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TMI Blog2023 (1) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Customs with the approval of the Chief Commissioner has referred to the communications dated 14.02.2019 and 15.02.2019 addressed by the respondent herein requesting for reconsideration of the request for extension of the warehousing period and held such consideration would not arise as the matter had already attained finality - The Tribunal entertained the appeal under Section 129A(1) of the Act and impugned order was set aside and matter was restored to the Commissioner of Customs for deciding the issue afresh. Challenging the said decision, an appeal under Section 130A of the Customs Act was filed and it is in this background, High Court of Bombay has held that Section 110A of the Act is required to be viewed and the decision in the letter dated 25.09.2017 is in terms of Section 110A. A taxing statute is to be strictly construed. In a taxing statute, one has to look merely what is clearly said in the provision. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing has to be read in, nothing is to be implied. One can look only fairly at the end use - substantial question of law will have to be answered in the negat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess with regard to liability of respondent to pay duty - penalty had got crystallised and had attained finality and as such by taking aid of the circular dated 14.01.2003 and reading the same disjunctively, no undue benefit could have been extended to the respondent by impugned order. Hence, we are of the considered view that Tribunal committed a gross error in entertaining the prayer of the respondent. A taxing statute is to be strictly construed. The Courts have stated greater latitude to the legislature is to be extended in formulating its tax policy either directly or by delegated legislation - The appellant has made out a strong case to accept the appeal. Hence, substantial questions of law are answered in the negative viz. in favour of the Revenue and against the respondent. Application disposed off. - R/TAX APPEAL NO. 504 of 2022 With CIVIL APPLICATION (FOR STAY) NO. 1 of 2022 In R/TAX APPEAL NO. 504 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 14527 of 2022 - - - Dated:- 2-1-2023 - HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR and HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI MR PRIYANK P LODHA(7852) FOR THE APPELLANT(S) NO. 1 MR SAURABH SOPARKA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. On account of the equipments in the bonded warehouse not having been cleared after the expiry of the permitted extension warehousing period, the appellant was issued show cause notices, initially 16 show cause notices resulting in 16 Orders in Original (For short OIO ) came to be passed on 30.03.2001 which became the subject-matter of appeals which came to be adjudicated by the appellate authority and a common order dated 15.01.2001 came to be passed and rejected the same. Further, challenge to the same before the Tribunal CESTAT, Mumbai, also ended in its dismissal on 25.01.2002. Simultaneously, in respect of remaining goods, five show cause notices came to be issued on 27.11.2001 which resulted in OIO dated 28.04.2013 being passed and appeal filed against the same was also dismissed vide order dated 12.12.2003 and appeal filed before the CESTAT was allowed in part by order dated 26.05.2004 by reducing the pre-deposit and directed the Commissioner (Appeals) to decide the appeals on merits and on account of there being no compliance, the order of Commissioner became final. Thus, the customs duty of 688.06 Lakhs was outstanding from the appellant as per the orders of the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods under Section 69 of the Act, same should be allowed even if the bonding period has expired and demand notice has been issued or even the goods are put under auction. It has been further held that appellant therein namely respondent herein stands on a better footing as the goods warehoused are not put to auction by the department and concluding that there is no conflict between the Board circular dated 14.01.2003 and Section 72(1)(d) of the Act, it has been held by the Tribunal that goods warehoused by the respondent were neither cleared for home consumption nor the department had initiated any action to sell/auction the goods and as such, appellant is entitled for re-export of the goods without payment of duty and consequently entitled for extension of the warehousing period. The Tribunal also held that even though goods are cleared for home consumption and same is exported, appellant would be entitled for 98% duty drawback under Section 74 of the Act and therefore appellant would not be liable to pay more than 2% of the total duty payable on the imported goods. Hence, concluding that appellant therein had sought to export the goods from the warehouse itself and as such it wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the effect of payment of custody duty as directed thereunder would stand negated. Hence, contending that respondent is attempting to seek the relief indirectly which he could not get directly. 