Karnataka High Court
Veetech Infoline Private Limited vs The Additional Commissioner Of Customs on 24 November, 2025
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
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NC: 2025:KHC:48515
WP No. 30257 of 2025
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24TH DAY OF NOVEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
WRIT PETITION NO.30257 OF 2025 (T-CUS)
BETWEEN:
1. VEETECH INFOLINE PRIVATE LIMITED
A COMPANY INCORPORATED UNDER
THE COMPANIES ACT, 2013
REPRESENTED BY SHRI M R VIJAY KUMAR,
MANAGING DIRECTOR,
AGED ABOUT 73 YEARS,
S/O SHRI M N RADHAKRISHNAN,
R/AT NO.74, MCHS COLONY,
BTM 2ND STAGE,
BENGALURU - 560 076
2. SHRI. M R VIJAY KUMAR
MANAGING DIRECTOR,
AGED ABOUT 73 YEARS,
S/O SHRI M N RADHAKRISHNAN,
R/AT NO.74, MCHS COLONY,
BTM 2ND STAGE,
BENGALURU - 560 076.
Digitally
signed by ...PETITIONERS
MADHURI S (BY SRI. PRADYUMNA HEJIB, ADVOCATE)
Location: AND:
High Court of
Karnataka
1. THE ADDITIONAL COMMISSIONER OF CUSTOMS
BENGALURU CITY CUSTOMS COMMISSIONERATE,
C R BUILDING,QUEENS ROAD,
BENGALURU - 560 001.
2. THE COMMISSIONER OF CUSTOMS (APPEALS)
4TH FLOOR, TTMC-BMTC COMPLEX,
HAL AIRPORT ROAD, DOMMALURU,
BENGALURU - 560 071.
3. THE ASSISTANT COMMISSIONER OF CUSTOMS
ARREARS RECOVERY SECTION,
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NC: 2025:KHC:48515
WP No. 30257 of 2025
HC-KAR
BENGALURU CITY CUSTOMS COMMISSIONERATE,
C R BUILDING, QUEENS ROAD,
BENGALURU - 560 001.
...RESPONDENTS
(BY SRI. SHISHIRA AMARNATH, ADVOCATE)
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH ORDER-IN-ORIGINAL
SL.NO. 506/2025 (DIN 2025 0772 MR 0000224052) DTD. 10.07.2025 PASSED
BY THE R-1 (ANNX-A).
THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER
WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
ORAL ORDER
In this petition, petitioners seek the following reliefs:
" (a) Issue a writ in the nature of certiorari or any other writ to quash Order-in-Original Sl.No.506/2025 [DIN 2025 0772 MR 0000224052] dated 10.07.2025 passed by the First Respondent [Annexure-A];
(b) Grant such other order or direction as deemed fit in the facts and circumstances of the case in the interest of justice."
2. Heard learned counsel for the petitioners and learned counsel for the respondents and perused the material on record.
3. A perusal of the material on record will indicate that pursuant to the Show Cause Notice dated 25.05.2011 issued by respondent No.1 to the petitioner demanding duty of -3- NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR Rs.36,88,280/-, the petitioner submitted a reply and contested the proceedings, which culminated in the Order-in-original dated 21.02.2012 confirming the demand made by respondent No.1.
4. Aggrieved by the said order, petitioner preferred an appeal before the Appellate Authority - Commissioner of Customs, who dismissed the appeal vide order dated 30.10.2014, aggrieved by the same, petitioner approached the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), which set aside the said order of the Appellate Authority and remitted the matter back to the 1st respondent for adjudication and for reconsideration afresh by passing the order dated 27.01.2025. It is the grievance of the petitioner that though the petitioner submitted a detailed reply and submissions on 13.06.2025 to respondent No.1 in the de novo proceedings, respondent No.1 has proceeded to pass the impugned Order-in-original dated 10.07.2025 re-iterating its earlier order which is a cryptic, laconic, non-speaking, unreasoned order without application of mind and without assigning any cogent reasons as to why earlier order has been reiterated thereby violating principles of natural justice and as such, the petitioner is before this Court in the present petition.
