Custom, Excise & Service Tax Tribunal
M.B. Bond Stores Pvt Ltd vs Commissioner Of Customs (Import), ... on 9 November, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. 1. Appeals No. C/430/08 (Arising out of Order-in-Appeal No. 70/2008/MCH/JC/Bond/2007-08 dated 04.02.2008 passed by Commissioner of Customs (Appeals), Mumbai.) 2. Appeal No. C/5418/08 (Arising out of Order-in-Appeal No. 102/2008/MCH/JC/Bond/2007-08 dated 29.02.2008 passed by Commissioner of Customs (Appeals), Mumbai.) For approval and signature: Honble Mr.P.G. Chacko Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== M.B. Bond Stores Pvt Ltd Appellant Vs Commissioner of Customs (Import), Mumbai Respondent Commissioner of Customs (Import), Mumbai Appellant Vs M.B. Bond Stores Pvt Ltd Respondent Appearance:
Shri S. Murthy, Advocate, for Appellant (assessee) Shri Kishori Lal, S.D.R, for Respondent (department) CORAM:
Honble Mr.P.G. Chacko Member (Judicial) Date of Hearing: 09.11.2009 Date of Decision: 09.11.2009 O R D E R NO..
1. One of these appeals was filed by the assessee challenging a demand of duty of Rs 1,85,407/- which was raised under Section 72 (1) of the Customs Act. The other appeal was filed by the department against the dropping of redemption fine and penalty. It appears from the records (a) that the department issued a show-cause notice dated 27.4.2000 under Section 124 of the Customs Act for demanding the above duty from the assessee under Section 72 (1) of the Act, confiscating the goods under Section 111 (d) and (o) of the Act, proposing to destroy the goods under preventive supervision, and for imposing penalty on the assessee under Section 112 of the Act, (b) that the party approached the Settlement Commission which directed that the goods be destroyed, in accordance with law, within a period of 15 days, (c) that the perishable goods in the assessees licensed warehouse were accordingly destroyed under departments supervision, (d) that subsequently the show-cause notice was adjudicated upon by the Joint Commissioner of Customs who confirmed duty liability against the assessee to the extent of Rs 1,85,407/- under Section 72 (1) of the Act and dropped the proposals for confiscation and penalty, (e) that, in an appeal filed by the party, the Commissioner (Appeals) upheld the Order-in-Original and (f) that the assessee and the Revenue are in appeal against the respective adverse portions of the appellate Commissioners order.
2. After hearing both sides, I find that, after obtaining warehouse licence, the assessee had imported certain goods, some of which were perishable, and warehoused the same. In respect of the perishable items, the assessee approached the Honble High Court as they were prevented from clearing the goods but no order in writing was issued in this behalf. The Honble High Court on 25.10.99 passed an order directing the department to issue a speaking order on 26.10.99. Accordingly, the Assistant Commissioner of Customs passed an order allowing the party to clear the highly perishable goods. Nevertheless, the party did not, or could not, clear such goods. While so, on 15.11.99, the department revoked the warehouse license under Section 58 (2) of the Customs Act. The Show-cause notice in question came to be issued in the next year. In this scenario, the question arises as to whether the assessee is liable to pay duty on the perishable goods warehoused by them and eventually destroyed under departmental supervision pursuant to the Settlement Commissions order. Learned Counsel has claimed the benefit of Section 23 (1) of the Customs Act, which provides that, if the Assistant Commissioner of Customs is satisfied that any imported goods have been destroyed at any time before clearance for home consumption, he shall remit the duty on such goods. Admittedly, the goods were destroyed on 31.12.2000 but the warehouse licence had been revoked much before that, i.e. on 15.11.99. In other words, the goods remained warehoused for purposes of the Customs Act only upto 15.11.99. Section 72 authorizes the proper officer to demand duty from the owner of warehoused goods, where such goods are removed from the warehouse in contravention of Section 71, or where such goods have not been removed at the expiration of the warehousing period, or where such goods were taken under Section 64 as samples without payment of duty or where such goods in respect of which a bond has been executed under Section 59 have not been cleared for home consumption, or exportation or has not been accounted for with the satisfaction of the proper officer. In the present case, the warehouse licence was suspended with effect from 15.11.99. Therefore, from 15.11.99, the goods cannot be deemed to be warehoused. Such goods were destroyed later on under departmental supervision pursuant to the Settlement Commissions order. It is pertinent to note that the show-cause notice itself contained a proposal to destroy the goods. Therefore, it can be safely concluded that the destruction of the goods was in pursuance of the show-cause notice, apart from the Settlement Commissions order. Could duty be demanded on such goods under Section 72? Section 72 (1) authorizes demand of duty on warehoused goods. Obviously, the goods must remain warehoused. This is not the case here. The warehouse license was suspended with effect from 15.11.99 beyond which there was no licence to warehouse and therefore there were no warehoused goods. In such a situation, Section 72 (1) could not be invoked to demand duty on the goods in question.
3. It is settled law that a person cannot be called upon to redeem goods which have already been destroyed. In other words, there can be no redemption in lieu of confiscation of destroyed goods. Even otherwise, where the goods are not available for confiscation, there can be no redemption fine unless it is shown that the goods were allowed to be cleared under bond/bank guarantee. Therefore, the plea of the Revenue for imposing redemption fine on the assessee cannot be accepted, on the facts of this case. The surviving question pertains to penalty. The question is whether the assessee, by their commission or omission, rendered goods liable to confiscation under Section 111 of the Act. The Show-cause notice proposed confiscation under clause (d) and clause (o) of Section 111. The same notice proposed to destroy the goods. These proposals are mutually inconsistent. Apart from this, in this case, there is no finding as to how the assessee rendered the goods liable to confiscation under the aforesaid provision. If that be the case, Section 112 of the Act is not invocable in this case. The lower authorities are right in having dropped the proposal for confiscation and penalty.
4. In the result, the assessees appeal against the demand of duty succeeds and the Revenues appeal for imposing fine and penalty fails.
(Dictated in Court.) (P.G. Chacko) Member (Judicial) rk 4