11. He would further submit that Tribunal erred in applying Section 69 inasmuch as liability to pay duty by the owner of the goods under Section 72(1) had already arisen with interest and penalty and as such, under Section 69 could not have been pressed into service at all. 12. He would also contend that circular No.03/2003 dated 14.01.2003 had no application to the facts on hand and Tribunal erred in relying on paragraph-2 of the said circular. He would submit that circular cannot be read in part and said circular itself indicates that it is subject to provisions of Section 61 and draws the attention of the Court to Sub-section (2) of Section 61. Hence, he would contend that Section 61 itself mandates that it is necessary to make payment of duty with interest without which the period of warehousing cannot be extended. 13. It is his further contention that circular dated 14.01.2003 does not indicate anything about liability of the owner to make payment of duty, interest and pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort the finding of the Tribunal with regard to payment of differential duty and contends that Tribunal has examined the case from all angles to extend the relief which finding does not suffer from any infirmity calling for interference at the hands of this Court and as such, he prays for answering substantial questions of law in favour of the respondent. In support of his submissions, he has relied upon the following judgments : (i) 2018 361 ELT, Page 51; (ii) 2003 (5) SCC 528; (iii) 2014 (3) SCC 154; (iv) 2016 (340) ELT 162. 15. Mr. Soparkar, learned Senior Counsel would also contend that revenue having not raised any ground with regard to respondent being entitled for 98% duty drawback under Section 74 of the Customs Act, 1962, in its appeal memorandum, said issue cannot be agitated by the revenue or adjudicated by this Court. 16. In rejoinder, Mr. Priyank Lodha, learned counsel appearing for the appellant would submit that judgment of the Bombay High Court was rendered in the background of Section 110A of The Customs Act, which provides for provisional release which is an inherent right given to a party and as such, the principles laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was not able to clear the imported plant and machinery / equipment on account of alleged financial crunch. Hence, petitioner applied for second extension upto 31.12.1996. Subsequently, the extension sought for from time to time had been considered and granted upto 31.12.1997. Though applications for extension were made, same was not granted and petitioner was not able to clear the imported plant and machinery / equipment from their bonded warehouse after the expiry of permitted extended warehouse. This resulted in adjudication and the department had issued 16 orders-in-original, all dated 30.3.2001 and confirmed the total custom duty of Rs.05,30,36,179/- and imposed penalty of 10% on each bond. It was also ordered to recover interest at appropriate rate. Being aggrieved by the same, petitioner filed appeals before the Commissioner (Appeals), Surat, who by common order-in-appeals dated 15.1.2001 rejected all the appeals filed by the petitioner. This was challenged before CESTAT, Mumbai which also ended in dismissal vide order dated 25.11.2002. 20. Hence, show cause notices were issued by the department on 27.11.2001 vide order-in-original dated 28.4.2003 whereby the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter on 15.02.2019 to the Chief Commissioner of Customs, Gujarat Zone, Ahmedabad and requested to re-consider the prayer for re-export of entire warehoused plant and machinery / equipment with consequent extension of warehousing period till the goods are re-exported. However, the said request was rejected by the Chief Commissioner of Customs, Gujarat Zone, Ahmedabad vide communication dated 07.03.2019, against which petitioner company preferred an appeal before CESTAT which has been allowed by the Tribunal vide impugned order dated 31.01.2022. RE: SUBSTANTIAL QUESTION OF LAW No.