Bharat Petroleum Corporation Vs. Commr. of Cus., Visakhapatnam - Court Judgment

Excerpt:
1. the issue arising for decision in both these appeals is the same i.e. rate of duly applicable to "warehoused goods". accordingly, both the appeals were taken up together for hearing and are disposed of by this common order.2. both the appellants are central public sector oil companies. they filed ex-bond bills of entry for the clearance of warehoused petroleum products a few days before the presenting on 27-2-99 of the union budget for the year 1999-2000. those bills of entry were assessed and duty paid and out of charge order were also given by the customs officer prior to 27-2-99. however, the goods were physically removed from the warehouses subsequent to the budget only. in the impugned orders, the commissioner, customs, visakhapatnam has held that the rate of duty as applicable subsequent to 27-2-99 would be applicable in respect of the goods covered under the appellants' bills of entry inasmuch as the goods were physically cleared from the bonded warehouse subsequent to the coming into effect of the new rates of duty. the issue for decision in these appeals is whether this finding of the commissioner is legal and correct.3. the appellants have pointed out that section 68 of the customs act relates to clearance of warehoused goods' and all the formalities under that section had been completed in respect of the impugned goods prior to 27-2-99. it is their contention that once a bill of entry for home consumption had been presented in respect of warehoused goods, customs duty and other charges in respect of such goods paid and order for clearance of such goods for home consumption has been made by the proper officer, the goods are no more warehoused goods and they cannot be subjected to the rate of duty which has become applicable subsequent to the order for clearance. they have submitted that in such a case, the duties imposed subsequent to order for the clearance of goods for home consumption cannot be imposed in terms of sub-section (b) of the section 15(1) of the customs act on the ground that the goods were actually removed from the warehouse only after the new rate of duty came into force. the appellants submitted that since out of charge order had been given by the customs officer, the goods should be treated as actually removed from the warehouse.4. during the hearing of the appeal, reliance has been placed by the appellants on the decision of the supreme court in the case of priyanka overseas pvt. ltd. reported in 1991 (51) e.l.t. 185, the decision of the orissa high court in the case of orissa cement reported in 1992 (61) e.l.t. 256, and the decision of the cegat in the case of biecco lawrie ltd v. commissioner of customs, calcutta reported in 2002 (139) e.l.t. 193 etc. it has-been contended that these decisions make it clear that actual removal of the goods mentioned in sub-section (6) of section 15(1) is not to be equated with physical removal of the goods in all cases. instead, the completion of the condition for the clearance of goods from bonded warehouse should be treated as equivalent to actual removal. it has been submitted that once "out of charge" order is given, the goods are no more to be treated as warehoused goods.5. as against the above submissions on behalf of the appellants, the departmental representative has pointed out that the language of section 15(1)(b) stipulated that the date for the purpose of duty is "the date on which the goods are actually removed from the warehouse".the dr therefore contended that the statutory requirement of "actually removed" can be satisfied only upon physical removal of the goods. she also pointed out that such an interpretation is not contrary to the provisions of section 68 of the customs act either since that section states that the importer of any warehoused goods may clear them for home consumption on fulfilment of the requirements of that section. the learned sdr relied on decision of the supreme court in prakash mills - 1979 (4) e.l.t. (j-241) in support other submissions.6. section 68 of the customs act lays down the requirements to be completed by an importer for the clearance of warehoused goods for home consumption. these requirements are filing bills of entry, payment of customs duty and other charges and obtaining of "an order for clearance of such goods for home consumption" by the proper officer. in the instant case all these requirements were completed prior to the budget day. once these requirements are completed, the goods are out of customs charge. in the orissa cement case the hon'ble high court held that the mere storage of duty paid goods in the warehouse would not make them warehoused goods. if the goods are duty paid and were not given out of customs charge, such goods cannot be subjected to assessment on the basis of warehoused goods. the apex court held in the case of priyanka overseas (p) ltd. that if the bills of entry were filed under section 68 of the customs act and customs officer refused to allow release of the goods on an erroneous assumption, the revised rate of duty would not be applicable and the rate of duty applicable would be the rate on date of filing the ex-bond bill of entry. the decision of the cegat in biecco lawrie ltd. also supports the view that once requirements under section 68 are completed no further assessment is permissible on the ground that the goods were not physically removed before the coming into force of the revised rate of duty. the decision of the apex court in the case of prakash mills related to warehoused goods in respect of which only bills of entries were filed. other requirements like payment of duty and other charges and obtaining out of charge from the customs prior to revision of rates had not taken place. we also note that a larger bench of cegat held in the case of raymond synthetics ltd. v. cce, allahabad [2000 (119) e.l.t. 205] that "in cases where clearance is made under section 68, pursuant to a bill of entry duly assessed, the relevant date is the date of payment of duty" [para 5 of the order].7. from a perusal of the decisions of the apex court, the high court and the tribunal it appears to be clear that once payment of duty has taken place in respect of warehoused goods in terms of section 68, no revised assessment is permissible on the ground that section 15(1)(b) stipulates that the rate of duty in respect of warehoused goods shall be rate of duty on the date of actual removal of goods. as already noted, in the present case all the requirements of section 68 had been fulfilled prior to the coming into effect of the new rate of duty. we are, therefore, of the opinion that the revised rate of duty imposed in the budget presented on 27-2-99 would not be applicable to the goods involved in the present appeals.8. in view of our findings above, these two appeals are allowed with consequential relief, if any.

Judgment:
1. The issue arising for decision in both these appeals is the same i.e. rate of duly applicable to "Warehoused Goods". Accordingly, both the appeals were taken up together for hearing and are disposed of by this common order.

