Commissioner of Customs, Vs. M/S. Epc Irrigation Ltd. - Court Judgment

Excerpt:
1. on hearing both sides, the main appeal itself was taken up for disposal.2. the respondents imported certain goods which were warehoused on 22.8.97. they sought transfer of the bonded goods to cwc nasik ware house. this was permitted on filing of a bond for sum of rs. 12 lakhs only being the duty leviable on the goods backed by a bank guarantee of rs.3 lakhs.the condition of the bond was that the goods should be re-warehoused within 21 days of the removal from mumbai. the second condition was that the re-warehousing certificate should be produced.but the bond has not specified any time limit for the production of the re-warehousing certificate. due to certain administrative problems the concerned officer at nasik gave the certificate of warehousing on 20.3.98. in the certificate the date of re-warehousing was shown as 11.10.97, the very date on which the goods were removed from mumbai.however, during the intervening period ie on 14.3.98 the customs enforced the guarantee and recovered rs. 3 lakhs from the bank.it appears on question made to both sides that the demand was for rs.12 lakhs but was not enforced. subsequently, on a number of occasions, the respondents removed the goods on payment of duty on filing ex-bond bills of entry. they came to know about the encashment of bank guarantee much later and filed a claim for refund on 18.9.98. the asstt.commissioner dismissed the claim as barred by time.the commissioner(appeals) observed that the delay in issuing the re-warehousing certificate was on the part of the department and since there was not fault on the appellants he allowed the appeal.hence, the present appeal from the revenue.3. in the grounds of appeal, the delay in issuing the re-warehousing certificate is justified and also claimed that the encashment is in lieu of duty.4. i have carefully considered the submissions. the encashment of the bank guarantee is entirely wrong because the bond itself did not stipulate any time limit for production of re-warehousing certificate.sec.67 of the customs act permits inter ware house movements. this section permits certain conditions to be imposed.in chapter ix of the customs act there does not appear to be any clear cut provision for charge of duty where the re-warehousing certificate is not produced.sec.67 seems to be the only control over the importer by way of a bond.5. there were arguments as to the nature of the amount encashed by the customs. shri jain states that since the bond is for payment of customs duty, the amount represents duty. however, he had no answer to the query whether the customs had sought recovery of the remaining amount of rs.9 lakhs. shri mayur shroff states that there is no demand made.this is a significant aspect because unless the payment was in the nature of customs duty, the provisions of sect.27(1) could not apply.if the customs had wrongly appropriated the amount (which seems to be the case), then the provisions of customs act would not apply.unfortunately, neither authority went into the legal aspect but cantered only on the findings that on importers fault such appropriation has been made. this is an unsatisfactory state of evidence. it is expected the commissioner to go into this aspect and give an appropriate order.the case is remanded back to the jurisdictional commissioner.it is emphasised that priority should be given in disposal of this appeal.

Judgment:
1. On hearing both sides, the main appeal itself was taken up for disposal.

2. The respondents imported certain goods which were warehoused on 22.8.97. They sought transfer of the bonded goods to CWC Nasik Ware House. This was permitted on filing of a bond for sum of Rs. 12 lakhs only being the duty leviable on the goods backed by a Bank Guarantee of Rs.3 lakhs.The condition of the bond was that the goods should be re-warehoused within 21 days of the removal from Mumbai. The second condition was that the re-warehousing certificate should be produced.

But the bond has not specified any time limit for the production of the re-warehousing certificate. Due to certain administrative problems the concerned officer at Nasik gave the certificate of warehousing on 20.3.98. In the certificate the date of re-warehousing was shown as 11.10.97, the very date on which the goods were removed from Mumbai.However, during the intervening period ie on 14.3.98 the Customs enforced the guarantee and recovered Rs. 3 lakhs from the Bank.It appears on question made to both sides that the demand was for Rs.12 lakhs but was not enforced. Subsequently, on a number of occasions, the respondents removed the goods on payment of duty on filing ex-bond Bills of Entry. They came to know about the encashment of Bank Guarantee much later and filed a claim for refund on 18.9.98. The Asstt.Commissioner dismissed the claim as barred by time.The Commissioner(Appeals) observed that the delay in issuing the re-warehousing certificate was on the part of the Department and since there was not fault on the appellants he allowed the appeal.Hence, the present appeal from the Revenue.

3. In the grounds of appeal, the delay in issuing the re-warehousing certificate is justified and also claimed that the encashment is in lieu of duty.

4. I have carefully considered the submissions. The encashment of the Bank Guarantee is entirely wrong because the bond itself did not stipulate any time limit for production of re-warehousing certificate.

Sec.67 of the Customs Act permits inter ware house movements. This section permits certain conditions to be imposed.In Chapter IX of the Customs Act there does not appear to be any clear cut provision for charge of duty where the re-warehousing certificate is not produced.Sec.67 seems to be the only control over the importer by way of a bond.

5. There were arguments as to the nature of the amount encashed by the Customs. Shri Jain states that since the bond is for payment of Customs duty, the amount represents duty. However, he had no answer to the query whether the Customs had sought recovery of the remaining amount of Rs.9 lakhs. Shri Mayur Shroff states that there is no demand made.

This is a significant aspect because unless the payment was in the nature of Customs duty, the provisions of Sect.27(1) could not apply.If the Customs had wrongly appropriated the amount (which seems to be the case), then the provisions of Customs Act would not apply.

Unfortunately, neither authority went into the legal aspect but cantered only on the findings that on importers fault such appropriation has been made. This is an unsatisfactory state of evidence. It is expected the Commissioner to go into this aspect and give an appropriate order.The case is remanded back to the Jurisdictional Commissioner.It is emphasised that priority should be given in disposal of this appeal.