TMI Blog2020 (12) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... vided 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were imported and these were warehoused in the storage tanks of the respondent. Disputes arose between the consignor and the consignee of the goods, and, by order dated November 16, 2007, the District Court directed sale of the stored goods. The Department was directed to sell 10,291.31 metric tonnes by auction and to deposit the balance amount after settling the dues under the Customs Act, 1962 and other statutory claims. From an amount of ₹ 5,00,00,001 realised in the auction sale, after adjusting an amount of ₹ 1,62,66,143 towards customs duty and ₹ 1,05,01,111 towards interest, the balance amount of ₹ 2,32,32,747 was deposited in the District Court. 3. The manner in which the customs duty was quantified was contested by the respondent. According to him, the quantification should have been done on cum-duty basis as per CBEC Circular No. 71/2001, dated November 28, 2001. The respondent also contended that the claim for interest cannot prevail over the claim for warehouse rent under section 150(2) of the Customs Act, 1962. The Commissioner of Customs (Appeals), Customs House, Cochin, before whom the above challenge was raised, rejected the same as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board of Excise and Customs has clarified that the interest on customs duty cannot take precedence over the rent and other claims of the warehouse keeper as per the clarification dated May 22, 1990. 6. The hon'ble Supreme Court has in its decision in Union of India v. Associated Container Terminal Ltd. reported in [2020] 12 GSTR 178 (SC) ; [2020] 371 ELT 817 (SC) held that the customs duty in case of sale of the goods has to be calculated working backwards on the price realised. 7. The following substantial questions of law arise for consideration : (a) Whether the warehouse keeper is the custodian of goods under Chapter IX of the Customs Act, 1962 ? (b) 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 ? (c) Whether the quantification of customs duty is to be made by following cum-duty method ? (d) Whether interest on customs duty can have precedence over the claims of the warehouse keeper ? 8. In order to appreciate the contentions of the parties, it is helpful to extract sections 48, 62, 63, 72 and 150 of the Customs Act, 1962, as they sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in contravention of section 71 ; (b) where any warehoused goods have not been removed from a warehouse at the expiration of the period during which such goods are permitted under section 61 to remain in a warehouse ; (c) where any warehoused goods have been taken under section 64 as samples without payment of duty. (d) where any goods in respect of which a bond has been executed under section 59 and which have not been cleared for home consumption or (export) are not duly accounted for to the satisfaction of the proper officer, the proper officer may demand, and the owner of such goods shall forthwith pay, the full amount of duty chargeable on account of such goods together with (interest, fine and penalties) payable in respect of such goods. (2) If any owner fails to pay any amount demanded under sub- section (1), the proper officer may, without prejudice to any other remedy, cause to be detained and sold, after notice to the owner (any transfer of the goods notwithstanding) such sufficient portion of his goods, if any, in the warehouse, as the said officer may (deem fit) . . . 150. Procedure for sale of goods and application of sale proceeds.- (1) Where any goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her says that if the above said charges or rent are in default, the warehouse keeper can cause to be sold such portion of the goods, which he may select, with the permission of the proper officer. In our opinion, unless the warehouse keeper is bestowed with custody of the warehoused goods, there can never be the question of any entitlement to rent and charges and the right to sell the goods after notice to the owner. The section does not even contemplate the permission of the owner to sell the goods. It contemplates only the permission of the proper officer since the said officer has control over the warehoused goods under the statute. Sections 62 and 63 do not in any way indicate statutorily as to the person in custody, which will have to be inferred on the factum of actual possession, which is with the warehouse keeper, who holds it in lieu of the owner and in a situation of non-payment ; by virtue of the right conferred to choose and sell goods has to be the custodian of the goods he chooses to sell. We infer so from the indication given in section 48 where the person in custody ; prior to the goods being cleared for home consumption or warehoused or transhipped within thirty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Considering the above statutory provisions, we answer Question No. (a) raised in the appeal in favour of the respondent and against the appellant. 14. Regarding the question whether a sale under section 72 is covered by section 150 of the Customs Act, all that is required is a reading of section 150(1). 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. Question No. (b) is thus answered against the appellant and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce is made to another circular dated November 28, 2001 issued by the Central Board of Excise and Customs. The circular reads as under : 'A reference was received from the Container Corporation of India (CONCOR) stating that there is a divergence of practice in customs houses with regard to apportionment of sale proceeds from disposal/sale of unclaimed/uncleared goods under section 150 of the Customs Act, 1962. It was reported that some customs houses deter mine the customs duty payable on auctioned goods after deducting the sales expenses from the sale proceeds of the goods whereas other customs houses are determining duty on the basis of sale proceeds without allowing any deduction. 2. The matter has been examined. It is clarified that- (a) the customs duty shall be determined by backward calculation considering the sale proceeds of unclaimed/uncleared goods as the cum-duty price. For calculation of duty, total sale proceeds with out allowing any deduction towards sales expenses or any other charge is to be taken as cum-duty price. (b) After determination of the customs duty, sale proceeds of unclaimed/uncleared goods is to be appropriated in the manner as provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The counsel for the respondent places reliance on a clarification issued by the Central Board of Excise and Customs, New Delhi, which is extracted below : Warehousing interest treatment of warehousing interest in the apportionment of sale proceeds under section 150 of the Customs Act, 1962 F. No. 473/94/89-Cus. VIII, dated May 22, 1990 Government of India, Ministry of Finance (Department of Revenue), Central Board of Excise and Customs, New Delhi. Treatment of warehousing interest in the apportionment Subject : Of sale proceeds under section 150 of the Customs Act, 1962. Reference to D. O. letter F. No. 5/6-Gen, 1246/89 bonds dated November 8, 1989 (copy enclosed) from the Collector of Customs, Bombay on the above mentioned subject. The matter has been considered by the Board. It is observed that interest on customs duty. on warehoused goods levied under section 61(2) of the Customs Act, is distinct from the customs duty. In fair ness, it cannot take precedence over the rent and other claims of the warehouse keeper who is providing a definite service, by keeping the custody of the goods and in the process incurring considerable costs. It is, accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed from very early times. As far as independent India is concerned, one of the earliest decision was the decision of the hon'ble Supreme Court in Desh Bandhu Gupta and Co. v. Delhi Stock Exchange Association Ltd. reported in [1980] 50 Comp Cas 84 (SC) ; [1979] 4 SCC 565. The apex court refers to the decision in Mathura Mohan Saha v. Ramkumar Saha reported in AIR 1916 Cal 136 and in paragraph 9 states thus (page 94 of 50 Comp Cas) : It may be stated that it was not disputed before us that these two documents which came into existence almost simultaneously with the issuance of the notification could be looked at for finding out the true intention of the Government in issuing the notification in question, particularly in regard to the manner in which outstanding transactions were to be closed or liquidated. The principle of contemporanea expositio (interpreting a statute or any other document by reference to the exposition it has received from contemporary authority) can be invoked though the same will not always be decisive of the question of construction (Maxwell, 12th Edition, page 268). In Crawford on Statutory Construction (1940 Edition) in paragraph 219 (at pages 393-39 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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