By TIOL News Service

MUMBAI, SEPT 18, 2014: THE appellant imported eight consignments of plant and machinery relating to acrylic fibre/polymerization/extrusion during October, 1994 to September, 1995. The said goods covered by six Bills of Entry were cleared and kept in a Bonded Warehouse while the goods covered by two other Bills of Entry were in docks area. Later on, intelligence was received that the appellants are required to pay, to the supplier, in addition to the invoice value of the said plant and machinery, certain amounts relating to the technical knowledge fee.

A SCN came to be issued but the same was dropped by the Commissioner on the ground that the goods are meant for 100% EOU and the warehousing period for 100% EOU is yet to be over. It was also noted that though the amount for technical knowhow fee is required to be paid, no such remittance was made so far.

In Revenue appeal, the matter was remanded by the Tribunal.

During the adjudication process in 2006, the appellant submitted a letter to the Commissioner of Customs relinquishing the title of the goods. The adjudicating authority accepted the relinquishment in respect of the two Bills of Entry wherein the goods were not cleared from the warehouse and were lying in the docks area. However, in respect of the remaining six Bills of Entry the request for relinquishing the title was rejected. A duty amount of Rs.7,15,28,985/- was confirmed u/s 68 of the Customs Act, 1962 r/w s.72 of the said Act. In addition, the appellants are held liable to pay interest on the warehoused goods under Section 61 of the Customs Act, 1962 after expiry of 90 days from the initial warehousing period till the date of payment. The plant and machinery was confiscated under Section 111(m) as the declared value was enhanced keeping in view the proportionate technical knowhow fee in respect of plant and machinery imported. A penalty of Rs.25 lakhs was also imposed on the appellant.

Before the CESTAT, the appellant submitted that since they had relinquished the title as per letter dated 14.3.2006 and it is not under dispute that the goods have not been cleared for home consumption, the relinquishment of the goods is in order and as per the said proviso they are not liable to pay any duty.

The appellant inter-alia placed reliance on the Board Circular 3/2003-Cus dated 14.01.2003 and decision in RPG Cables Ltd vs CC (Imports), Bombay - 2007-TIOL-431-CESTAT-MUM dated 1.3.2007 to support their contention.

The AR submitted that once the warehousing period is over as per Section 72 of the Customs Act, 1962 the goods are deemed to be improperly removed from warehouse and, therefore, the goods cannot be considered as warehoused goods; that since the goods are not warehoused goods, proviso to Section 68 of the Customs Act, 1962 is not applicable at all; that the said proviso is applicable only for the warehoused goods; that in the case of goods improperly removed from the warehouse there is no question of permitting clearance for home consumption and hence the argument that the appellant can relinquish the title before clearance of goods for home consumption is irrelevant in the present situation. The following case laws were relied upon to buttress the Revenue stand the appellants are required to pay the duty, interest and penalty as imposed under the impugned order -Kesoram Rayon 1996 (86) ELT 464 (SC), Videocon International vs Union of India 2003 (155) ELT 25 (Bom); Commissioner of Central Excise vs Decorative Laminates (I) Pvt Ltd 2010 (257) ELT 61 (Kar) & PSI Data Systems Ltd vs Assistant Commissioner of Customs, Bangalore - 2004 (163) ELT 302 (Kar).

The Bench noted that the goods were warehoused during the period October 1994 to September 1995 and after extracting the provisions of sections 61, 68 & 72 as they were amended over a period of time, the Bench observed that the facts of the present case were covered under clause (b) of section 72 of the Customs Act, 1962; that in terms of s. 72(1)(b) any warehoused goods not removed from a warehouse at the expiration of the period permitted under Section 71 are considered as goods improperly removed and the owner of such goods is required to pay, the full amount of duty chargeable together with all penalties, rent, interest and other charges payable in respect of such goods; that 1st proviso to Section 68 introduced w.e.f. 14.5.2003, provides for relinquishment of title of warehoused goods at any time before clearance of goods for home consumption; that Section 72 (1)(b) does not stipulate filing of Bill of Entry for payment of duty and that since the goods are considered as improperly removed from the warehouse, the same cannot be considered as warehoused goods.

Thereafter the Bench visited the ratio of the various decisions cited by both sides and concluded thus -

++ A combined reading of the judgments of the Hon'ble Supreme Court, Bombay High Court and two cases of the Hon'ble Karnataka High Court it is clear that once the warehousing period has expired, the goods are deemed to be improperly removed from the warehousing and cannot be considered as warehoused goods and the appellants are required to pay duty under Section 72(1)(b) of the Customs Act, 1962 irrespective of the fact that they want to abandon or relinquish title of the goods. Accordingly we do not find any merit in the appeal.

++ In this case the appellant has sent a letter for relinquishing title of the goods after more than ten years of the expiry of the warehousing period. Even when the letter for relinquishing the title was sent, the appellants have not made payment of rent, interest and other charges and penalties. The second proviso to Section 68 of the Customs Act, 1962 which was introduced with effect from 18.4.2006 also provides that relinquishment shall not be allowed where offence appears to have been committed. In this case, in the impugned order, goods have been held to be liable for confiscation under Section 111 (m) of the Customs Act, 1962 and are confiscated.

The appeal was dismissed.

(See 2014-TIOL-1783-CESTAT-MUM)