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TMI Blog2024 (7) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... said tank on 15th February 2022. There is no doubt that the procedure does not contemplate retrospective applicability of such inclusion but in matters of storage, and especially of liquid bulk, which, for want of discharge on arrival, would imply retention of the vessel with mounting of related charges, required the breach to be viewed in proper perspective as malafide has not been set out in the impugned order - there are doubts about the applicability of this provision inasmuch as goods not having been deposited in a warehouse could not be alleged to have been removed contrary to permission and, further, it is not as if the goods were moved out of customs area and supervisory control of the customs authorities pending clearance for home consumption. As confiscation was not warranted, the imposition of penalty under section 112 in relation to the impugned goods is patently not correct in law. The confiscation had been ordered under section 111(h) of Customs Act, 1962 which is liable to be invoked only when goods are unloaded or attempted to be unloaded in contravention of provisions under section 33 and section 34 of Customs Act, 1962. It would appear that Commissioner of Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant Shri Krishna M Azad , Assistant Commissioner (AR) for the respondent ORDER PER : C J MATHEW In this dispute, cavil is not about duty liability on goods allegedly not levied, not paid, short-levied or short-paid by the appellant. The cavil is also, for the most part, not about alleged smuggling of goods by the appellant; we have qualified it only because, though without saying so, the impugned order has held some goods to have been for imposing penalty in consequence. For the most part, simultaneous penalty has been imposed under a residual empowerment vested in adjudicatory authority by Customs Act, 1962 and for having breached obligations as licensee of warehouse under Customs Act, 1962. Two appeals are before us with the first impugning order [order-in-original no. 291/2024-25/COMMR/NS-I/Bond/JNCH dated 26th March 2024] of Commissioner of Customs (NS-I), JNCH, Nhava Sheva concerning licence dated 11th August 2021 under section 58 of Customs Act, 1962 to operate a private warehouse comprising eight tanks. The other impugned order [order-in-original no. 16/2024-25/COMMR/NS-I/Bond/JNCH dated 16th April 2024] of Commissioner of Customs (NS-I), JNCH, Nhava Sheva concerning l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edible oil, chemicals and petroleum products - for all of which two tanks and eight tanks respectively were in their possession. Storage of liquid bulk is handicapped by being product sensitive but offers convenience of being owner neutral both combining for singularity of accounting disposal of cargo to suffice. We draw attention to this aspect as some part of the dispute turns on this peculiarity. 3. The scheme of regulation over warehouses, licenced by Commissioner of Customs under the empowerment of the two provisions in chapter IX of Customs Act, 1962, prescribes the method of handling goods in different circumstances and obligation devolving thereon. Not unnaturally, consequences of non-observance and breach thereof are also statutorily provided thus 117. Penalties for contravention, etc., not expressly mentioned Any person who contravenes any provision of this Act or abets any such contravention or who fails to comply with any provision of this Act with which it is his duty to comply, where no express penalty is elsewhere provided for such contravention or failure, shall be liable to penalty not exceeding one lakh rupees. which the impugned order has liberally applied to ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appears to have been deemed into the Regulations in the impugned order. 5. We are, therefore, required to examine the scope of recourse to section 117 of Customs Act, 1962 for penalising alleged breach of licencing condition and breach, if any, of stipulations in the Regulation. But first and foremost is, so to speak, the icing on the cake the continuation of suspension till the penalties and fines in the impugned order had been met by the appellant. It has been contended by the Learned Counsel for appellant that the suspensions, as also contingent retention in the impugned order; are in violation of the empowerment afforded under section 58B of Customs Act, 1962. Learned Authorized Representative submitted that breach of the regulatory environment in which a licensee was required to carry out its responsibility elicited during inspection of the facility had led to proceedings prescribed under chapter IX of Customs Act, 1962 and, therefore, suspension was in accordance with law. 6. Section 58B of Customs Act, 1962 empowers Principal Commissioner of Customs / Commissioner of Customs to cancel the license granted to public warehouse under section 57 of Customs Act, 1962, to