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5. Per contra, learned counsel for the respondents submits that there is no merit in the petition and that the same is liable to be dismissed. It is also submitted that having regard to the availability of equally, efficacious and alternative remedy by way of an appeal before respondent No.2, petitioner is not entitled to relief in the present petition.
6. I having given my anxious consideration to the rival submissions and perused the material on record.
7. Before adverting to the rival submissions, it would be necessary to extract the impugned order, which reads as under:
"M/s. Veetech Infoline Private Limited, Prestige Hosto: Chambers, No.52, 1st Main Road, Seshadripuram, Bangalore - 560 020 (Herein after referred to as M/s VIPL), a 100% Export Oriented Unit (EOU), under STPI scheme and are having a Private Bonded Warehouse licence(Ground floor G2, First floor F101, F102, F103, Second floor S201, S202, S203 and Third floor T301, T302) and Inbond manufacture sanction No. 531/2000 dated 14-11-2000 issued under Section 59 & 65 of the Customs Act, 1962 respectively.
2. M/s. Veetech Infoline Pvt. Limited, Bangalore have registered as STPI unit (EOU Scheme) with the Customs Division of Customs Commissionerate, -5- NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR Bangalore. They had imported capital goods and procured some goods indigenously with out payment of duty under the EOU Scheme. The said goods were bonded at the said premises.
3. On receipt of information that M/s Veetech Infoline Pvt. Ltd , had let out certain duty free imported capital goods on rent to M/s Llyods Solutions Pvt. Limited, Ground floor and portion of first floor(herein after referred to as M/s.LSPL), M/s.Leads Animation India Pvt. Ltd., second floor (herein after referred to as M/s.LAIPL), M/s. Pheonix Life care Systems, third floor and portion of fourth floor(herein after referred to as M/s. PLS) and M/s. Tidal data Solutions Pvt. Limited, fourth floor (herein after referred to M/s.TSPL) without payment of duty, the officers of Customs Preventive, Bangalore visited the premises of M/s VIPL on 08-07-2010, for verification of the same. Verification of the records revealed that M/s VIPL possessed Private Bonded Ware House Licence No. 531/2000 dated 14-11-2000 valid till 13-11-2005. Subsequently, vide Ref No.EIG/ VEETECH INFOLINE/GEN/40366 Dated 09-01-2006 the STPI issued a "No Objection" to renew the PBWH License No.531/2000 dated 14-11-2000 and the same was renewed up to 31-03-2007. Further verification revealed that the said unit had not applied for de-bonding of the said premises as required under the provisions of Section 61 of the Customs Act, 1962 and the said premises along with the certain duty free imported capital goods and locally procured duty free capital goods, and the same -6- NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR had been let out on rent to four companies mentioned above. It was also noticed during the verification that M/s VIPL, had imported various Capital Goods since inception i.e., 14-11-2000 and had obtained further extension of warehousing period of the said goods upto 31-03- 2007 in respect of imported and indigenously procured capital goods were stored in a disorderly manner at different places of the premises without being used and also rented out to the four companies mentioned above. The said goods were then detained under a Mahazar dated 08-07-2010 drawn in the presence of independent witnesses for want of further verification and handed over the same for safe custody to M/s. Llyods Solutions Pvt. Limited, Ground floor and portion of first floor (herein after referred to as M/s. LSPL), M/s. Leads Animation India Pvt. Ltd., secondSystems, third floor(herein after referred to as M/s. PLS) and M/s. Tidaldata Solutions Pvt. Limited, fourth floor (herein after referred to M/s.TSPL).
4. From the subsequent investigations carried out, it appeared that M/s VIPL had obtained License for private bonded warehouse License No. 531/2000 dated 14-11- 2000 under Section 58(1) of the Customs Act, 1962(No.52 of 1962) as 100% EOU under STP scheme Private Bonded Warehouse for the premises situated at the No.52, (Ground, 1st , 2nd , 3rdand 4th floor ) of Prestige Hosto Section 65 of customs Act,1962. Inbond Manufacturing Sanction Order No.631/2000 dated 14-11- 2000 was sanctioned to M/s VIPL, Bangalore to carry on the operations relating to Development of Computer -7- NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR Software under 100% EOU STP Scheme and export of the same in terms of Notification No.140/91-Cus dated 22-10-1991 as amended and as per approval of the same by the director, Software Technology Parks of India, Bangalore as per his letter reference No.EIG/ VEETECH/GEN/ 10121 dated 13-10- 2000 subject to certain conditions. M/s. VIPL had imported various Capital Goods duty free under various Bills of Entry and had also procured capital goods locally without payment of duty for the purpose of development of software and had installed them in their bonded premises situated at the above said premises.
