2016 (12) TMI 375 - AT - Customs

Demand - goods manufactured in bonded warehouse - relinquishment of the title of goods - Held that - the issue in the instant appeal is squarely covered by the decision of the Hon ble High Court of Karnataka in the case of i2 Technologies Software Pvt. Ltd. 2007 (8) TMI 49 - HIGH COURT, BANGALORE , where Department contended that respondent company liable to pay the duty along with interest and penalty on the ground that goods have outlived the warehousing period Held that department contention was not valid and set aside demand, interest and penalty. The 2nd issue which arises is the quantification of the demand for the purposes of interest. We find that the matter has been clarified by the Hon ble Supreme Court in the case of Kesoram Rayon 1996 (8) TMI 109 - SUPREME COURT OF INDIA , where it was held that The consequence of non-removal of warehoused goods within the permitted period or the permitted extension is, by virtue of the terms of Section 72, certain. The date on which it comes to end is the date relevant for determining the rate of duty. When the duty is, in fact, demanded is not relevant. The appellants have a right to relinquish the goods. However, the interest can be recovered from the date of warehousing of the goods left in the warehouse to the date of relinquishing of the title by the appellants. Rate of duty for calculation of interest would be determined in terms of the decision of the Hon ble Supreme Court in the case of Kesoram Rayon - appeal disposed off - decided partly in favor of appellant.

Summary

Issues: Bonded goods clearance, duty demand, opportunity for hearing, relinquishment of goods title, demand quantification for interest.

Bonded Goods Clearance: The appellant had bonded goods in a warehouse and parts were cleared between specific dates. A demand notice was issued for duty on the uncleared goods, confirmed without a hearing by the lower authority.

Opportunity for Hearing: The appellant contended that the lower authority should have provided an opportunity for representation and hearing before confirming the duty demand. The Commissioner (Appeals) remanded the matter back for revised assessment and determination of duty.

Relinquishment of Goods Title: The appellant argued that they had abandoned the goods and relinquished the title, citing a High Court decision. They claimed relief in respect of interest and quantified duty, which was not challenged by the Revenue earlier.

Judicial Interpretation: The Tribunal examined a High Court decision regarding the right to relinquish title to warehoused goods and liability for duty, penalties, and interest. The High Court clarified that the owner has the right to relinquish title even after the warehousing period expires, and relinquishment does not lead to liability for duty, interest, or penalties.

Quantification of Demand for Interest: The Tribunal referenced a Supreme Court decision regarding the date relevant for determining the rate of duty on warehoused goods. It was held that interest could be recovered from the warehousing date to the relinquishment date, with duty rate determined as per the Supreme Court decision.

In conclusion, the appeal was partly allowed based on the appellant's right to relinquish goods, with interest recoverable within specified dates and duty rate determined as per legal precedent.