2003 (4) TMI 107 - SC - Customs

Whether there would be deemed removal from the warehouse on the date when the period of warehousing was over? Held that - It was not open to the Department to prefer the appeal before the Tribunal contrary to what has been laid down in the circular dated 12-7-1989 which specifically provided that in such cases residual Section 15(1)(C) of the Customs Act would apply to the case where the goods are removed from a warehouse after expiry of the warehousing period and that the rate of duty in such cases shall be the rate prevalent on the date of payment of duty. No doubt the aforesaid circular is withdrawn by Circular dated 14th August, 1997. Still, however, at the relevant time neither the impugned order passed by the Collector of Customs (Appeals) can be said to be in any way illegal or erroneous nor it was open to the Department to challenge the said order. As a result, the appeals are allowed and impugned judgments and orders passed by the Tribunal are set aside

Summary

Issues:
Appeal against judgments and orders of Customs, Excise and Gold (Control) Appellate Tribunal based on circular dated 12-7-89 issued by Central Board of Excise & Customs; Extension of bonded warehouse period; Department's appeal against Collector of Customs (Appeals) judgment; Validity and binding nature of circulars issued by the Board under Section 37B of Central Excise Act, 1944.

Analysis:
The case involves an appeal against judgments and orders of the Customs, Excise and Gold (Control) Appellate Tribunal based on a circular issued by the Central Board of Excise & Customs. The appellant contended that the circular dated 12-7-89, along with a previous court decision, should invalidate the Tribunal's decisions. The goods in question were sent to a bonded warehouse for three months, with the period set to expire on 2-12-1991. The appellant sought an extension by filing an application on 18th November, 1991, which was deemed rejected. Despite subsequent requests for extension, the Department asked the appellant to clear the goods on 23rd December, 1991. The appellant did not comply, leading to a final assessment order in April 1992 that did not grant the benefit of certain notifications.

The Department appealed the Collector of Customs (Appeals) judgment, which had granted the benefit of exemption notifications based on the Board's circular. The Tribunal allowed the Department's appeal, citing a previous court decision. However, the Supreme Court found that the issue was already addressed in a prior judgment concerning the validity and binding nature of circulars issued by the Board under Section 37B of the Central Excise Act, 1944. The Court emphasized that circulars issued under Section 37B are binding on the Department, and the Department cannot take a stand contrary to these instructions. The Court highlighted the importance of consistency and discipline in following such circulars.

In light of the clear pronouncements by the Court on the binding nature of circulars, the Supreme Court held that it was not open to the Department to challenge the Collector of Customs (Appeals) judgment. Despite the withdrawal of the circular in question, the Court found that the Collector of Customs (Appeals) judgment was not illegal or erroneous at the relevant time. Therefore, the Court allowed the appeals, setting aside the Tribunal's judgments and orders, and restored the judgment and order passed by the Collector of Customs (Appeals) due to the peculiar facts and circumstances of the case.