TMI Blog1991 (2) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... the warehousing period upto 31-12-1985, the Central Board of Excise & Customs informed the appellants that no further extension would be considered after 31-12-1985. The appellants did not clear the goods within the extended period from the warehouse. They addressed another letter dated 6-11-1985 seeking extension of the warehousing period for a further period of one year on the ground that the demand for gramophone records which would be manufactured from the goods imported by them, had gone down in the market. In the said letter, they informed the Board that they had cleared the goods to the extent of 4.536 MT. The appellants addressed another registered letter on 14-4-1986 and applied in the prescribed form for extension of bond period for a period of three years from 1-1-1986 to 31-12-1988. The appellants were not granted any extension of bond period expressly by a letter by the Board in response to their representation. They had cleared on 18-3-1987 goods to an extent of 4.536 MT after paying duty at the rates prevailing on that date as prescribed under Section 15(l)(b) of the Customs Act i.e. at the rate of Rs. 15,000/- per MT and the duty worked out to Rs. 68,040/- by utilis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 15(l)(b) of the Act lays down that the rate of duty shall be the rate in force in the case of goods cleared from a warehouse under Section 68 for home consumption to be as on the date on which the goods were actually removed from the warehouse. They have contended that there is no provision governing the removal of warehoused goods for home consumption after the expiry of warehousing period, therefore, the said goods must be deemed to have been cleared under the provisions of Section 68 even though the warehousing period had expired and therefore, the conditions of Section 15(l)(b) should have been deemed to have been complied in the present case. Section 72 neither expressly nor impliedly refers to the determination of the rate of duty. In the circumstances, they have stated that the Revenue has erred in determining the rate of duty under Section 72 of the Act instead of determining it under Section 15 of the Act. 6. They have further contended that on a true and proper construction, the said Section 72(l)(b) merely confers a power on the proper officer to demand and recover duty on goods stored in a warehouse where the permitted warehousing period has expired. They have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... housing period on 31-12-1985. After this date, the goods will not be deemed to be warehoused though they may be kept in warehouse. If the warehousing period is not extended by the proper authority i.e. CBEC in this case, the Department acquires a limited right in the goods to the extent of recovery of duty, interest etc. as above". In view of the position stated above, the rate of duty applicable in this case was that prevailing on 31-12-1985. 8. Shri Pochkhanawala, learned Advocate appearing for Mulla & Mulla & Craigie Blunt & Caroe for the appellants contended in this case that the Revenue having remained silent and not replying to their two representations dated 6-11-1985 and 14-4-1986 seeking further extension of bond period for three years from 1-1-1986 to 31-12-1988, it has to be presumed that the authorities had considered the goods to be warehoused goods. The subsequent conduct of the authorities in not demanding duty as per Section 72(1)(b) of the Act clearly tantamounted to the fact that the Department had not considered the goods as not warehoused goods but had all along been treating the goods to be warehoused goods. In the circumstances, the appellants paid duty un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no provision to consider the goods to be deemed warehoused goods. Therefore, in the circumstances, the duty has to be only as on the date on which warehousing period has expired and in this case, the duty should be as on 31-12-1985 when the warehousing period expired. He submitted that Section 15(l)(b) will apply only if the warehoused period had been extended and goods remained within that extended period. He submitted that the show cause notice was not barred by time. The show cause notice has been issued within six months from the date of payment of the duty by the appellants and it has to be considered as short levied. Shri Jayaraman, SDR, relied on the decision of this Tribunal in Kesoram Rayon v. Collector of Customs - 1989 (44) E.L.T. 37 - laying down that the rate of duty applicable to goods cleared from a warehouse after the expiry of the warehousing period, under an order passed by the Asstt. Collector in terms of Section 72 of the Act, would be the rate of duty in force on the date of filing of the into bond bill of entry. 11. In reply, Shri Pochkhanawala, Advocate, submitted that the Department had not resorted to any steps to recover the duty after the expiry of bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended. Difficulty arises in the case of goods which are actually removed from the warehouse after the expiry of the warehousing period. In the present case, the warehousing period which was initially for a period of three months, was extended upto 31-12-1985. The goods were cleared on 18-3-1987. The question boils down to whether the clearance of goods in such circumstances would amount to clearance of warehoused goods as envisaged in Section 68 and clearance of goods from warehouse as envisaged in Section 15 of the Act. 15. Sections 2(43) and 2(44) of the Customs Act read us: 2(43) "Warehouse" means a public warehouse appointed under Section 57 or a private warehouse licenced under Section 58". 2(44) "Warehoused goods" means goods deposited in a warehouse". 