Permission to carry on the development of software was initially granted up to 13- 11-2005 and later validity was extended up to 13-01-2006 by the Assistant Commissioner, Customs Division, Bangalore on 08-12- 2005. Further, the validity was again extended up to 31- 03-2007 by the Assistant Commissioner, Customs Division, Bangalore on 24-01-2006.
5. The facility of warehousing of imported goods in Customs Bonded warehouses, without payment of customs duty otherwise leviable on imports, is permitted under the Customs Act, 1962. Basically, goods after landing are permitted to be removed to a warehouse without payment of duty and duty is collected at the time of clearance from the warehouse. Hence a warehouse, in terms of the provision of Customs Act, 1962, is essentially a place where any goods can be stored / deposited without payment of duty. Under Section 58 of the -8- NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR Customs Act, 1962, the proper officer of Customs can license Private Bonded Warehouse where goods imported by or on behalf of the licensees, or other imported goods where facility for Public warehouse is not available, may be deposited. Only after licensing a place / premise /s as warehouse, it can be used for storing / depositing of duty free goods without payment of duty. The goods stored / deposited in such licensed warehouse are called as warehoused goods. As per Section 71 of the Customs Act, 1962, "No warehoused goods shall be taken out of a warehouse except on clearance for home consumption or re-exportation, or for removal to another warehouse, or as otherwise provided by this act". In other words, the warehoused goods can be removed for home consumption as provided under the provision of Section 68 of the Customs Act, 1962 on payment of duty or for re- export as provided under the provision of Section 69 of Customs Act, 1962, or for removal to another warehouse under the provision of Section 67 of Customs Act, 1962 or in any other manner as provided in the Customs Act, 1962. When any warehouse is de-licensed the goods deposited / stored therein cease to be warehoused goods and if it is continued to be stored therein the net result is that the goods have been removed improperly in violation of the provision of Section 71 of the Customs Act, 1962 and duty on the said goods is liable to be discharged in terms of provisions of Section 72 (1)(a) of the Customs Act, 1962
6. In the instant case, M/s VIPL, Bangalore -9- NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR had imported certain capital goods duty free and procured locally certain capital goods duty free and had bonded/warehoused them in the licensed premises situated at No.52, Prestige Hosto Chambers, 1%* Main Road, Seshadripuram, Bangalore-560 020 (Ground floor to 4th floor. Letting out the premises for rent along with the goods (duty free capital goods and indigenously procured goods). Therefore resulting in improper removal of the warehoused goods, inviolation of Section 71 of the Customs Act, 1962. Hence, M/s VIPL are liable to pay the duty liability thereon along with interest in terms of the provisions of Section 72 (1)(a) of Customs Act, 1962. Since, the LOP was valid only up --to 31-03-2007, the premises situated at No.52, Prestige Hosto Chambers, 1st Main Road, Seshadripuram, Bangalore, 560020 (Ground floor to 4thfloor),lost the Private Bonded Warehouse status.