2. Both the appellants are Central Public Sector Oil Companies. They filed ex-bond Bills of Entry for the clearance of warehoused petroleum products a few days before the presenting on 27-2-99 of the Union Budget for the year 1999-2000. Those Bills of Entry were assessed and duty paid and out of charge order were also given by the Customs Officer prior to 27-2-99. However, the goods were physically removed from the warehouses subsequent to the Budget only. In the impugned orders, the Commissioner, Customs, Visakhapatnam has held that the rate of duty as applicable subsequent to 27-2-99 would be applicable in respect of the goods covered under the appellants' Bills of Entry inasmuch as the goods were physically cleared from the Bonded Warehouse subsequent to the coming into effect of the new rates of duty. The issue for decision in these appeals is whether this finding of the Commissioner is legal and correct.

3. The appellants have pointed out that Section 68 of the Customs Act relates to clearance of Warehoused Goods' and all the formalities under that Section had been completed in respect of the impugned goods prior to 27-2-99. It is their contention that once a bill of entry for home consumption had been presented in respect of Warehoused goods, customs duty and other charges in respect of such goods paid and order for clearance of such goods for home consumption has been made by the proper officer, the goods are no more warehoused goods and they cannot be subjected to the rate of duty which has become applicable subsequent to the order for clearance. They have submitted that in such a case, the duties imposed subsequent to order for the clearance of goods for home consumption cannot be imposed in terms of Sub-section (b) of the Section 15(1) of the Customs Act on the ground that the goods were actually removed from the Warehouse only after the new rate of duty came into force. The appellants submitted that since out of charge order had been given by the Customs Officer, the goods should be treated as actually removed from the Warehouse.

4. During the hearing of the appeal, reliance has been placed by the appellants on the decision of the Supreme Court in the case of Priyanka Overseas Pvt. Ltd. reported in 1991 (51) E.L.T. 185, the decision of the Orissa High Court in the case of Orissa Cement reported in 1992 (61) E.L.T. 256, and the decision of the CEGAT in the case of Biecco Lawrie Ltd v. Commissioner of Customs, Calcutta reported in 2002 (139) E.L.T. 193 etc. It has-been contended that these decisions make it clear that actual removal of the goods mentioned in Sub-section (6) of Section 15(1) is not to be equated with physical removal of the goods in all cases. Instead, the completion of the condition for the clearance of goods from Bonded Warehouse should be treated as equivalent to actual removal. It has been submitted that once "out of charge" order is given, the goods are no more to be treated as warehoused goods.

5. As against the above submissions on behalf of the appellants, the Departmental Representative has pointed out that the language of Section 15(1)(b) stipulated that the date for the purpose of duty is "the date on which the goods are actually removed from the warehouse".

The DR therefore contended that the statutory requirement of "actually removed" can be satisfied only upon physical removal of the goods. She also pointed out that such an interpretation is not contrary to the provisions of Section 68 of the Customs Act either since that Section states that the importer of any Warehoused Goods may clear them for home consumption on fulfilment of the requirements of that Section. The learned SDR relied on decision of the Supreme Court in Prakash Mills - 1979 (4) E.L.T. (J-241) in support other submissions.

6. Section 68 of the Customs Act lays down the requirements to be completed by an importer for the clearance of Warehoused Goods for home consumption. These requirements are filing Bills of Entry, payment of customs duty and other charges and obtaining of "an order for clearance of such goods for home consumption" by the proper officer. In the instant case all these requirements were completed prior to the Budget day. Once these requirements are completed, the goods are out of customs charge. In the Orissa Cement case the Hon'ble High Court held that the mere storage of duty paid goods in the warehouse would not make them Warehoused Goods. If the goods are duty paid and were not given out of customs charge, such goods cannot be subjected to assessment on the basis of warehoused goods. The Apex Court held in the case of Priyanka Overseas (P) Ltd. that if the Bills of Entry were filed under Section 68 of the Customs Act and Customs Officer refused to allow release of the goods on an erroneous assumption, the revised rate of duty would not be applicable and the rate of duty applicable would be the rate on date of filing the ex-bond Bill of Entry. The decision of the CEGAT in Biecco Lawrie Ltd. also supports the view that once requirements under Section 68 are completed no further assessment is permissible on the ground that the goods were not physically removed before the coming into force of the revised rate of duty. The decision of the Apex Court in the case of Prakash Mills related to warehoused goods in respect of which only Bills of Entries were filed. Other requirements like payment of duty and other charges and obtaining out of charge from the Customs prior to revision of rates had not taken place. We also note that a Larger Bench of CEGAT held in the case of Raymond Synthetics Ltd. v. CCE, Allahabad [2000 (119) E.L.T. 205] that "In cases where clearance is made under Section 68, pursuant to a Bill of Entry duly assessed, the relevant date is the date of payment of duty" [Para 5 of the order].

7. From a perusal of the decisions of the Apex Court, the High Court and the Tribunal it appears to be clear that once payment of duty has taken place in respect of warehoused goods in terms of Section 68, no revised assessment is permissible on the ground that Section 15(1)(b) stipulates that the rate of duty in respect of warehoused goods shall be rate of duty on the date of actual removal of goods. As already noted, in the present case all the requirements of Section 68 had been fulfilled prior to the coming into effect of the new rate of duty. We are, therefore, of the opinion that the revised rate of duty imposed in the budget presented on 27-2-99 would not be applicable to the goods involved in the present appeals.

8. In view of our findings above, these two appeals are allowed with consequential relief, if any.