By TIOL News Service

MUMBAI, NOV 27, 2016: THE appellant had bonded certain goods on 18.08.1984 u/s 60 of the Customs Act, 1962 in the bonded warehouse. Part of the goods were cleared from 26.09.1984 to 14.01.1988. Demand Notice was issued wherein duty was demanded on the balance goods which were not cleared by the appellant.

The Commissioner (Appeals) remanded the matter with the following observation :-

"4(iii) According to the provisions of Section 15, the rate of duty applicable in the goods cleared from the warehouse is not that payable on the date on which the goods were warehoused and, therefore, there was need for revised assessment and determination of duty. The appellants have pointed out that duty payable would be only Rs. 91,013/-. Further, the bond executed by the appellants does not require to pay any interest as there was no provision for paying interest at the time when the bond was executed. It was, therefore, incumbent on the part of the Asstt. Commr. to give not only an opportunity for representation but also an opportunity for hearing before passing the order."

In remand, the AC confirmed the entire duty demand of Rs.1,78,884/- and rejected the request of the appellant to relinquish the title to the goods.

The Commissioner (Appeals) upheld this order by relying on the decision of the Apex Court in the case of Kesoram Rayon - 2002-TIOL-818-SC-CUS.

The appellant is before the CESTAT.

It is submitted that they had abandoned the goods and relinquished the title and in these circumstances no demand under Section 72 can be raised. They rely on the decision in i2 Technologies Software Pvt. Ltd. - 2007-TIOL-833-HC-KAR-CUS. Moreover, the Commissioner (A) had granted them relief in respect of interest and had quantified the duty asRs.91,013/- only and since this order was not challenged, now the Revenue cannot take a different view.

The Bench extracted the findings from the order passed by the Karnataka High Court in the cited case and observed that the issue in the instant appeal is squarely covered by the said decision.

On the issue of quantification of the demand for the purposes of interest, the Bench extracted paragraph 17 of the decision of the Supreme Court in the case of Kesoram Rayon (supra) which reads:

"17. The consequence of non-removal of warehoused goods within the permitted period or the permitted extension is, by virtue of the terms of Section 72, certain. The date on which it comes to end is the date relevant for determining the rate of duty. When the duty is, in fact, demanded is not relevant. The alternative submission on behalf of the appellant must, therefore, also be rejected."

After concluding that in view of the cited decisions, the appellants have a right to relinquish the goods, the Bench added-

"However, the interest can be recovered from the date of warehousing of the goods left in the warehouse to the date of relinquishing of the title by the appellants. Rate of duty for calculation of interest would be determined in terms of the decision of the Hon'ble Supreme Court in the case of Kesoram Rayon (supra)."

The appeal was partly allowed.

(See 2016-TIOL-3064-CESTAT-MUM)