7. Further, it appeared that M/s VIPL, Bangalore had imported duty free capital goods under various Bills of Entry availing exemption under Notification No.140/91 Cus dated 22.10.1991 (The details of the Bills of Entry are listed in ANNEXURE - WS1 of the notice ) and had warehoused them in the licensed premises and had obtained extension of the warehousing period upto 31-03- 2007 only, but had not sought further extension of the warehousing period of the said capital goods after the expiry of the extended warehousing period. As per Section 61 of the Customs Act, 1962, any warehoused
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR goods may be left in the warehouse in which they are deposited or in any warehouse to which they may be removed, - (a) in the case of capital goods intended for use in any hundred percent export oriented undertaking, till the expiry of five years; and (b) in the case of any other goods, till the expiry of one year, i.e., the initial warehousing period of capital goods for 100 % Export Oriented Units' is 5 years from when the capital goods are warehoused and beyond which extension of warehousing has to be sought from the competent authority. As per Section 72 (1) ( b) of the said Act, in case 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, the proper officer may demand, and the owner of such goods together with all penalties, rent, interest and other charges payable in respect of such goods. And as per the interpretation of the Section 72 (1) (b) of the said Act by the Hon'ble Supreme Court in case of Kesoram Rayons reported in 1996 (86) ELT 464 (SC), goods which are not removed from a warehouse within the permissible period are treated as goods improperly removed from the warehouse. Such improper removal takes place when the goods remain in the warehouse beyond the permitted period or tts permitted extension. The importer of the goods may be called upon to pay the Customs duty on them and, necessarily, it would be payable at the rate applicable on the date of their deemed removal from the
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR warehouse, that is the date on which the permitted period or its permitted extension came to an end.
8. In the instant case, M/s VIPL, Bangalore, have not sought further extension of the warehousing period of the capital goods whose permitted period expired on 31-03- 2007 and hence have contravened the provisions of Section 61 of the Customs Act, 1962, as a result of which the goods are deemed to have been improperly removed and therefore duty becomes payable under the provisions of Section 72, ibid, in respect of all bonded goods, which have outlived their warehousing period. The total duty payable by M/s VIPL works out to Rs.36,88,280/-. M/s DSLSL have paidan amount of Rs.10,00,000/- vide TR6 Challans dated 29-10-2010.
9. Consequently Show Cause Notice dated 25.05.2011 was issued as to why inter- alia: the warehoused goods improperly removed, value of which is Rs.2,19,94,694/- should not be held liable to confiscation under Section 111(j) and Section 111(o) of the Customs Act, 1962;the duty amount of Rs. 36,88,280/-(Duty on imported purchase Rs.29,40,953 + Rs.7,47,327/- duty involved in respect of local purchase = Rs.36,88,280/-) being the duty payable on the warehoused imported and indigenously procured capital goods respectively and improperly removed by them should not be demanded from them under the provisions of Section 72 (1)(a) of the Customs Act, 1962, in as much as the raw-material purchased locally without payment of duty under CT 3
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR and improperly removed from their bonded premises by suppressing the fact of the said removals should not be treated as removal in contravention of Rules 4,6,8,11, and 17 of Central Excise Rules, 2002 read with section 58,59 and 71 of the Customs Act, 1962 and the duty amount of Rs.7,47,327/- on the value of the goods cleared of Rs.25,25,674/- should not be recovered from them under proviso to Section 11A(1) of the Central Excise Act, 1944 along with interest under Section 11AB of the Central Excise Act, 1944;the interest on the amount mentioned at (ii) above should not be demanded from them under the provisions of Section 72(1)(a) of the Customs Act, 1962 and under Section 11AB of the Central Excise Act, 1944; penalty should not be imposed upon them under Section 112(a) and Section 112(b) of the Customs Act, 1962 read with Section 11ACof the Central Excise Act, 1944fortheabovereasons; penalty should not be imposed on Shri .M.Vijay Kumar, Managing Director of M/s.Veetech Infoline Pvt Ltd., under Section 112(a)&(b) of the Customs Act 1962 read with Rule 26 and 27 of Central Excise Rules,2002 for the reasons mentioned above. Subsequently vide Order-in- Original No. 03/2012 dated 21.02.2012 the adjudicating authority has inter-alia held that the goods are liable to be confiscated interms of Section 112(j) and (O) of Customs Act, 1962 ,confirmed the demand of Rs.36,88,280/- under Section 72(1)(a) of the Customs Act, 1962 read with Section 11 A (1) of the Central Excise Act, 1944 and interest , imposed penalty ofRs.36,88,280/- under Section
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR 112 (a) and (b) of the Customs Act, 1962 read with Section 11AC of the Central Excise Act, 1944 as well as imposed penalty of Rs. 10,000/- on Shri.M.Vijay Kumar, Managing Director of M/s.Veetech Infoline Pvt Ltd
10. In this regard, Hon'ble CESTAT, Bengaluru in Final Order No. FO/A/20139- 20140/2025-EX(DB) dated 27.01.2025 in the appeal filed by M/s. Veetech Infoline Private Ltd. and Shri M.R. Vijaykumar, Managing Director, M/s. Veetech Infoline Private Ltd. has interi-alia stated that :
"When the appeal came up for hearing, the learned counsel for the appellant submits that as per the Order-in- Original, the Adjudication Authority confirmed demand of Rs. 36,88,280/- along with interest and imposed penalty. Aggrieved by said order, appeals were filed before the Commissioner (Appeals). Learned counsel further submits that during the investigation, they have deposited Rs.10,00,000/- and it isappropriated vide the impugned order. However, whenthe appeals werefiled,in addition toabove,LearnedCommissioner (Appeals)vide Stay Order No. 06/2014 dated 21.02.2014 directed the appellant to make a pre-deposit of Rs. 32,00,000/- and aggrieved by said order, the present appeals are filed before the Tribunal.
