Custom, Excise & Service Tax Tribunal
John Energy Ltd vs Hyderabad Ii on 8 April, 2024
(1)
C/30324/2022
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench
Court - I
Customs Appeal No. 30324 of 2022
(Arising out of Order-in-Appeal No. VIZ-CUSTM-000-APP-005-22-23 dt.13.06.2022 passed
by Commissioner of Central Tax & Customs (Appeals), Guntur)
John Energy Ltd
220, GIDC Estate, Mehsana, ......Appellant
Gujarat - 384 002
VERSUS
Commissioner of Customs
Visakhapatnam
Custom House, Port Area,
......Respondent
Visakhapatnam, Andhra Pradesh - 530 035 Appearance Shri Anil Kumar Mishra, Advocate for the Appellant. Shri P. Amaresh, Authorized Representative for the Respondent.
Coram:
HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) FINAL ORDER No. A/30267/2024 Date of Hearing: 06.03.2024 Date of Decision: 08.04.2024 [Order per: ANIL CHOUDHARY] This appeal has been filed by the appellant-importer (i) against demand of Rs.1,61,70,808/- (as reduced by Rs.3,02,766/- vide impugned OIA) and for
(ii) denial of relinquishment of title of part (balance) goods lying in the warehouse under warehouse B/E No. 5714432 dt.24.03.2018.
2. The brief facts of the case are that the appellants are engaged in business of providing drilling rigs on hire basis to various on shore oil explorers in India, who operate under Government/ONGC contracts.
3. Vide Warehouse Bill of Entry (WBE) No.5714432 dt.24.03.018 the appellants warehoused imported 81 packages (gross weight of 581.630 MTs) of (2) C/30324/2022 'Equipment/Component for Land Rig #20 in Knockdown condition, Bunk House Two Main Office Unit' under CTH 8430 4900.
4. After assessment for bond purposes, out of charge for warehouse was given on 23.05.2018 with permission by proper officer on 24.05.2018.
5. The appellant filed a triple duty bond amounting to Rs.60,00,00,000/- bearing No. 2001405214 dt.23.05.2018 under proviso to section 59(2) of the Customs Act, 1962.
6. The goods were warehoused under Bond No. 1349 dt.30.05.2018 in the Public Bonded Warehouse of M/s Integral Trading and Logistics LIC No. 13/2018 (WH Code VTZ1U044) for one year i.e., up to 29.05.2019.
7. Out of total cargo weighing 581.630 MTs, the appellants have cleared 62.47 MTs of goods vide Ex-BE No. 9875587 dt.31.01.2019 for home consumption under Customs Notification No. 50/2017 dt.30.06.2017 paying duty amounting to Rs.3,02,767/- out of assessed bond duty of Rs.1,64,27,497/-.
8. Due to severe financial crunch, after the expiration of warehousing period of one year, the appellant could not clear the goods.
9. The appellant requested for an extension of warehousing vide letter dt.05.07.2019 and 20.07.2019.
10. Subsequently, a notice to show cause dt.18.06.2019 was issued as to why a penalty be not imposed under section 117 of the Customs Act cum Personal Hearing memo dt.21.08.2019 was issued, against which the appellants appeared on 28.08.2019 and made interim submissions. The appellant requested for time and requested for waiver of bank guarantee terms. A penalty of Rs.20,000/- under section 117 was imposed and appellant paid vide CM No. 109 dt.06.09.2019.
11. Though the appellant sought time, they could not furnish the B.G. due to financial hardships and requested to extend time to furnish bank guarantee vide letter dt.07.12.2019.
12. A demand notice (SCN) dt.13.01.2021 was issued demanding the full duty amount of Rs.1,64,73,574/- under section 72(1)(b) and (d) of the Act, to which the appellants replied vide submissions that due to continuing financial crunch and the ongoing COVID-19 pandemic, they are not in a position to (3) C/30324/2022 furnish any bank guarantee, issuance of which requires equivalent deposits at bank as there are no funds available with them. A written plea was also made for waiver of bank guarantee.
