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TMI Blog2013 (3) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ral. No specific details have been given as to why such duty is payable in terms of Section 72(1)(b) and (d) of the Act. We may recall that clause (d) of sub-section (1) of Section 72 pertains to a case where bond has been executed and the goods are not accounted for to the satisfaction of the proper officer. Show cause notice quashed - Decided in favor of assessee. - Special Civil Application No. 11336 of 2001 - - - Dated:- 8-8-2012 - Akil Kureshi and Harsha Devani, JJ. Shri Rakesh Gupta with Uday Joshi for M/s. Trivedi Gupta, for the Petitioner. Shri R.K. Mishra, S.P. Singh, Vibhuti Nanavati and Ms. Amee Yajnik, for the Respondent. [Judgment per : Akil Kureshi, J. (Oral)]. - This petition was previously disposed of by an order dated 1-3-2011 in view of the fact that substantial grievance of the petitioners came to be resolved during the pendency of the petition. With respect to the petitioners grievance against the Customs Department regarding non-issuance of duty remission certificate, the court noticed that the Customs Department had not raised any demand of duty on goods destroyed during cyclone. On such basis, the petition was disposed of. While so doin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Department - respondent No. 3 due to which clearance of goods was not permitted. With respect to details of such disputes, we are not directly concerned. Suffice it to note that the petitioners succeeded in such legal battle before the Apex Court when by an order dated 21-1-1997, the Apex Court granted permission to clear the goods in following terms :- A request is made on behalf of Raj Exports that in view of the aforesaid developments the imports made by them should be allowed to be cleared without payment of any duty. An equally important submission made is that the Customs Authorities be directed to issue a detention certificate which may help the importers in having the warehouse charges reduced or waived, as the case may be. On this question, we would like to hear the Revenue. List these matters on 22-1-1997. 4. It is not in dispute that under such order of the Supreme Court, the petitioners cleared a part of the consignment. However, a part thereof could not be cleared due to the petitioners own difficulties. It is the case of the petitioners that due to adverse market conditions, part of the goods could not be cleared by the petitioners after payment of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. In terms of Section 23 of the Customs Act, 1962 ( the Act , for short), there would be no duty liability. The customs authorities, therefore, grievously erred in raising such duty demand. In support of this contention, the counsel placed reliance on the decision in case of Swil Ltd. v. Union of India reported in 2005 (185) E.L.T. 251 wherein a Division Bench of this court found that upon re-export of the goods, no duty demand arose. In that view of the matter, the court held that when duty was not payable, the question of payment of interest under Section 61(2) of the Act would not arise. (b) The impugned show-cause notice dated 12-4-2011 is bad-in-law because (a) the notice is vague and inspecific, the duty demand is not computed and, the reasons why such demand is raised is not stated and (b) there is gross delay in issuing the notice. Counsel submitted that under Section 28 of the Act, the authorities can recover unpaid duty within a period of one year from the date the same becomes payable in absence of any clandestine removal or concealment on part of the petitioners. He submitted that even if such limitation is not to be made applicable to duty demand raised under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the show-cause notice was issued soon after the petition was disposed of and the same, therefore, cannot be treated as belated since, till then the entire issue was pending before this Court. 10. The counsel appearing for the CWC and insurance company opposed the prayer for payment of customs duty. In particular, counsel for the insurance company submitted that the petitioners did not clear the goods due to their own difficulties. The insurance company cannot be held liable for any interest, penalty and other charges under such circumstances. He submitted that a writ petition would not be maintainable for entertaining such a prayer. In any case, there was no privity of contract between the petitioners and the insurance company. 11. Having thus heard learned counsel for the parties and having perused the documents on record, we may examine the three contentions raised by the petitioners one after another. Insofar as the first contention is concerned, the facts are not in dispute at all. To reiterate, the petitioners imported soda ash in the year 1995. They were allowed to clear such goods by the Supreme Court by the order dated 21-1-1997. Despite such order, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of one year, after the date on which the proper officer has made an order under section 60 permitting the deposit of the goods in a warehouse : Provided that - (i) in the case of any goods which are not likely to deteriorate, the period specified in [clause (a) or clause (aa) or clause (b)] may, on sufficient cause being shown, be extended - (A) in the case of such goods intended for use in any hundred per cent, export-oriented undertaking, by the Commissioner