(i): 23. Right of appeal is a creature of statute and there cannot be any dispute to this proposition. When the issue comes up before the Court with regard to the maintainability, it goes to the root of the matter namely jurisdictional aspect and at any stage this issue can be considered, as it would have a direct bearing on the core issue of maintainability. This view gets support from the authoritative principles laid down by the Hon ble Apex Court in the case of Corona Limited vs. M/s.Parvathy Swaminathan and sons, reported in (2007) 8 SCC 559 and Kanwar Singh Saini vs. High Court of Delhi, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1 [Principal Commissioner of Customs or Commissioner of Customs] as an adjudicating authority; (b) an order passed by the 2 [Commissioner (Appeals)] under section 128A; (c) an order passed by the Board or the Appellate 3 [Commissioner of Customs] under Section 128, as it stood immediately before the appointed day; (d) an order passed by the Board or the 1 [Principal Commissioner of Customs or Commissioner of Customs], either before or after the appointed day, under section 130, as it stood immediately before that day: [Provided that no appeal shall lie to the Appellate Tribunal and the Appellate Tribunal shall not have have jurisdiction to decide any appeal in respect of any order referred to in clause (b) if such order relates to,- (a) any goods imported or exported as baggage; (b) any goods loaded in a conveyance for importation into India, but which are not unloaded at their place of destination in India, or so much of the quantity of such goods as has not been unloaded at any such destination if goods unloaded at such destination are short of the quantity required to be unloaded at that destination; (c) payment of drawback as provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he jurisdictional 6 [Principal Chief Commissioner of Customs or Chief Commissioner of Customs] who shall, after considering the facts of the order, if is of the opinion that the order passed by the Commissioner (Appeals) is not legal or proper, direct the proper officer to appeal to the Appellate Tribunal against such order. Explanation.-For the purposes of this sub-section, ―jurisdictional Chief Commissioner‖ means the 6 [Principal Chief Commissioner of Customs or Chief Commissioner of Customs] having jurisdiction over the adjudicating authority in the matter.] (3) Every appeal under this section shall be filed within three months from the date on which the order sought to be appealed against is communicated to the 2 [Principal Commissioner of Customs or Commissioner of Customs], or as the case may be, the other party preferring the appeal. (4) On receipt of notice that an appeal has been preferred under this section, the party against whom the appeal has been preferred may, notwithstanding that he may not have appealed against such order or any part thereof, file, within forty-five days of the receipt of the notice, a memorandum of cross-objections v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the said matter which related to release of vessel namely the respondent therein that is S.S. Offshore Private Limited filed a bill of entry BE for the import of a second hand vessel by declaring the value of the vessel to be of Rs.13.82 crores by classifying the same under Chapter 89, heading 8901 of Custom Tariff Act, 1975. The bill of entry was assessed and vessel was allowed to be cleared for home consumption. Subsequently, the vessel was allowed to be converted from a foreign run vessel to coastal run vessel. The officer of Intelligence and Investigation Branch of Custom on a reasonable belief that vessel is liable for confiscation on account of incorrect classification / declaration seized it. Hence, respondent met the Commissioner of Customs and sought for provisional release of the vessel under Section 110A of the Act, which provision came to be substituted by Act 2 of 2014 and by virtue of the said section having undergone a change and interim order or decision could be taken by the adjudicating authority that is the Commissioner of Customs was the basis on which the application was made and it is this representation which resulted in a decision being rendered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered view that substantial question of law No.1 will have to be answered in the negative that is in favour of the appellant revenue and against the respondent. RE : SUBSTANTIAL QUESTION OF LAW NO.(ii): 29. The Tribunal having entertained the appeal against a communication dated 07.03.2019 whereunder the Department Revenue had intimated the respondent about representation submitted for extension of warehousing period having already been adjudicated and reconsideration of the request would not merit consideration on account of the matter having been already attained finality, received the attention of the Tribunal and held that on account of goods lying in the warehouse without being cleared for home consumption and therefore, no customs duty would be payable. The grievance of the Revenue has been throughout that the issue regarding extension of warehousing period having been rejected and as such it is deemed under Section 72 of the Customs Act that such goods or improperly removed from warehouse and thereby the customs duty, penalty and interest are liable to be paid by the owner and same having been adjudicated and attained finality, question of permitting the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been