2. Learned counsel for the appellant further submits that during the pendency of the present appeals, they had obtained the documentary evidence from the Software Technology Park evidencing that they have fulfilled the Net Foreign Exchange (NFE) during the corresponding period of operation and finding of the Adjudication Authority are contrary to the said facts, which lead to the confirmation of the demand against the appellant. However, Ld. AR objected to the same and submits that regarding fulfilment of NFE, no documentary evidence was produced before the Adjudication Authority. Considering the same, to consider the issue on merit, appeals may be remanded for Denovo Adjudication.
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR
3. Considering the above facts, the impugned order is set aside, the appeals are remanded before the Adjudication Authority for Denovo Adjudication. The appellant is at liberty to produce the relevant evidence before the Adjudication Authority and Adjudication Authority after considering such evidence shall pass appropriate order on merit within 3(three) months after receipt of this order. "
11. The said Final Order of Hon'ble CESTAT, Bengaluru was received by the adjudicating authority vide email dated 23.05.2025 from Headquarters Review Section. Consequently personal hearing was held on 10.06.2025 which was attended by Mr. Chethan Kumar C. B., Authorized Representative of M/s. Veetech Infoline Private Ltd. and Shri M.R. Vijaykumar, Managing Director, M/s. Veetech Infoline Private Ltd. who requested time upto 17.06.2025 to make submissions which may be taken on record and requested to issue suitable order based on the submissions made.
12. Subsequently, M/s. Veetech Infoline Private Ltd. and Shri M.R. Vijaykumar, Managing Director, M/s. Veetech Infoline Private Ltd. inter-alia have submitted that the undisputed facts of the present case are as follows. As mentioned in Para 3 of the SCN itself and as held in the order passed by the original authority, the Noticee had obtained PBWH Licence and IBMSO bearing No 531/2000 dated 14-11-2000 from the then Deputy Commissioner of Customs. Customs Division, Bangalore in respect of their EOU unit for the purpose of Development of IT Services (Computer Software). As
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR clearly recorded in the SCN, the validity of the licence was initially up to 13-11-2005 and later extended up to 31- 03-2007. That is to say, for the period from 14-11- 2000 to 31-03-2007 (for nearly seven years) the Noticee were engaged in the Development of IT Services (Computer Software) under EOU/STPI scheme and within the premises duly bonded by the Customs department. During the said period ,the Noticee had obtained various imported and indigenous goods and had utilized the same for their EOU activity i.e. Development of Computer Software. In other words, most of the duty-free goods were used for the Development of Computer Software for a period ranging 4-7 years. It is seen that nowhere in the SCN or the order passed by the original authority it has been alleged/held that duty-free goods procured by the Noticee had been physically displaced or removed from the EOU premises. In fact, as per the facts mentioned in the SCN itself, all the duty-free goods were available in the EOU premises later occupied by the certain business entities as detailed in Para 3 of the SCN; that the key issue to be determined is whether the Noticee had used the duty-free goods in their EOU for software development or not. In this regard, during the pendency of the appeal before the CESTAT ,the Noticee through their had filed an application under Right to Information Act, 2005 to the Director, Software Technology Parks of India, Bangalore seeking information about the import of duty-free goods and exports made. The Director of STPI vide letter dated 19th June 2017 has categorically
