2010 (3) TMI 534 - HC - Customs

Warehoused goods - Interest & penalty - The assessee filed an appeal before the CESTAT which appeal came to be allowed by considering the proviso the Section 68 of the Act. It is also relevant to mention in the meanwhile the assessee has challenged the action of the appellant by filing the writ petition under Section 23(2) of the Act which also ended in vain. Challenging the order of the CESTAT, the Revenue has filed this appeal. Held that- Tribunal without considering provision, granted exemption from duty, interest and penalty. Rent stated as paid. Metter remanded to assessing officer to compute interest, penalty and other charges. Exemption from duty can be claimed on relinquishing title to goods.

Summary

Issues:
1. Interpretation of amended Section 68 of the Customs Act, 1962.
2. Application of the proviso to Section 68 regarding duty, interest, and penalty.
3. Consideration of exemption under the amended Section 68 in an ongoing case.

Issue 1: Interpretation of amended Section 68:
The case involved a dispute over the application of the amended Section 68 of the Customs Act, 1962, which came into effect on 14-5-2003. The primary question was whether the Tribunal was justified in granting relief to the Respondent under the amended section for a transaction that occurred before the amendment. The Court held that the prospective nature of the amendment allowed for its application to ongoing cases, benefiting the assessee. Thus, the Court ruled in favor of the assessee on this issue.

Issue 2: Application of the proviso to Section 68:
The Court analyzed whether the proviso to Section 68, which allows for exemption of duty upon relinquishing title to goods, should also apply to interest, penalty, and other charges. The Court found that the Tribunal erred in granting blanket exemption without considering the full scope of the proviso. It was determined that the assessee could claim exemption only on duty payable by relinquishing title to the goods. Therefore, the Court ruled in favor of the Revenue on this issue.

Issue 3: Consideration of exemption under amended Section 68:
The Court addressed the contention that despite a previous dismissal of a writ petition under Section 23(2) of the Act, the assessee could still benefit from the amended Section 68. Relying on the ongoing nature of the case and the legislative intent to provide relief to the assessee, the Court held that the dismissal of the earlier petition did not bar the assessee from invoking the amended provision. Consequently, the Court ruled in favor of the assessee on this issue.

In conclusion, the Court dismissed the appeal, ruling in favor of the assessee on the interpretation of the amended Section 68 and the ongoing case, but in favor of the Revenue regarding the application of the proviso to Section 68. The matter was remitted to the Assessing Officer for the computation of interest, penalty, and other charges payable by the assessee in accordance with the proviso to Section 68.