improperly removed and as a consequence thereof, the duty, interest and penalty levied if any would become payable. Sub-section (2) of Section 72 enables the proper officer to sell such goods after notice to the owner, if any, in the warehouse in the event of the owner failing to pay any amount demanded under Sub-section (1) of Section 72. The issue relating to improper removal of goods has been laid to rest by the Apex Court in SBEC Sugar Limited and another vs. Union of India and others, reported in (2011) 4 SCC 668. It has been held: 23. The scope and purport of Section 72 was examined by this Court in Kesoram Rayon (supra). It was held that: 13. Goods which are not removed from a warehouse within the permissible period are treated as goods improperly removed from the warehouse. Such improper removal takes place when the goods remain in the warehouse beyond the permitted period or its permitted extension. The importer of the goods may be called upon to pay customs duty on them and, necessarily, it would be payable at the rate applicable on the date of their deemed removal from the warehouse, that is, the date on which the permitted period or its pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we deem it proper to extract section 69 of the Customs Act, 1962 and it reads: 69. Clearance of warehoused goods for exportation. (1) Any warehoused goods may be exported to a place outside India without payment of import duty if (a) a shipping bill or a bill of export has been presented in respect of such goods in the prescribed form; (b) the export duty, penalties, rent, interest and other charges payable in respect of such goods have been paid; and (c) an order for clearance of such goods for exportation has been made by the proper officer. (2) Notwithstanding anything contained in subsection (1), if the Central Government is of opinion that warehoused goods of any specified description are likely to be smuggled back into India, it may, by notification in the Official Gazette, direct that such goods shall not be exported to any place outside India without payment of duty or may be allowed to be so exported subject to such restrictions and conditions as may be specified in the notification. 32. A perusal of the above provision would clearly indicate that warehoused goods can be re-exported without payment of duty. The Tribunal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .(ii) in the negative namely in favour of Revenue and against the respondent. RE: SUBSTANTIAL QUESTION OF LAW Nos. (iii) AND (iv): 33. Insofar as question Nos.(iii) and (iv) are concerned, from the record, we notice that original order which had been passed on 30.3.2021 by Assistant Commissioner, Central Excise Division-I Surat who by virtue of powers conferred under Section 72 read with Section 47 and 15(1)(b) of the Customs Act, 1962 has ordered to recover customs duty amounting to Rs.59,43,140/- chargeable under Section 28 of the Customs Act, 1962 and also imposed a penalty of Rs.10,000/- under Section 117 of the Customs Act, 1962 in addition to recovery of interest at an appropriate rate in view of Section 61(2) of the Customs Act read with Sections 47 and 72 till date goods are not actually cleared had attained finality. Similar orders have been passed with respect to other show cause notices as can be seen from the record and these were the orders which came to be challenged in the year 2001 by preferring an appeal before the Appellate Authority has specifically rejected the request for extension of warehousing period. Said orders were passed way back in the year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red under the Act. Thus, keeping the overall legal position in view and circumstances prevailing, appeal along with stay application came to be dismissed. Thus, it is clearly evident that appellant therein namely respondent herein had not disputed their duty liability at any point of time. 35. When aforesaid being the factual scenario and the issue regarding duty and penalty having attained finality, an attempt came to be made by the respondent herein after several years, i.e. 16 years to revive the same issue by seeking permission to re-export the goods that too without payment of duty and penalty, by submitting representations commencing from 23.06.2018 and attempting to revive the dead cause of action representations were submitted during 2018-19 and rightly so said request has been rejected by the Chief Commissioner of Customs on 07.03.2019 on the ground said issue had been laid to rest by the CESTAT. 36. However, Tribunal entertained an appeal against such rejection and has held that in terms of the Board s Circular No.03/2003-CUS dated 14.01.2003, respondent was entitled to re-export the goods without payment of duty, penalty and consequently entitled for extension of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 60 of the said judgment: 60. In our view, it is well settled that if the departmental circular provides an interpretation which runs contrary to the provisions of law, such interpretation cannot bind the Court. 