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR informed that during the period 2000-2010, the Noticee had procured duty-free capital goods totaling to Rs 241.28 Lakhs (duty-free imports Rs 200.53 Lakhs+ indigenous goods Rs 40.75 Lakhs) and that the value of exports of IT/IT enabled services for which Softex is certified is Rs 405.00 Lakhs. In other words, it is indisputably clear that the Noticee had utilized the duty- free capital goods and hence were entitled to depreciation as per the governing notifications. In other words, contrary to what was held by the original authority vide Order-in-Original No 03/2012dated21-02-2012,theNoticee had used the duty-free goods for export of IT/IT Enabled Services in their EOU. Therefore, they were entitled to depreciation as per Notification No. 52/2003-Cus dated 31-03-2003 .In this regard, the depreciation details as given in the table at Para 4 in page no. 67 of the submissions may be referred. In continuation of the above it is submitted that as mentioned in the SCN itself, the Noticee had obtained the EOU Licence on 14-11- 2000which was valid till 31-03-2007. During this period, the Noticee had exported IT/IT Enabled Services to the tune of Rs 405.00Lakhs as per STPI letterdated19th June2017 (supra). Although the period mentioned in the STPI letter is 2000-2010, the Noticee was in operation till 2007 and the entire exports had taken place during this period .Considering the above, duty payable, on all the computers and computer peripherals like servers ,UPS systems, Telematic Equipment, Antistatic Carpets. Telecommunications Equipment(Call Centre
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR Equipment),Vertica lCable Manager, Dell Power Edge, Software and Associated Hardware etc. becomes Nil as the depreciated value of the same after usage for a period of over five year shad become zeroasper Notification No. 52/2003-S.T. dated 31-03-2003 which is applicable imported to goods. Further, duty, if any, payable on indigenous goods other than computers and counter peripherals viz. Security Systems, Access Control Systems, Air Conditioners, DG Set etc. as peris the and Notification No. 22/2003-C.E. dated 31-03-2003would also become zero since the date of debonding has to be taken as the present date. In this regard, the depreciation details as appearing in Para 8 in page no. 78 of the submissions may be referred .Notwithstanding the fact that the Director, STPI has categorically stated in their letter dated 19th June 2017 that the Noticee had exported services to the tune of Rs 405.00 Lakhs during the period 2000-2010, specimen copies of Softex Forms, invoices, bank realization certificates evidencing the export of services and realization of proceeds are placed on record. In view of the above, the demand is liable to be dropped and accordingly de novo order may be passed and issued.
Findings:
13. I have gone through the Show Cause Notice dated 25.05.2011(hereinafter referred to as"notice" or "SCN")and the submissions of the noticee(s).The issue(s) to be adjudicated is as detailed below:
(i) Whether the ware housed goods of M/s.Veetech
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR Infoline Private Ltd. Having value of Rs.2,19,94,694/- is liable to confiscation under Section 111(j) and Section 111(o) of the Customs Act, 1962 along with confirmation of the duty amount of Rs. 36,88,280/- along with the interest under the provisions of Section 72(1)(a) of the Customs Act, 1962 read with Section 11AB of the Central Excise Act, 1944 and penalty under Section 112(a) and Section 112(b) of the Customs Act, 1962 read with Section 11ACof the Central Excise Act, 1944 or otherwise
(ii) Whether Shri.M.Vijay Kumar, Managing Director of M/s.Veetech Infoline Pvt Ltd., is liable for penalty under Section 112(a)&(b) of the Customs Act 1962 read with Rule 26 and 27 of Central Excise Rules, 2002 or otherwise 14.1 As per the notice "M/s Veetech Infoline Pvt. Ltd , had let out certain duty free imported capital goods on rent to M/s Llyods Solutions Pvt. Limited, Ground floor and portion of first floor(herein after referred to as M/s.LSPL), M/s.Leads Animation India Pvt. Ltd., second floor (herein after referred to as M/s.LAIPL), M/s. Pheonix Lifecare Systems, third floor and portion of fourth floor(herein after referred to as M/s. PLS) and M/s. Tidaldata Solutions Pvt. Limited, fourth floor(herein after referred to M/s.TSPL) without payment of duty. The officers of Customs Preventive, Bangalore visited the premises of M/s VIPL on 08-07-2010, for verification of the same. Verification of the records revealed that M/s VIPL possessed Private Bonded Ware House Licence No. 531/2000 dated 14-11-2000 valid till 13-11-2005.
