Customs, Excise and Gold Tribunal - Bangalore
Ruchi Infrastructure Ltd. vs The Commissioner Of Customs on 7 June, 2006
Equivalent citations: 2006(111)ECC429, 2006ECR429(TRI.-BANGALORE)
ORDER T.K. Jayaraman, Member (T)
1. This appeal has been filed against the OIO No. 14/2005(VR) dated 20.10.2005 passed by the Commissioner of Central Excise & Customs, Visakhapatnam-II Commissionerate.
2. The appellant requested that their modern edible oil/non-edible oil storage terminal in Kakinada to be approved as the landing place under Section 8 of the Customs Act, 1962. This request was considered favourably by the Commissioner vide Public Notice No. 82/2001 dated 09.07.2001. The Commissioner also appointed the appellant as the Custodian under Section 45(1) of the Customs Act 1962 of the imported goods vide Public Notice No. 83/2001 dated 09.07.2001. The appellants' facility was utilized by several importers. Most of the storage space was occupied by the consignments belonging to the appellants themselves. The Department felt that with the introduction of EDI and the requirement under Section 30 of the Customs Act for filing the manifest before arrival of the vessel by the Agent, there was no need for the facility of the appellants. It was seen that the appellants were not clearing the goods expeditiously. As per Section 48 of the Customs Act, if the imported goods are not cleared for home consumption within 30 days from the date of unloading, the Custodian has to sell the goods after notice. In the present case, the appellants who are the Custodian were delaying payment of duty. Moreover, the cargo of each bill of lading was not kept in a separate tank. In other words, the cargo got mingled. Clearance was not effected for the whole quantity covered by a single bill of lading. The appellants vehemently opposed to execute additional bank guarantee as ordered by the Department in breach of the conditions and Public Notices 82 & 83/2001. Hence, Revenue proceeded against the appellants and issued a Show Cause Notice proposing termination of the Custodianship. The appellants filed a Writ Petition in the High Court of Andhra Pradesh. The Court ordered the Commissioner to take a decision after supplying the necessary documents to the appellants. After considering the reply of the appellants and other submissions, the Adjudicating Authority passed the impugned order. In the impugned order, the Commissioner ordered termination of the Custodianship of the appellants. The appellants have strongly challenged the impugned order.
3. Shri G.L. Rawal, the learned Senior Advocate and Shri K.S. Karanath, the learned Advocate appeared for the appellants and Shri R.K. Singla, the learned JCDR for the Revenue.
4. The learned Advocates urged the following points:
(i) The learned Advocates invited our attention to the Public Notices issued by the Commissioner for declaration of their tanks as landing places and also the appointment of the appellants as Custodians of the Cargo under the relevant provisions of the Customs Act. The Public Notice No. 83/2001 has laid down certain conditions to be fulfilled for the appellants for acting as a Custodian of the imported cargo. The learned Advocate emphatically pointed out that none of the conditions stipulated in the Public Notice has been violated by the appellants. Even then, the Commissioner has taken action to terminate their Custodianship.
(ii) One of the reasons for termination of the Custodianship is that the appellants do not clear the consignments within 30 days as per the Customs Act, 1962. It was pointed out that whenever there is a delay in the clearance of goods, the importer pays interest and this should not be a ground for terminating the Custodianship.
(iii) It was further pointed out that another reason for termination of the Custodianship is that the consignment in respect of each Bill of Lading is not stored separately in a tank. The Advocates submitted that the construction of storage tank involves huge money viz several crores. There is no room that in the storage tanks, liquid cargo should be stored Bill of lading-wise.
(iv) Another objection of the Revenue is that the clearance of the goods is not done for the quantity mentioned in the Bill of Lading. For this, it was submitted that there is no statutory requirement that the entire quantity covered by a Bill of Lading should be cleared in one go.
(v) As regards the contention of the Revenue that the appellants failed to give sufficient Bank Guarantee, it was submitted that they had executed the Bank Guarantee required by the department, subsequently.
(vi) Our attention was invited to the letter dated 08.07.2005 issued by the Assistant Commissioner, Kakinada, wherein a direction was given to the appellants to clear all the goods stored in the storage tank which are in their Custodianship. Further, it was stated that the appellants were not permitted to receive any further quantities into the tank w.e.f. 09.07.2005 and this letter cancel the custodianship w.e.f 09.07.2005. In other words, the adjudication order is dated 20.10.2005, therefore even before the adjudication order was passed, the Assistant Commissioner has terminated the Custodianship. It was emphasised that the adjudication proceeding is just an eye-wash. It is like the execution first and trial thereafter. Thus, entire proceedings are bad, violative of the Principles of Natural Justice and nullity.
(vii) Right to Trade is a Fundamental Right under Article 19(1)(g) of the Constitution of India. This right cannot be snatched in an arbitrary manner by the Commissioner.
(viii) The appellant spent enormous sums to the tune of Rs. 75 crores for providing the storage tank for unloading the storage of goods. Just for the reason that certain improvements have been made at the small port of Kakinada should not be a reason for termination of the Custodianship.
5. The learned JCDR reiterated the order of the lower authority.
6. We have gone through the records of the case carefully. The Jurisdictional Commissioner, in the Public Notice No. 82/2001 dated 09.07.2001, declared 16 Tanks of M/s. Ruchi Infrastructure Ltd., as landing place for loading and unloading of edible and non-edible oil. This is a huge infrastructure spread over 3.28 acres. It is a fact that for storing imported edible oil, huge tanks are required. These tanks are in the nature of infrastructure requiring high investment. Normally, the Custodian of goods in the sea ports is the Port Trust. Only under certain special circumstances, Custodianship is given to organizations other than Port Trust. Another Public Notice No. 83/2001 dated 09.07.2001 has been issued appointing M/s. Ruchi Infrastructure Ltd., Kakinada, who is the appellant, as the Custodian of the imported goods. This Public Notice has enumerated many conditions to be complied with by the Custodian. While proposing to terminate the Custodianship, the Commissioner has not pointed out how the Custodian has violated the conditions mentioned in the Public Notice. No doubt, under the Customs Act, the cargo should be cleared within 30 days. However, when the clearance is delayed for some reason or other, there is a provision to collect interest. It is not the case of the Revenue that the appellant had not paid the interest due in respect of delayed clearance. In any case, the delayed clearance cannot be a reason for terminating the Custodianship when it involves 16 huge tanks, which have been constructed at enormous cost. There is also no requirement that the cargo relating to each Bill of Lading should be stored in separate tanks. Such a condition is not stipulated in the Public Notice. The Commissioner has further stated that the cargo relating to different Bills of Lading get mixed up. This is also a very trivial objection. In any case, we find that the Assistant Commissioner, Kakinada, had issued a letter terminating the Custodianship even before the Commissioner has passed his order. In view of this, we agree with the appellants that the entire adjudication proceedings have become a farce and violative of the Principles of Natural Justice. We are not impressed with the reasons given in the adjudication order for termination of the Custodianship. So long as the appellants comply with the conditions mentioned in the Public Notice, they should be allowed to retain their Custodianship especially, in view of the huge investment in creating the infrastructure. Therefore, we set aside the impugned order and allow the appeal.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)