1979 circular falls in such category. Moreover, the 1979 circular is with reference to the DPCO,1979 whereas we are concerned with DPCO, 1987 and DPCO, 1995. We are not impressed by the argument of Mr. S. Ganesh that in view of the saving clause in DPCO, 1987, the circular is saved which is further saved by the saving clause in DPCO, 1995. 38. The exemption circular has to be read in its entirety and not in part. It would be necessary to consider the language of the circular in its entirety and it cannot be read in isolation. In fact, paragraph 2 of the said circular which has been relied upon by the Tribunal would indicate the following expression being conspicuously present viz. 2. The matter has been examined in each such case, however, it will be necessary to extend the period of warehousing under Section 61 of the Customs Act to enable the importer to export the goods within the permitted period of warehousing. (emphasis supplied) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the circular would only indicate about re-export being permitted of warehoused goods and it does not specify or mention about the liability of the owner to make payment of duty, interest and penalty. However, it indicates before permitting re-export in each case, it will be necessary to extend the period of warehousing under Section 61 of the Customs Act. In other words, Sections 61 would come into play. Thereby, Section 61(2) would be attracted. Hence, we are of the considered view that the circular cannot be read in isolation or it cannot be read against Section 72 which empowers the Revenue to demand payment of duty in case warehoused goods are not cleared within the permitted time. 41. The circular in question which has been dealt with is also ex facie not possible to be taken for assistance to order for re-export of goods, especially when liability to pay duty, interest and penalty had already been crystallised and said findings has attained finality. Hence, the circular which is sought to be pressed into service cannot be read contrary to the statutory provisions. Under the garb of the circular, the adjudicating process cannot be given a go-by completely by permitting r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legal obligation arising out of a genuine transaction and nothing else is the substance . This principle which is known as Duke of Westminster principle is subject to new approach of the courts towards tax evasion schemes consisting of a series of transactions or a composite transaction. 46. In interpreting a section in a taxing statutes, according to Lord Simonds, the question is not at what transaction the section is according to some alleged general purpose aimed, but what transaction its language according to its natural meaning fairly and squarely hits . Lord Simonds calls this the one and only proper test . It is, therefore, not the function of a court of law to give to words a strained and unnatural meaning to cover loopholes through which the evasive taxpayer may find escape or to tax transactions which, had the Legislature thought of them, would have been covered by appropriate words. As stated by Lord Simon: It may seem hard that a cunningly advised taxpayer should be able to avoid what appears to be his equitable share of the general fiscal burden and cast it on the shoulders of his fellow citizens. But for the courts to try to stretch the law to meet hard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rant permission to the petitioner for re-export of the goods, equipment / machinery which are lying at Surat and as permitted by CESTAT vide order dated 31.01.2022 passed in Customs Appeal No.14527 of 2022. 50. In the background of Tax Appeal No.504 of 2022 filed by the Revenue having been allowed by answering the substantial questions of law in favour of the Revenue and consequently setting aside the order dated 31.01.2022 passed by CESTAT in Customs Appeal No.10752 of 2019, we are of the considered view that prayer sought for in Special Civil Application No.14527 of 2022 cannot be entertained and said petition is liable to be rejected. 51. For reasons aforestated, we proceed to pass the following ORDER (i) Tax Appeal No.504 of 2022 is allowed by answering the substantial questions of law in favour of the appellant Revenue and against the respondent, by setting aside the order passed by CESTAT in Customs Appeal No.10752 of 2019 dated 31.01.2022. Consequently, Customs Appeal No.10752 of 2019 is dismissed; (ii) Special Civil Application No.14527 of 2022 is dismissed; (iii) No order as to costs; (iv) All pending civil applications stand consigned to records. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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