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR Subsequently, vide Ref No.EIG/ VEETECH INFOLINE/GEN/40366 Dated 09-01-2006 the STPI issued a "No Objection" to renew the PBWH License No.531/2000 dated 14-11-2000 and the same was renewed upto31-03- 2007.Further verification revealed that the said unit had not applied for de-bonding of the said premises as required under the provisions of Section61 of the Customs Act, 1962 and the said premises along with the certain duty free imported capital goods and locally procured duty free capital goods, and the same had been let out on rent to four companies mentioned above. It was also noticed during the verification that M/s VIPL, had imported various Capital Goods since inception i.e., 14-11- 2000 and had obtained further extension of warehousing period of the said goods up to 31- 03-2007 in respect of imported and indigenously procured capital goods were stored in a disorderly manner at different places of the premises without being used and also rented out to the four companies mentioned above. The said goods were then detained under a Mahazar dated 08-07-2010 drawn in the presence of independent witnesses for want of further verification and handed over the same for safe custody to M/s.Llyods Solutions Pvt.Limited, Ground floor and portion of first floor(herein after referred to as M/s.LSPL), M/s.Leads Animation India Pvt. Ltd., second Systems, third floor(herein after referred to as M/s. PLS) and M/s. Tidaldata Solutions Pvt. Limited, fourth floor(herein after referred to M/s.TSPL)". I find that VIPL has not disputed
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR the above facts. In fact, I find that VIPL has inter- alia submitted that" for the period from 14-11-2000 to 31-03- 2007 (for nearly seven years) the Noticee were engaged in the Development of IT Services (Computer Software) under EOU/STPI scheme and within the premises duly bonded by the Customs department. During the said period, the Noticee had obtained various imported and indigenous goods and had utilized the same for their EOU activity i.e. Development of Computer Software. In other words, most of the duty-free goods were used for the Development of Computer Software for a period ranging 4-7 years. It is seen that nowhere in the SCN or the order passed by the original authority it has been alleged/held that duty-free goods procured by the Noticee had been physically displaced or removed from the EOU premises. In fact, as per the facts mentioned in the SCN itself, all the duty-free goods were available in the EOU premises later occupied by the certain business entities as detailed in Para 3 of the SCN"
14.2 As per Section 72 (1) ( b) of the said Act, in case where any ware housed 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 aware house, 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. And as per the interpretation of the Section 72 (1) (b) of the said Act
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR by the Hon'ble Supreme Court in case of Kesoram Rayons reported in 1996 (86) ELT 464 (SC), goods which are not removed from a warehouse within the permissible period are treated as goods improperly removed from the warehouse. Such improper removal takes place when the goods remain in the warehouse beyond the permitted period or its permitted extension. The importer of the goods may be called upon to pay the Customs duty on them and, necessarily, it would be payable at the rate applicable on the date of their deemed removal from the warehouse, that is the date on which the permitted period or its permitted extension came to an end. Hence in the instant case, I find that as per Section 72 (1) (b) of the Customs Act, 1962, VIPL is liable to pay, the full amount of duty chargeable on such goods together with interest, fine and penalties.
14.3. I find that though the noticee has submitted the documents dealing with the fulfilment of Net Foreign Exchange Earnings , they have failed to substantiate with any documents including calculation worksheet ,the argument that on application of depreciation for the capital goods and other goods imported and locally procured, the liability to be paid is zero as on 31-03-2007 when the warehousing period expired as per Para 4 of Notfn.No.52/2003-Cus. Dtd.31.03.2003 read with Para 2 of the Circular No. 12/2008-Customs, dtd.24.07.2008. In light of the above I do not find any merit in the said submissions of the noticee and the same is liable for rejection for the reason(s) cited above.
