summary:

1. Validity of the Order-in-Appeal Confirming the Order-in-Original:
The appellants challenged the validity of the Order-in-Appeal No. 4017/88-BCH, dated 31-10-1988, which confirmed the Order-in-Original No. 125/87, dated 31-12-1987. The appellants contended that the Revenue had erroneously restricted the ambit of Section 15 of the Customs Act.

2. Determination of the Applicable Rate of Duty for Warehoused Goods:
The appellants imported PVC Compound, warehoused it, and did not clear the goods within the extended warehousing period. They argued that the applicable rate of duty should be the rate in force on the date of actual removal from the warehouse u/s 15(1)(b) of the Customs Act. The Revenue contended that the applicable rate should be the rate on the date of expiry of the warehousing period u/s 72(1)(b) of the Act.

3. Applicability of Section 15 vs. Section 72 of the Customs Act:
The appellants argued that Section 72 neither expressly nor impliedly refers to the determination of the rate of duty and that the goods must be deemed to have been cleared u/s 68 even after the warehousing period expired. The Tribunal held that goods deposited in a warehouse and not removed continue to be "warehoused goods" within the meaning of Section 2(44) of the Act. Therefore, the applicable rate of duty should be that in force on the date of actual removal from the warehouse.

4. Legality of the Demand for Differential Duty:
The Superintendent of Central Excise demanded a differential duty of Rs. 67,837.26, stating that the appellants were not entitled to the benefit of the exemption notification as the clearances were made after the expiry of the warehousing period. The appellants contended that the demand was illegal and should be dropped. The Tribunal found that the goods continued to be "warehoused goods" till their actual removal and thus attracted the rate of duty in force on the date of removal.

5. Timeliness of the Show Cause Notice:
The appellants argued that the show cause notice issued on 2-9-1987 was time-barred as the duty should have been demanded within six months from the expiry of the warehousing period on 31-12-1985. The Tribunal held that the relevant date for determination of limitation u/s 28(1) of the Act is the date of payment of duty, which was 18-3-1987, making the show cause notice timely.

6. Interpretation of Warehoused Goods and the Warehousing Period:
The Tribunal interpreted that goods deposited in a warehouse and not removed continue to be "warehoused goods" even after the expiry of the warehousing period. It held that the applicable rate of duty is to be determined with reference to the date of actual removal of the goods from the warehouse.

Conclusion:
The Tribunal concluded that the goods attracted duty at the rate in force on the date of their actual removal from the warehouse. The appeal succeeded, and the appellants were granted consequential relief.