2018 (8) TMI 433 - AT - Customs

Warehoused goods - Relinquishment of rights - Extension of warehousing period - N/N. 53/97-Cus dated 03.06.1997 - Held that - The respondents have relinquished the title of the goods after the amendment has come into force on 14.05.2003; however, during this time, the issue was quite alive and the appellants are entitled to make use of the amended provisions. It is also the matter of fact in this case that the SCN is given much more lately after the relinquishment of the title of the goods by the appellants - Hon ble High Court of Karnataka in the case of i2 Technologies Software Pvt. Ltd 2007 (8) TMI 49 - HIGH COURT, BANGALORE has held that owner of any warehoused goods has right to relinquish the title of the goods at any time before an order for clearance of goods for home consumption has been made. There is no prohibition on the owner of the goods to exercise the right to relinquish the title of goods after the expiration of warehousing period or after expiration of the extended period. In this case, the SCN itself has been issued much later than the date of relinquishment of the title of goods by the appellants. No duty can be chargeable from the appellants - The case should go back to the adjudicating authority to quantify rent, interest, other charges and penalties, if any, payable by the appellant while holding that no duty shall be paid by the appellants. Appeal allowed by way of remand.

Issues:
1. Violation of conditions of Notification and Bond executed by appellants.
2. Rejection of extension of warehousing period by Commissioner of Customs.
3. Entitlement to remission of duty under Section 23(1) of the Customs Act, 1962.
4. Liability to pay interest and penalty on relinquishment of title of warehoused goods.

Analysis:

Issue 1: Violation of conditions of Notification and Bond
The appellants imported connectors under an exemption but failed to utilize them within the prescribed time limit for manufacturing and exporting final products. The Department issued a Show Cause Notice (SCN) demanding Customs duty, interest, and penalty. The lower authorities confirmed the demand and penalty. The appellants argued that due to market loss post 9/11, they couldn't use the goods and requested an extension, which was rejected. They relied on precedents emphasizing consideration of belated applications.

Issue 2: Rejection of extension of warehousing period
The Commissioner rejected the extension request, leading to the appellants' request for abandonment of goods. The appellants claimed the right to relinquish the title of goods and sought remission of duty under Section 23(1) of the Customs Act, 1962. They cited legal precedents supporting their position and argued that the taxable event had not occurred at the time of the SCN, aligning with settled law.

Issue 3: Entitlement to remission of duty
The appellants contended that the goods became useless for them and should be considered "destroyed," warranting remission of duty. They referenced a case supporting their stance and highlighted the taxable event concerning warehoused goods as per Supreme Court rulings.

Issue 4: Liability for interest and penalty
The debate centered on whether the appellants, upon relinquishing the title of warehoused goods, were liable to pay interest and penalty. The appellants argued against such liability, citing relevant case law and a CBEC Circular. The Department contended that the appellants' delay in seeking an extension impacted their claim.

Judgment
The Tribunal found in favor of the appellants, allowing the appeal by remanding the case to the original authority. The Tribunal held that no duty was chargeable from the appellants and directed the quantification of rent, interest, charges, and penalties, if applicable, while accepting the relinquishment of goods' title. The judgment emphasized the appellants' right to relinquish goods before clearance for home consumption, aligning with legal precedents and distinguishing relevant case law to support the decision.

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