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2025 (4) TMI 894 - AT - CustomsApportionment of sale proceeds of goods auctioned under the Customs Act 1962 - goods were already time expired warehouse goods - whether the goods were required to be sold under the provisions of Section 63(2) of the Customs Act 1962 or Section 150 (2) of the Act? - HELD THAT - In view of the law as laid down in terms of Section 150 of the Customs Act 1962 the apportionment of the sale proceeds after defraying payment of the auction caused is the first priority the next element to be considered is the freight and other charges payable in respect of the goods sold to the carriers. There is nothing wrong in the order of the ld.Commissioner (Appeals) allowing payment of freight expenses. The ld.Commissioner (Appeals) was however handicapped for want of each and every bills and therefore remanded the matter to the lower authorities for examining the authenticity and applicability of the said category of other charges via provisions of Section 150(2)(b) of the Customs Act 1962. The respondent has challenged this remand pointing out that the ld.Commissioner (Appeals) was not vested with the power of remand. This premise of the respondent is not agreed upon. It is settled law that the ld.Commissioner (Appeals) in terms of power vested upon him is permitted to pass appropriate order as deemed fit including the power to remand Section 128A (3) of the Customs Act 1962. The law clearly provides as may be seen from the aforesaid words of law besides confirming modifying or annulling the decision or order appealed against in terms of Sub-Section (3)(a) of Section 128A of the Act the ld.Commissioner (Appeals) is also vested with power to remand vide Sub-section (3)(b) thereto - Even in the interregnum the Court has given Commissioner (Appeals) the power for modifying the order including the power of remand. Conclusion - i) The apportionment of sale proceeds for auctioned time-expired warehouse goods must follow Section 150(2) of the Customs Act 1962. ii) The respondent is entitled to freight charges of Rs.74, 65, 099/- as per Section 150(2)(b) supported by unchallenged documentary evidence. iii) The Commissioner (Appeals) validly remanded the matter concerning warehouse rent charges for detailed verification due to incomplete documentation. The appeal filed by the Revenue is therefore dismissed.
The core legal questions considered by the Tribunal in this appeal are:
1. Whether the apportionment of sale proceeds of goods auctioned under the Customs Act, 1962, should be governed by Section 150(2) or Section 63(2) of the Act, particularly in the context of time-expired warehoused goods. 2. Whether the respondent (warehouse-keeper) is entitled to reimbursement of freight charges amounting to Rs.74,65,099/- incurred in respect of the auctioned goods under Section 150(2)(b) of the Customs Act, 1962. 3. Whether the respondent is entitled to reimbursement of outstanding warehouse rent charges amounting to Rs.21,97,80,235/- and the procedural correctness of remand by the Commissioner (Appeals) for verification of such charges. 4. The scope and extent of the Commissioner (Appeals)'s powers, particularly whether the Commissioner (Appeals) was empowered to remand the matter to the adjudicating authority for fresh adjudication. Issue-wise Detailed Analysis: 1. Apportionment of Sale Proceeds under Section 150(2) or Section 63(2) of the Customs Act, 1962 The legal framework involves Sections 63, 72, and 150 of the Customs Act, 1962. Section 63(2) permits a warehouse-keeper to sell warehoused goods for unpaid rent with permission from the proper officer. Section 150 prescribes the procedure for sale of goods and the order of application of sale proceeds, prioritizing payment of sale expenses, freight and other charges, customs duty, custody charges, government dues, and finally the balance to the owner. The respondent had warehoused imported consignments and claimed freight and warehouse rent charges after the goods remained uncleared. The Revenue undertook e-auction of the goods and recovered sale proceeds. The dispute arose over the correct legal provision governing apportionment of sale proceeds and entitlement to freight and warehouse charges. The Commissioner (Appeals) examined whether the goods were to be sold under Section 63(2) or Section 150(2). It was noted that the goods were time-expired warehouse goods and the sale was conducted under Section 150. This was consistent with the Division Bench of the High Court's earlier decision, which the appellant (Revenue) did not appeal, thus making the issue final. The Tribunal upheld this interpretation, stating that apportionment of sale proceeds after defraying auction expenses must first satisfy freight and other charges payable to the carrier under Section 150(2)(b). This interpretation aligns with the statutory hierarchy of payments in Section 150(2) and was supported by the absence of any contrary appeal or evidence. 2. Entitlement to Freight Charges under Section 150(2)(b) The respondent claimed Rs.74,65,099/- as freight charges incurred for transporting the goods from the barge to the warehouse. The Deputy Commissioner of Customs initially denied reimbursement, but the Calcutta High Court set aside that order, directing adjudication of the freight claim in accordance with law. The Commissioner (Appeals) allowed the freight charges after examining documentary evidence including bills and communications, noting that the Revenue had not disputed the authenticity or correctness of the documents at any stage. The Commissioner (Appeals) relied on the statutory mandate of Section 150(2)(b) that freight and other charges payable to the carrier must be paid from sale proceeds before duty and other charges. The Tribunal found no infirmity in this reasoning, emphasizing that the Revenue's failure to challenge the documents implied acceptance of their veracity. The order allowing the freight charges was thus upheld as consistent with the law and facts. 3. Reimbursement of Warehouse Rent Charges and Remand for Verification The respondent claimed outstanding warehouse rent charges of Rs.21,97,80,235/-. The Commissioner (Appeals) noted that the respondent had submitted a consolidated statement and some bills but lacked "each and every" individual bill necessary for verification. The Commissioner (Appeals) remanded the matter to the adjudicating authority for detailed examination of the authenticity and applicability of these charges under Section 150(2)(b). The respondent challenged the remand, contending that the Commissioner (Appeals) lacked power to remand. The Tribunal rejected this contention, relying on Section 128A(3) of the Customs Act, 1962, which explicitly empowers the Commissioner (Appeals) to confirm, modify, annul, or refer the matter back to the adjudicating authority for fresh adjudication where necessary. The Tribunal emphasized that the Commissioner (Appeals) was justified in remanding the matter to ensure proper verification and adherence to principles of natural justice, especially given incomplete documentation. 4. Scope of Commissioner (Appeals)'s Powers Section 128A(3) of the Customs Act, 1962, was central to this issue. It confers on the Commissioner (Appeals) the authority to pass just and proper orders, including remanding matters to the adjudicating authority for fresh decision, particularly in cases where principles of natural justice were not followed or further inquiry was necessary. The Tribunal highlighted that this statutory power is well-settled and includes the power of remand. The Commissioner (Appeals)'s remand for verification of warehouse charges was therefore within jurisdiction and proper. Significant Holdings: "Thus, I find that Hon'ble Division Bench, High Court, Kolkata has decided the issue in favour of Revenue that the sale proceeds is to be apportioned under Section 150 of the Customs Act, 1962... I hold that there is no infirmity in the impugned order-in-original... on this account." "In view of the law as laid down in terms of Section 150 of the Customs Act, 1962, the apportionment of the sale proceeds after defraying payment of the auction caused is the first priority, the next element to be considered is the freight and other charges payable in respect of the goods sold to the carriers." "The law clearly provides... the ld.Commissioner (Appeals) is also vested with power to remand vide Sub-section (3)(b) thereto." "The Commissioner (Appeals) was justified in remanding the matter to the lower authorities for examining the authenticity and applicability of the said category of other charges." The Tribunal conclusively held that:
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