TMI Blog2007 (8) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act') which were levied and imposed by him. 2. The brief facts of the case are as under: (a) The respondent Company has been a licensed S.T.P. unit at Bangalore engaged itself in development and export of software. Ever since its establishment it has been importing capital goods for the said purpose. The said capital goods comprise of mainly duty free computers and peripherals. In its usual course of business it imported certain quantities of capital goods namely computers and peripherals and with the permission of the proper officer obtained under Section 60 of the Act, deposited them into bonded warehouse. As provided under Section 61(1)(a) of the Act the said capital goods were permitted to be stored in the said warehouse till the expiry of five years from the date of the said permission and this period could be extended by the Commissioner of Customs on the application of the respondent Company. (b) The initial period of five years in respect of warehousing of few of the said goods expired during the year 2001 and therefore the respondent company filed its application on 30-6-2003 before the Commissioner of Customs seeking extension of the warehousing period in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and circumstances of the case passed an order dated 7-7-2004 wherein the amount of duty, interest and penalty proposed in the said show cause notice came to be confirmed. Aggrieved by the said Order-in-Original the respondent filed an Appeal No. C 379/2004 before the Tribunal which passed the impugned order setting aside the Order in-Original. Aggrieved by the said order of the Tribunal, the presen appeal is filed by the Revenue. 3. We have heard the arguments of both sides and perused all the records. In the light of the arguments advanced by the learned Counsel for the appellant Revenue and the respondent the following substantial questions of law emerge for our consideration and decision thereon: (i) Whether, by virtue of the provisions of Sections 72(1)(a) and 72(2) of the Customs Act, 1962 the respondent Company lost its right u/s. 68 of the Act to relinquish title to the warehoused goods on the expiry of the period permitted under Section 61(1)(a) or the extended period under the proviso thereto? (ii) Whether the respondent Company became liable to pay, with respect to warehouse goods, as provided under Section 72(1)(a) of the Act the full amount of duty char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quish its title to the said goods 'at any time before an order for clearance of the goods for home consumption' could be made in respect of the said goods and therefore since the respondent Company relinquished its title to the said goods in terms of Sections 68 and 23(2) of the Act no duty, penalty or interest could be imposed and recovered from it. By contending so Sri Ravishankar, Advocate, submitted that the Tribunal was quite justified in allowing the appeal of the respondent Company and setting aside the Order-in-Original that was passed by the Commissioner of Customs confirming the propositions made in the show-cause notice issued to the respondent-Company. 6. In support of his above contentions, the learned ASG Sri Aravind Kumar has placed strong reliance on the decision of the Supreme Court in Kesoram Rayon v. Collector of Customs, Calcutta, reported in 1996 (86) E.L.T. 464 (S.C.). For proper comparison of the facts in the said case with those in the present case and to see whether the principles therein can be applied to the facts of the case on hand, it is necessary to narrate briefly the relevant facts in the said case, which are as under: 6A. The appellants t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 15(1)(b) applies to the case of goods cleared under Section 68 from a warehouse upon presentation of a bill of entry for home consumption; payment of duty, interest, penalty, rent and other charges; and an order for home clearance. The provisions of Section 68 and, consequently, of Section 15(1)(b) apply only when goods have been cleared from the ware house within the permitted period or its permitted extension and not when, by reason of their remaining in the warehouse beyond the permitted period or its permitted extension, the goods have been deemed to have been improperly removed from the warehouse under Section 72. 15 xxxx xxxxx 16. The permitted period for warehousing the said bales came to an end on 15th September, 1984, but the said bales remained in the bonded ware house thereafter. The said bales, by reason of the provisions of Section 72, were deemed to have been improperly removed from the bonded warehouse on that day and subject to duty at the rate then in force. The demand notice dated 8th May, 1985, called upon the appellants to pay such duty. The order dated 25th June, 1985, pertaining to the appellants' private bonded warehouse, rightly made it clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the warehousing period. But in the instant case the respondent—Company, by addressing its letter dated 3-9-2003 to the customs authorities, intimated relinquishment of its title to the said goods. (v) Further, the question to be decided in the said case was that, what should be the date for determination of duty under Section 15(1)(b) of the Act in respect of the goods which came to be cleared from the warehouse, 'whether it should be the date on which the said goods were actually removed from the warehouse' as provided under Section 68 of the Act or 'whether it should be the date of expiration of the warehousing period on which dates the goods were deemed to have been improperly removed from the warehouse' as provided under Section 72(1) of the Act. In view of the above differences between the facts in that ( Kesoram's ) case and in the instant case, the Tribunal, rightly made distinction between the facts of the said case with those of the present case and declined to apply the principles laid down in the said case to the facts of the present case. 9. For the proper application or various provisions of the Customs Act, 1962, to the facts of this case, it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods warehoused therein shall, within seven days from the date on which notice of such cancellation is given or within such extended period as the proper officer may allow, remove the goods from such warehouse to another warehouse or clear them for home for home consumption or exportation. (1) where any warehoused goods - (i) specified in sub-clause (a) or sub-clause (aa) of sub-section (1), remain in a warehouse beyond the period specified in that sub-section by reason of extension of the aforesaid period or otherwise, interest at such rate as is specified in Section 47 shall be payable, on the amount of duty payable at the time of clearance of the goods in accordance with the provisions of Section 15 on the warehoused goods, for the period from the expiry of the said warehousing period till the date of payment of duty on the warehoused goods; (ii) xxx xxxx xxxx Provided that the Board may, if it considers it necessary so to do in the public interest, by order and under circumstances of an exceptional nature, to be specified in such order, waive the whole or part of any interest payable under this section in respect of any warehoused goods: Provided fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods for home consumption. - (1) Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption. S. 68. Clearance of warehoused goods for home consumption.