private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory intent to set apart cancellation of licence and penalties. Validation of this act of the licencing authority is to participate in the illegality of continuation of suspension even without the legally intended finale. It would also be appellate sanction for stretching a legally circumscribed provision beyond statutory intent as means of compelling compliance which is anathema to rule of law. It would also be contrary to the judicially determined principle that suspension is not an instrument of penalty. Carryover of the suspension of licence beyond the stage of enquiry is not in concord with the power vested in Principal Commissioner of Customs/Commissioner of Customs. The act of Commissioner of Customs in bundling suspension with other action that has been taken against the licensee and goods is beyond the scope of law and, consequently, continuation of suspension beyond the date of impugned order merits setting aside. 8. In the two proceedings, separate episodes of unauthorized storage have been elaborated upon as cause for confiscation of goods with consequent redemption fine in lieu thereof as well as imposition of penalty under section 112 of Customs Act, 1962. Insofa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings that the appellant had sought inclusion of tank no. 103 to the private warehouse licence in December 2021 and that permission was accorded on 18th February 2022. It is also on record that the goods imported vide bill of entry 7434419/10.02.2022 had been pumped in the said tank on 15th February 2022. There is no doubt that the procedure does not contemplate retrospective applicability of such inclusion but in matters of storage, and especially of liquid bulk, which, for want of discharge on arrival, would imply retention of the vessel with mounting of related charges, required the breach to be viewed in proper perspective as malafide has not been set out in the impugned order. It also bemuses that a Commissioner of Customs, while ready and willing to consider storage for three days in a non-bonded tank as demonstration of all that is wrong in this world, has failed to ascertain cause for delay in approval on the part of the competent authority in disposing off the application for inclusion in the licence; the severity of premature deployment of tank for storage of dutiable goods in circumstances of denial of inclusion is nowhere near one of delay in discharge of responsibil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s had ascertained if the said bonded tanks were within such customs area. In any which way, section 111(h) of Customs Act, 1962 would not be applicable and consequently confiscation thereof, as well as imposition of fine and the determination of penalty, is not in accordance with law. For these reasons, detriment in relation to the five bills of entry would need to be set aside. 12. In the impugned order pertaining to the public warehouse, the goods belonging to the appellant, and covered by bill of entry no. 9146408/16.06.2022, were held as liable to confiscation under section 111(h) of Customs Act, 1962 for having been stored in the public warehouse which, according to the Commissioner of Customs, is in violation of section 33, section 60 and section 71 of Customs Act, 1962. In connection with the five bills of entry for consignments alleged to have been incorrectly stored in the private warehouse, we have found that the provisions of section 33 of Customs Act, 1962 would not apply. As far as section 60 and section 71 of Customs Act, 1962, for deposit of goods, permitted to be removed from customs station, in a warehouse is concerned, no distinction is drawn between public wareho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the violation of the licensing conditions and, admittedly so, with the impugned order making reference to Annexure for the purpose. Regulation 12 of the Warehouse (Custody and Handling of Goods) Regulations, 2016 does not envisage importation of such licensing conditions as a part and parcel of the said Regulations; neither is authority vested with the Principal Commissioner of Customs / Commissioner of Customs, empowered to specify conditions appended to licence, to deem these as incorporated within Regulations notified under section 157 of Customs Act, 1962 and section 73A of Customs Act, 1962. It was always open to the Commissioner of Customs, as the licensing authority, to cancel the licence for such breach but imposition of penalty is in the realm of statutory enactment only. It is to be invoked in consequence of breach of Customs Act, 1962 and, by delegated authority, extended through regulation 12 therein to breach of provisions of Warehouse (Custody and Handling of Goods) Regulations, 2016. The latter has no reference to license conditions and Customs Act, 1962 authorizes prescribing of conditions with no allowance for fiscal penalties for breach thereof. Therefore, Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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