13. During the hearing, the appellant relinquished their title of the goods requesting the Adjudicating Authority for disposal of goods by Auction. The prayers were refused as irrelevant holding that under the provisions of section 72, the goods are already deemed as improperly removed. The Adjudicating Authority vide OIO No. 04/2021 dt.20.04.2021 confirmed the entire demand of assessed duty Rs.1,64,73,574/- under section 72(1)(b) and (d) failing the payment of which, the goods were ordered to be disposed by sale to recover the amount with applicable interest.
14. Aggrieved, the appellant filed an appeal before the Commissioner (Appeals), who reduced the amount of duty by Rs.3,02,767/- paid Ex-BE No. 9875587 dt.31.01.2019 for part clearance, but confirming the remaining duty demand holding that the appellant-importer failed to make a relinquishment request before the expiry of the bond. Further, held that the ruling of Hon'ble Karnataka High Court in CC, Bangalore vs I2 Technologies Software Pvt Ltd [2007 (217) ELT 176 (Kar.)] is distinguishable and further relied on the ruling of Hon'ble Supreme Court in Kesoram Rayon vs CC, Calcutta [1996 (86) ELT 464 (SC)] wherein it was held that the goods were deemed to have been removed from the warehouse.
15. Learned Counsel for the appellant - Mr. Anil Kumar Mishra, inter alia, urges as follows:
A. the warehoused goods may be cleared only after compliance of three sequential conditions of section 68(1) i.e.,
(a) A Bill of Entry must be filed
(b) Duty, interest and penalties should have been paid and;
(c) An order for clearance of such goods for home consumption has been made B. He further contends that 2nd proviso to said section allows an importer to relinquish the title just before the stage (c) above and in present matters even stage (a) was not completed.
C. That the decision in CC, Bangalore vs I2 Technologies Software Pvt Ltd (supra) is squarely applicable as in said matters title was relinquished after provisions for such relinquishment were incorporated in 2003.(4)
C/30324/2022 D. That Hon'ble Supreme Court's decision in Kesoram Rayon (supra) firstly relates to determination of rate of duty when goods are deemed as cleared on date of expiry of bond. Secondly, the decision is rendered for goods warehoused prior to date of amendment in section 68 i.e., when rights of relinquishment as statutorily incorporated in section 68. Thirdly, the decision of Hon'ble Supreme Court does not address the issue of rights of relinquishment of title.
E. That rejection of the appellant's relinquishment of title of warehoused goods be accepted and consequently, there are no grounds to confirm the demand of duty and interest from the appellants.
F. Reliance was also placed on Circular No.42/2003-Cus dt.20.05.2003 which clarifies that the term 'interest' appearing in section 68 prior to its amendment in 2016 does not mean interest on duty but means interest on other charges.
G. Reliance also placed on Mafatlal Fine Spinning & Manufacturing Co Ltd vs UOI & others [1987 (27) ELT 19 (Bom.)] to submit that the point of time before which this right can be exercised is passing of the order of clearance of the goods for home consumption and before that date, it is open for the importer to relinquish the title. Even in cases where a demand is made by the Assistant Collector under section 72(1)(b) of the Act, it is open for the importer to relinquish the title to the imported goods, provided an order for clearance for home consumption is not passed.
16. Opposing the appeal, learned AR for Revenue contended that the relinquishment of the title by the appellant cannot be accepted as the warehoused goods are already deemed to have been improperly removed from the warehouse in terms of section 72(1)(b) of the Act. He reiterates the impugned OIA. Further, he places reliance on the following rulings:
a) Videocon International Ltd vs UOI [2002 (9) TMI 125 (Bom.)]
b) PSI Data Systems Ltd vs CC, Bangalore [2006 (202) ELT 316 (Tri-Bang)]
c) Allied Fibres Ltd vs CC, Mumbai [2014 (309) ELT 535 (Tri-Mum.)]
