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TMI Blog2024 (3) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... ant attracting Section 71 and the consequences following the same did not arise. Inference drawn by the respondent that the permission granted by the Superintendent was only temporary and therefore, the rigor of Section 71 would be attracted, in our view, would not be a correct understanding of the situation and the law. We find that there is no explanation on the part of the appellant qua the missing 27 cases. Therefore, the view taken by the respondent and affirmed by the CESTAT that those 27 cases were improperly or unauthorisedly removed from the notified public bonded warehouse is correct and requires no interference. Evidently, the circular dated 12.7.1989 would not be applicable to the facts of the present case in as much as it is not the case of the respondent that either the warehousing period had expired or that the warehousing period was extended . As we have seen, the warehousing in the notified public bonded warehouse continued as the Corporation had deposited with the respondent a sum of Rs. 56,10,294.00 in respect of the notified warehouse as custom establishment charges for the period from 1992-1993 to 2007-2008. That apart, we can refer to the fact that respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of actual payment of duty. The Commissioner had also confiscated 264 cases of imported goods valued at Rs.48,79,776.00 seized from within the factory premises of the appellant but outside the approved warehouse under Section 111 of the Customs Act. However, the confiscated goods were permitted to be redeemed on payment of fine of Rs. 2 lakhs. Thirty days' time was granted to the appellant to exercise the option for redeeming the goods. Further, the Commissioner had confirmed customs duty amounting to Rs.39,03,821.00 in terms of Section 71 read with the proviso to Section 28A of the Customs Act. The appellant was also required to pay interest amounting to Rs.18,88,425.00 on the customs duty confirmed on the 264 packages from the date of warehousing till the date of detection of the shortage in the warehouse; in addition, appellant was also required to pay interest on the duty confirmed in terms of Section 28AB of the Customs Act from the date of enforcement of the said section till the date of actual payment of duty confirmed on the 264 cases. 3. Appellant before us is M/s Bhanu Iron and Steel Company Limited, Plot No. 801, Sector III, Industrial Estate, Pithampur, Distri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized was estimated at Rs.48,79,776.00. 9. In his statement recorded under Section 108 of the Customs Act on 07.08.1992, Sh. Yashwant Singh Bisht, Project Officer (Commercial) of the appellant stated that the 264 cases of imported goods were kept outside the bond under a shed as the trailers transporting the goods could not enter the notified warehouse in view of the soil becoming very sluggish on account of heavy rains and also because of paucity of space. The Collector, therefore, opined that the appellant had removed the 264 cases of warehoused goods valued at Rs.48,79,776.00 attracting duty of Rs.39,03,821.00 and interest of Rs.18,88,425.00 in violation of Section 71 read with Section 111(j) of the Customs Act. The seized goods were thus held liable for confiscation. 10. It was further alleged that appellant had unauthorisedly cleared 27 cases of the imported goods valued at Rs.4,99,068.00 attracting duty of Rs.3,99,255.00 with interest of Rs.2,41,326.00 which were liable to be recovered under Section 71 read with the proviso to Section 28(1) of the Customs Act. 11. That apart, it was alleged that M/s. Central Warehousing Corporation, Pithampur had abetted the appellant in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the premises of the appellant having fencing and a gate with locking arrangement was approved by the customs and central excise authorities as a public bonded warehouse. Appellant vide letter dated 30.08.1989 sought permission from the Superintendent, Customs and Central Excise, Range-III, Pithampur for unloading the cargo covered by Bond No.T-1592 dated 31.05.1989 outside the said warehouse on account of heavy rains, etc. It was pointed out that the trailers carrying the consignment could not enter the said warehouse because those got stuck in the soil outside the said warehouse as the soil had got sluggish due to heavy rains. The Superintendent gave permission for unloading the cargo outside the warehouse but within the factory premises on the body of the letter itself. The machinery parts had to be shifted to a shed outside the bonded warehouse but within the factory premises to protect those parts from further rusting and corrosion. 15. Commissioner by his adjudication order dated 28.08.1996 did not accept the reply of the appellant and confirmed the demand and interest. It was ordered as under: (i) demand for duty of Rs.3,99,255.00 plus Rs.2,41,326.00 leviable on 27 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fording an opportunity of hearing to the appellant. 