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2020 (12) TMI 40 - HC - CustomsAdjustment / Appropriation of sale proceeds from sale of stored goods in auction sale - Priority of claim - interest on customs duty - precedence over the claims of the warehouse keeper - quantification of customs duty - cum duty method - CBEC Circular No. 71/2001, dated November 28, 2001 - Whether the warehouse keeper is the custodian of goods under Chapter IX of the Customs Act, 1962? - HELD THAT:- Section 73A(1), when it says that all warehoused goods shall remain in the custody of the person who has been granted a licence under section 57 or 58 or section 58A until they are cleared for home consumption, clearly speaks about the period of custody. The said section, even though it was inserted only on May 14, 2016, clarifies the position that the warehouse keeper has custody of the goods which are warehoused - Decided in favour of the respondent and against the appellant. Whether the proceeds of auction sale conducted as ordered by the District Court under section 72 are to be appropriated as provided in section 150 of the Customs Act? - HELD THAT:- The section clearly provides for sale by public auction or by tender or with the consent of the owner in any other manner, of any goods not being confiscated goods and that too under any provision of the Act. section 72 deals with sale of goods which are warehoused. As such, sale of goods by invoking section 72 comes within the ambit of section 150 since it is not a sale of confiscated goods. Confiscation of goods and its consequences are dealt with in Chapter XIV of the Act - answered against the appellant and in favour of the respondent. Whether the quantification of customs duty is to be made by following cum-duty method? - HELD THAT:- As clearly stated by the Department itself, there can be no further doubt regarding the manner in which the customs duty has to be arrived at in case of sale of uncleared goods. In the case on hand, admittedly, the customs duty has not been arrived by following the cum-duty method. The finding of the Tribunal on the above question cannot be faulted in any manner - answered against the appellant and in favour of the respondent. Whether interest on customs duty can have precedence over the claims of the warehouse keeper? - HELD THAT:- The order of precedence contained in section 150(2) does not leave any room for doubt. Since the amount is received as a result of a public sale, the first priority is given as per section 150(2)(a) to the expenses for sale. The second priority is given, as per section 150(2)(b) to the expenses that were incurred prior to the goods coming into the custody of the warehouse keeper, i. e., freight, etc. The third priority is to the State for its claim towards customs duty as can be seen from section 150(2)(c). The fourth priority is for the dues to the warehouse keeper in the form of rent and charges as is seen from section 150(2)(d). What is most relevant is section 150(2)(e), which says that after the claim under sub-section (2)(d), the next priority is for the payment of any amount due from the owner of the goods to the Central Government under the provisions of this Act or any other law relating to customs. Any claim other than customs duty, which comes under sub-section (2)(c), under the Act, can be settled only after the claim under section 150(2)(d) is settled - the claim for interest can come only under section 150(2)(e). Even without the aid of the above clarification, section 150 can be understood only to mean that interest on customs duty cannot have precedence over the charges and rent due to the warehouse keeper. The clarification dated May 22, 1990 can be treated as a contemporaneous exposition - thus, interest on customs duty does not have precedence over the warehousing charges and rent - answered against the appellant and in favour of the respondent. Appeal dismissed.
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