- The importer of any warehoused goods may clear them for home consumption if - (a) a bill of entry for home consumption in respect of such goods has been presented in the prescribed form; (b) the import duty leviable on such goods and all penalties, rent, interest and other charges payable in respect of such goods have been paid; and (c) an order for clearance of such goods for home consumption has been made by the proper officer: Provided that the owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish his title to the goods upon payment of rent, interest, other charges and penalties that may be payable in respect of the goods and upon such relinquis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vii) As provided under proviso to Section 68, which came into force with effect from 14-5-2003, the owner of the warehoused goods may relinquish his title to such goods 'at any time before an order for clearance of the goods for home consumption' has been made and, upon such relinquishment, he shall not be liable to pay duty thereon. However, he has to pay rent, interest and other charges and penalties that may be payable in respect of such goods. From these provisions it is crystal clear that the moment the owner of the goods (i.e., importer) deposits the goods in the warehouse under the bond executed by him, though loses control over the goods, does not lose his title or ownership to such goods so long as they remain in the warehouse either during the continuance of the warehousing period or even after its expiration. Therefore, the contention of the learned ASG for the appellant-Revenue that on the expiration of the warehousing period, as initially fixed under Section 61(1)(a) or on the expiration of the extended period under the proviso to Section 61(1), the owner of the goods loses his title or ownership in respect of such goods and consequently he also loses his right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order of clearance and upon payment of duty and all penalties, rent, interest and other charges payable in respect of such goods. Proviso to Section 68 gives to the owner of such goods a right to relinquish his title thereto at any time before an order for clearance of goods for home consumption has been made. Section 23(2) of the Act, which also provides for relinquishment of title to the imported goods by the owner, reads as under: S. 23. Remission of duty on lost, destroyed or abandoned goods :- (1) xxxx xxxx (2) The owner of any imported goods may, at any time before an order for clearance of goods for home consumption under Section 47 or an order for permitting the deposit of goods in a warehouse under Section 60 has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon. Further, Section 72 of the Act, which deals with goods improperly removed from the warehouse, etc., reads as under: S. 72. Goods improperly removed from warehouse, etc.,- (1) In any of the following cases, that is to say, - (a) Where any warehoused goods are removed from a warehouse in contravention of Section 71; (b) Where an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect thereto'. There is no prohibition for the owner of the goods to exercise his right to relinquish his title to such goods after the expiration of the warehousing period or after expiration of the extended period. Further, the provisions of Section 23(2) and proviso to Section 68 make it clear that upon relinquishment of his title to any imported goods, including the warehoused goods, the owner of such goods shall not be liable to pay duty thereon. When he is not liable to pay duty, the question of paying any interest on the duty and the penalty does not arise. Therefore, we are of the considered view that by virtue of proviso to Section 68 and the provisions of Section 23(2) of the Act, the respondent-Company herein had right to relinquish its title to the said goods even after expiry of the warehousing period and as such, the relinquishment of his title to the said goods by addressing his letter dated 3-9-2003 before the Commissioner of Customs proceeded against the respondent-Company under Section 72(2) of the Act by issuing show cause notice proposing to impose duty, penalty, interest, etc., was legal and valid. 14A. In support of his case the learned Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it relates to imposing of duty of Rs. 1,89,120/- and interest of Rs. 80,656/- on the respondent-Company in respect of two numbers of UPS which were found kept in un-bonded premises deserves to be confirmed and as such the impugned order-in-appeal passed by the Tribunal needs modification. However, as imposition of duty of Rs. 1,89,120/- and interest of Rs. 80,656/- in respect of the said two numbers of UPS has been accepted by the respondent-Company and the payment of the same has already been made by it. 16. For the foregoing reasons, while answering both the substantial question of law in the negative and against the appellant-Revenue, we dismiss the appeal. However, liberty is given to the Commissioner of Customs to recover from, the respondent-Company the rent, interest under Section 68 of the Act in respect of the warehoused goods left in the warehouse, from the date of their deposit till 3-9-2003, the date of relinquishment of title thereto by the respondent company, and penalty under Section 117 of the Act in respect of the said goods. After adjusting the amount of rent, interest and penalty from out of the amount of Rs. 19,90,450/-, which was deposited by the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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