16. In the present case, admittedly, the goods were deposited in a public warehouse appointed under Section 57 of the Act. That they were warehoused goods till the expiry of the extended warehousing period on 31-12-1985 is not a matter of doubt. The question is whether after the expiry of the said period on 31-12-1985 the goods continued to be "warehoused goods" as defined in Section 2(44) of the Act. The definiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not replied to their representation would not, in my opinion, lead to the conclusion that, by implication, the warehousing period must be deemed to have been extended till the Board's order either allowing the extension asked for or denying it was communicated to the importer. Section 61(2) reads thus :- "Where any warehoused goods remain in a warehouse beyond the period of one year or three months specified in clause (a) or clause (b) of sub-section (1) by reason of the extension of the aforesaid period or otherwise, interest at such rate, not exceeding eighteen per cent per annum as is for the time being fixed by the Board, shall be payable on the amount of duty on the warehoused goods, for the period from the expiry of the period of one year or, as the case may be, three months, till the date of the clearance of the goods from the warehouse. Provided that the Board may, if it considers it necessary so to do in the public interest, waive, by special order and under circumstances of an exceptional nature to be specified in such order, the whole or part of any interest payable under this sub-section in respect of any warehoused goods." A plain reading of the above provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th only Section 15(l)(b) of the Act to ascertain the date with reference to which the applicable rate of duty is to be determined. In this view of the matter, the date on which the goods are actually removed from the warehouse, even though such removal may be after the expiry of the warehousing period, would seem to be the date with reference to which the applicable rate is to be ascertained. 21. While the Revenue contends that the relevant date would be the date of expiry of the warehousing period, the appellant contends that it is the date of clearance or actual removal of the goods from the warehouse. 22. In support of his submission, the Learned Counsel for the appellant has placed reliance on para 10 of the Supreme Court's judgment in Chowgule & Co. Pvt. Ltd. & Another v. Union of India & Ors. -1987 (28) E.L.T. 39 (SC). The facts and the question for consideration before the Supreme Court in that case were different from those in the present case and we do not see the direct relevance of this judgment to the present case. However, there are some observations of the Supreme Court which are of relevance. In the Chowgule & Co.'s case, a vessel was imported for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be deposited in a warehouse. The goods had been entered for home consumption under Section 46 of the Act and were allowed to be deposited in the warehouse under Section 49 as they could not be cleared within a reasonable time due to the enquiries being undertaken by the Department. Thus, it was not a case of goods having been "warehoused" as provided for in Chapter IX of the Act. Therefore, this decision also, in my view, has no application to the present case. 24. The next contention of the Counsel was that Section 72 had been improperly invoked by the Department in the show cause notice, dated 2-9-1987 (page 36-39 of the paper book), the argument being that this section deals with, as the heading shows, goods improperly removed from a warehouse. The invocation of the section was improper also because the appellants' application for further extension of the warehousing period was pending before the Board. Therefore, there was no impropriety in the continued storage of the goods in the warehouse and the goods were not sought to be improperly removed. While it is true that the heading of the section refers to goods improperly removed from a warehouse etc., what is relevant is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 26. A submission was made by the Counsel that the show cause notice and adjudication order was based on the Board's direction and as such they were not maintainable. While the Superintendent's initial letter of 15-6-1987 did refer to the Board's letter to the effect that the appellants were not entitled for availment of the exemption granted under Customs Notification No. 88/87, dated 1-3-1987 since the goods had been cleared after the expiry of the extended period of warehousing, a reading of the show cause notice dated 2-9-1987 and the order of adjudication passed by the Asstt. Collector shows that they were not based on Board's instruction. The Asstt. Collector has given his own reasoning as to why, in his view, the goods were not entitled to the said benefit. It is, therefore, difficult to fault the adjudication order on the basis of the objection raised by the Counsel. 27. Finally, the Counsel made an alternative submission that the show cause notice, dated 2-9-1987 was barred by limitation having been issued after the expiry of more than 6 months from the date of expiry of the warehousing period, namely, 31-12-1985. This contention, to my mind, is devoid of substance s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not effected under Section 68. Hence, the decision in Kesoram Rayon's case (supra), to our mind, is not applicable. 30. The learned Departmental Representative also placed reliance on the Tribunal's decision in Indian Fanners Fertilizers Co-op. Ltd. v. Collector of Central Excise -1989 (41) E.L.T. 474 (Tri.) This case dealt inter alia with the limitation for demand of duty in terms of Central Excise Rule 196 in respect of goods not accounted for. The Tribunal held that when the demand was made under Rule 196 there was no warrant to import the limitation laid down in Section 11A of the Central Excises & Salt Act in respect of such demand. This decision has, in my opinion, no application whatsoever to the present case for the reason that Rule 196 figures under Chapter X of the Central Excise Rules and not under Chapter VII which deals with warehousing of goods under the Central Excise Law. The purpose of citing this decision by the learned Departmental Representative was to show that for raising a demand under Section 72 of the Customs Act, the limitation imposed by Section 28 is not relevant. In the present instance, the demand for duty has been raised, as we have seen earlier, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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