17. Having considered the rival contentions, we find that the Commissioner (Appeals) have erred by not taking notice of the subsequent amendments made in section 68 wherein proviso was inserted by Finance Act 2003 w.e.f. 14.05.2003. The said proviso reads as follows:
(5)C/30324/2022 "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 relinquishment, he shall not be liable to pay duty thereon."
18. The words of "rent, interest, other charges and penalties" appearing in the aforementioned proviso, before 'penalties' were omitted by Finance Act 2016 dt.14.05.2016.
19. Further, 2nd proviso was added in section 68 of the Finance Act 2006 w.e.f. 18.004.2006, which reads as follows:
"Provided that the owner of any such warehoused goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force."
20. Accordingly, we hold that the Commissioner (Appeals) has erred in relying on the ruling of Hon'ble Supreme Court in Kesoram Rayon (supra), which is of the year 1996 under the erstwhile law.
21. We further find that pursuant to insertion of the 1st proviso under section 68 w.e.f. 14.05.2003, the Board had issued Circular No.42/2003-Cus dt.20.05.2003 (TRU) clarifying the scope of amendment made to section 68 wherein the Board clarified as follows:
"2. While it is clear that upon relinquishment of the title of the goods, the importer gains a freedom from liability to pay duty thereon, there appears to be some confusion in the field, whether such freedom also extends to the 'interest accrued on the said duty till the date of such relinquishment'. The confusion appears to have generated from the word 'interest' appearing in the text of the proviso.
3. In this regard it is clarified that the word 'interest' appearing in the said proviso, does not relate to 'interest accrued on the said duty till the date of such relinquishment' but relates to interest on other dues such as warehouse charges, rent etc."
22. Upon careful reading of section 68, as amended by the provision for relinquishment of title to warehoused goods inserted w.e.f. 14.05.2003 and the subsequent amendment made in the year 2016 to remove other charges and fees from its provisions, it is clear that the said proviso has extended the time available to the owner/importer of warehoused goods for relinquishment of title till or before an order for clearance of such goods for home consumption, as mentioned in clause (c) of section 68, has been made by the proper officer.
(6)C/30324/2022
23. We find that in the facts of the present case, the relinquishment of title was made by the appellant well in time, as permitted by the Statute as no order for clearance of goods for home consumption was made till that date. We further hold that the issuance of SCN under section 72(1)(b) for warehoused goods cannot stop the time running and available to the owner to relinquish the title before the order for clearance of such goods for home consumption, as stipulated in section 77 read with section 68, is made.
24. We further find that none of the provisions of section 72 of the Act restrict an owner of the warehoused goods to relinquish the title after issuance of SCN. Even after expiry of bond validity, the title of the goods remains with the owner as is manifested in the language of section 72(2) of the Act. We further find that similar is the purport of the Board Circular dt.20.05.2003, which has clarified that with the relinquishment of right, the owner is absolved from the liability of duty and interest on the goods.
25. In view of our aforementioned findings and observations, we hold that the appellant has rightly relinquished the title to the goods during the pendency of the proceedings under section 72(1)(b) of the Act. We further find that on the date of such relinquishment, no case of any offence committed by the appellant under this Act or any other Act for the time being in force is made out in the facts and circumstances. Accordingly, we hold that the appellant is entitled to the benefit of relinquishment of title as provided under section 68 of the Customs Act read with proviso. We further find that appellant has already been imposed penalty of Rs.20,000/- under section 117 of the Act and the same has already been deposited vide CM No.109 dt.06.09.2019. Accordingly, we refrain from imposing any further penalty.
26. In view of our aforementioned findings and observations, we allow the appeal and set aside the impugned order. Appellant shall be entitled to consequential benefits, in accordance with law.
(Pronounced in the Open Court on 08.04.2024) (ANIL CHOUDHARY) MEMBER (JUDICIAL) (A.K. JYOTISHI) MEMBER (TECHNICAL) Veda