19. The matter was taken up by the Commissioner afresh on remand. By a detailed order dated 28.04.2005, the Commissioner directed as under: (i) demand of Rs.3,99,255.00 leviable on the 27 cases found not warehoused was confirmed for recovery from the appellant in terms of the conditions of transit bond. (ii) appellant should pay interest on the duty confirmed in terms of Section 28AB of the Customs Act from the date of enforcement of the said section till the date of actual payment of duty. The interest amount was directed to be worked out and communicated to the appellant by the Assistant Commissioner, Central Excise Division, Pithampur. (iii) 264 cases of imported goods valued at Rs.48,79,776.00 seized from the premises of the appellant outside the approved warehouse were confiscated under Section 111 of the Customs Act. As the goods were within the factory premises but outside the bonded warehouse, a lenient view was taken; the goods were permitted to be redeemed on payment of fine of Rs.2,00,000.00 (Rupees two lakhs only). The option for redeeming the goods was to be exercised by the appellant within 30 days from the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stom establishment charges' for the financial year 1992-1993 to 2007-2008. 24. Learned counsel for the appellant submits that CESTAT had failed to consider the fact that it was on the basis of specific permission granted to the appellant by the proper officer that the impugned goods were found outside the warehouse but within the industrial/factory premises of the appellant. Therefore, in terms Section 64(d) of the Customs Act respondent could not have treated the said goods as having been removed from the warehouse. He submits that since the appellant had not cleared the warehoused goods, Section 64 of the Customs Act would come into play. Therefore, CESTAT was clearly in error in upholding the order of the respondent applying Section 15(1)(b) of the Customs Act for determining the rate of duty in respect of those goods. According to him, in the facts of the present case the only provision that would be applicable is the residuary provision i.e., Section 15 (1) (c) of the Customs Act. 24.1. Learned counsel has also placed reliance on the circular dated 12.07.1989 of the Central Board of Excise and Customs which was fully applicable to the case of the appellant. Though this circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermination of rate of duty and tariff valuation of imported goods is dealt with in Section 15. Sub- Section(1) of Section 15 says that the rate of duty and tariff valuation, if any, applicable to any imported goods shall be the rate and valuation in force- (a) in the case of goods entered for home consumption under Section 46, on the date on which a bill of entry in respect of such goods is presented under that section; (b) in the case of goods cleared from a warehouse under Section 68, on the date on which the goods are actually removed from the warehouse; (c) in the case of any other goods, on the date of payment of duty. 30. While Section 28 provides for recovery of duties not levied or short levied, Section 28AA deals with interest on delayed payment of duty. On the other hand, Section 28AB provided for interest on delayed payment of duty in special cases. Substance of Section 28AB (since deleted) was that where any duty was not levied or paid or short levied etc., the person who was liable to pay the duty would also be liable to pay interest in addition to duty at such rate not below 10% and not exceeding 36% per annum as may be fixed by the central government by noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficient cause being shown, be extended by the Principal Commissioner or Commissioner of Customs for a period not exceeding six months and by the Principal Chief Commissioner or Chief Commissioner of Customs for further period as he may deem fit. 35. Section 64 deals with owner's right to deal with warehoused goods. Section 64, as it stood at the relevant point of time, read as under: 64. Owner's right to deal with warehoused goods.- With the sanction of the proper officer and on payment of the prescribed fees, the owner of any goods may either before or after warehousing the same- (a) inspect the goods; (b) separate damaged or deteriorated goods from the rest; (c) sort the goods or change their containers for the purpose of preservation, sale, export or disposal of the goods; (d) deal with the goods and their containers in such manner as may be necessary to prevent loss or deterioration or damage to the goods; (e) show the goods for sale; or (f) take samples of goods without entry for home consumption, and if the proper officer so permits, without payment of duty on such samples. 35.1. Thus, this section provided that the owner of any goods with the sanction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son who has executed or is entitled to receive it. 41. Section 110(1) of the Customs Act empowers the proper officer to seize any goods if he has reason to believe that such goods are liable to confiscation under the Customs Act. 42. As per Section 111(j), any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission, shall be liable for confiscation. 43. In the event of such an act, the concerned person shall be liable to pay penalty under Section 112. 