of Customs, for such period as he may deem fit; and (B) in any other case, by the Commissioner of Customs, for a period not exceeding six months and by the Chief Commissioner of Customs for such further period as he may deem fit;] (ii) in the case of any goods referred to in clause (b), if they are likely to deteriorate, the aforesaid period of one year may be reduced by the [Commissioner of Customs] to such shorter period as he may deem fit : Provided further that when the licence for any private warehouse is cancelled, the owner of any goods warehoused therein shall, within seven days from the date on which notice of such cancellation is given or within such extended period as the proper officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other charges payable in respect of such goods have been paid; and (c) an order for clearance of such goods for home consumption has been made by the proper officer : [Provided that the owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish his title to the goods upon payment of rent, interest, other charges and penalties that may be payable in respect of the goods and upon such relinquishment, he shall not be liable to pay duty thereon.] [Provided further that the owner of any such warehoused goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force.] 12.3 Section 72 pertains to goods improperly removed from warehouse etc. and reads as under :- 72. Goods improperly removed from warehouse, etc. - (1) In any of the following case, that is to say,- (a) where any warehoused goods are removed from a warehouse in contravention of section 71, (b) where any warehoused goods have not been removed from a warehouse at the expiration of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided is one year. Section 72, as noted, pertains to goods improperly removed from warehouse etc. Sub-section (1) thereof provides for instances where the proper officer may demand the full amount of duty chargeable on account of such goods together with penalties, rent, interest and other charges payable in respect of such goods. Such instances are - (a) where any warehoused goods are removed in contravention of section 71; (b) where such goods have not been removed from a warehouse at the expiration of period provided in section 61; (c) where any warehoused goods have been taken under section 64 as samples without payment of duty, and (d) where any goods in respect of which a bond has been executed and such goods are not duly accounted for to the satisfaction of the proper officer. 15. Section 72 thus provides for the power to collect duty under circumstances other than regular clearance of goods for home consumption. Under clause (b) of sub-section (1), the authorities have power to collect duty when it is found that the goods warehoused have not been removed even after the period permitted under Section 61 has expired. In the present case, admittedly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sub-section (2) of Section 61. It was in this background the court held that when the duty liability does not arise, the question of interest which was payable at the specified rate on the amount of duty payable would not arise. 18. The decision of Karnataka High Court in the case of Commr. of Cus., Bangalore v. i2 Technologies Software Pvt. Ltd. (supra) was rendered in the background of relinquishment of title to the goods and the question of the importers continued liability to pay customs duty on such goods even after relinquishment. In any case, in the present case, we have given our interpretation to the provisions contained in Sections 72 and 23 of the Act. 19. We would, at this stage, like to deal with the third contention ahead of the second contention of the petitioners. This is in respect to the petitioners insistence that whatever the duty liability, must be paid over by the CWC and the insurance company. We are not inclined to give any such direction for the following reasons :- (1) that such liability has still not yet been worked out. The Customs Department has only issued a show-cause notice. The question of payment of duty is still not decided. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is recoverable. However, no notice or any other formal demand for payment of customs duty was raised by the respondent No. 3 against the petitioners. 21. During the pendency of this petition, no stay was granted against collection of such duty despite which for over ten years, the Customs Department did not issue any notice nor demanded the customs duty in any other manner. The impugned notice came to be issued in April, 2011 shortly after the petition came to be disposed of. 22. We are of the opinion that the notice for recovery of the customs duty is hopelessly belated. Nothing has been brought on record to suggest that due to pendency of the petition and out of due deference to the court in view of pending disputes, the Department did not issue the show-cause notice. In any case, there was no stay against issuance of show-cause notice or even against recovery of the duty. Quite apart from total inaction on part of the respondents to issue such a notice during the pendency of the petition, four years had passed before the petition was filed. During such period no steps were taken at all. 23. Section 28 of the Customs Act provides for the limitation of one year for col ..... X X X X Extracts X X X X X X X X Extracts X X X X
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