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR 14.4. Consequently, I find that the VIPL have contravened the provisions of Section 71 of Customs Act, 1962 in as much as they have removed the goods improperly without payment of Customs duty as required in terms of Section 72 (1)(a) of Customs Act, 1962 and hence the goods, removed improperly, valued at Rs.2,19,94,694/- are liable to be confiscated under Section 111(j) and (O) of Customs Act, 1962. Further I find that the VIPL have contravened the provisions of Rules 4,6, 8, 11 and 17 of Central Excise Rules, 2002 read with Sections 58, 59 and 71 of Customs Act, 1962 in as much as they have removed the goods without proper permission from the department and hence I hold that the duty of Rs.36,88,280/- (imported/locally procured raw materials), on the goods improperly removed is liable to be demanded and recovered from the assessee in terms of Section 72 (1)( A) of the Customs Act,1962 read with proviso to Section 11A(1)of Central Excise Act, 1944 along with interest in terms of Section 72(1)(a) of the Customs Act, 1962 read with Section 11AB of the Central Excise Act, 1944.In light of the above discussion I also hold that VIPL are liable to be imposed with penalty in terms of Section 112 (a) and (b) of Customs Act, 1962 read with Section 11AC of Central Excise Act, 1944. I find that Shri.M.R. Vijaykumar, MD of VIPL, had not paid the relevant duties on the goods bonded on expiry of the warehousing period as well as has allowed the premises of the warehouse in which the bonded goods were present to be used by other entities .In light of the above
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR discussion. I also hold that Shri.M.R. Vijaykumar, MD of VIPL is liable to be imposed with penalty interms of Section 112(a)and(b) of Customs Act, 1962 read with Rule 26 and 27 of C Ex Rules, 2002.
15. Hence, I pass the following order:
ORDER
(i) I hold that the warehoused goods improperly removed, value of which is Rs.2,19,94,694/-, are liable to be confiscated under Section 111(j) and Section 111(O) of the Customs Act, 1962;
(ii) I confirm the demand of Rs.36,88,280/-
(Rupees Thirty-six lakh Eighty-eight Thousand Two Hundred and Eighty only) on VIPL being the duty payable on the warehoused goods (imported/indigenously procured), from the assessee in terms of Section 72 (1)( A) of the Customs Act, 1962 read with proviso to Section 11 A (1)of Central Excise Act, 1944;
(iii) I confirm interest on VIPL on the amount confirmed at(ii)above under Section 72(1)(a) of the Customs Act, 1962 read with Section 11AB of the Central Excise Act, 1944;
(iv) I impose penalty of Rs.36,88,280/- on VIPL under Section 112 (a) and (b) of Customs Act, 1962 read with Section 11AC of Central Excise Act, 1944;
(v) I impose penalty of Rs.10,000/- on Shri.M.R. Vijay Kumar, Managing Director of M/s.Veetech Infoline Pvt Ltd., under Section 112(a)&(b) of the Customs Act 1962 read with Rule 26 and 27 of Central Excise Rules, 2002."
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR
8. As can be seen from the impugned order particularly paragraphs 14.3 and 14.4 of the impugned order, after referring to the earlier orders of rejection, respondent No.1 has proceeded to reject the claim of the petitioner by passing a cryptic, laconic, non-
speaking, unreasoned order without application of mind and without assigning any cogent reasons as to why earlier order has been reiterated thereby violating principles of natural justice thereby warranting interference by this Court in the present petition.
9. Insofar as the contention urged by learned counsel for the respondents that the present petition is not maintainable on account of availability of equally efficacious and alternative remedy by way of an appeal is concerned, having regard to the fact that the findings made hereinabove that the impugned order is violative of principles of natural justice mere availability of remedy of an appeal would not come in the way of this Court exercising its jurisdiction under Article 226 of the Constitution of India and consequently, the said contention urged on behalf of the respondents cannot be accepted.
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NC: 2025:KHC:48515 WP No. 30257 of 2025 HC-KAR
10. In the result, I pass the following:
ORDER
(i) The petition is hereby allowed.
(ii) The impugned order-in-original at Annexure - A dated 10.07.2025 passed by the 1st respondent is hereby set aside.
(iii) Matter is remitted back to 1st respondent for reconsideration afresh, in accordance with law.
Sd/-
(S.R.KRISHNA KUMAR) JUDGE SV List No.: 2 Sl No.: 51