44. Central Board of Excise and Customs had issued Circular No.98/95-Cus. dated 12.07.1989. Subject matter of this circular was what would be the relevant date for calculation of customs duty in cases where warehoused goods were cleared after expiry of the warehousing period. Reference was made to the instructions of the Board dated 17.03.1987 where it was clarified that in cases where warehoused goods were cleared from a warehouse after expiry of the bond period, the rate of duty would be the one which was prevalent on the date of expiry of the bond. The issue was reconsidered in the tripartite meeti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod or its permitted extension, the goods would be deemed to have been improperly removed from the warehouse under Section 72. In the facts of that case, it was found that there was nothing on record to suggest that clearance of the goods in question under Section 68 was ordered and, therefore, Section 15(1)(b) had no application. Finally, this Court held that the consequence of non-removal of the warehoused goods within the permitted period or the permitted extension by virtue of Section 72 is certain. The date on which it comes to an end is the date relevant for determining the rate of duty; when the duty is in fact demanded is not relevant. 46. Following the decision of this Court in Kesoram, the Central Board of Excise and Customs issued Circular No.31/97-Cus. dated 14.08.1997. The Board held that in view of this Court's judgment, the date of payment of duty in the case of warehoused goods removed after expiry of the permissible or extended period would be the date of expiry of the warehousing period or such other extended period, as the case may be, and not the date of payment of duty. Goods not removed from a warehouse within the permissible period or the extended period are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods are cleared from the warehouse after expiry of the permitted period or its permitted extension, the goods are deemed to have been improperly removed under Section 72(1)(b) of the Customs Act with the consequence that the rate of duty has to be computed according to the rate applicable on the date of expiry of the permitted period under Section 61. 49. Let us now briefly recap the facts. Appellant had imported second hand steel mill machinery and parts covered by three transit bonds totalling 595 cases. The customs authority had notified an open area of 2000 square meters within the industrial/factory premises of the appellant as a public bonded warehouse. This open area was fenced and had gate with locking arrangement. The imported goods covered by the 595 cases were required to be warehoused in the said notified public bonded warehouse without payment of customs duty. Appellant had written a letter dated 30.08.1989 to the concerned Superintendent seeking permission to unload a portion of the cargo outside the warehouse but within the factory premises. It was pointed out that the trailers carrying the consignment could not enter the said warehouse as because those trailers ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 28AB in respect of the 264 cases from the date of enforcement of the said section to till the date of actual payment of the duty. Penalty of Rs.1,00,000.00 was also imposed on the appellant under Section 112 of the Customs Act. 49.3. In appeal, CESTAT by the impugned order affirmed the aforesaid decision of the Commissioner. 50. We may mention that the permission granted by the Superintendent to the appellant on 30.08.1989 to unload a portion of the cargo outside the open space which was notified as public bonded warehouse but within the factory premises of the appellant was neither cancelled nor revoked by the Superintendent or even by the Commissioner. Infact, a view can reasonably be taken that the appellant as the owner of the goods had exercised its right under Section 64(d) which was endorsed by the Superintendent. Therefore, it would not be correct to say that the 264 cases found outside the notified warehouse but within the factory premises of the appellant were improperly or unauthorisedly removed from the notified public bonded warehouse. 51. It has also come on record that Central Warehousing Corporation had deposited a sum of Rs.56,10,294.00 with the respondent as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that those 27 cases were improperly or unauthorisedly removed from the notified public bonded warehouse is correct and requires no interference. 55. Reverting back to the 264 cases, we are of the view that in a case of this nature, Section 15(1)(b) would have no application. Rather, Section 15(1)(c) would be attracted. 56. In so far the Board's circular dated 12.07.1989 is concerned, the subject matter of the said circular was what would be the relevant date for calculation of customs duty in cases where warehoused goods were cleared after expiry of the warehousing period. In that context, it was clarified that provisions of Section 15(1)(b) of the Customs Act would apply to cases where the goods were cleared from the warehouse after extension of the warehousing period but before expiry of such extended period. On the other hand, in respect of cases where the goods were removed after expiry of the warehousing period, the residual clause of Section 15(1)(c) of the Customs Act would apply. Evidently, this circular dated 12.7.1989 would not be applicable to the facts of the present case in as much as it is not the case of the respondent that either the warehousing period had expired ..... X X X X Extracts X X X X X X X X Extracts X X X X
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