Legal principle

A curative amendment to a Section 58 bonded warehouse licence operates retrospectively from the date of the original licence where the department had full knowledge of the practice, the goods were not diverted, and there was no loss of revenue — and in such circumstances extended limitation under Section 28 cannot be invoked.

Court decision

The Tribunal allowed the appeal of L&T: the amendment dated 01.09.2017 was held to be a curative amendment having effect from the date of the original licence, 28.05.2014, and consequently the duty demands raised against the appellant would not survive.

Facts

Larsen & Toubro (Hydro Carbon Engineering) imported goods into its private bonded warehouse at Hazira and, owing to the size of products manufactured for ONGC, carried out manufacturing outside the bonded warehouse but within its Central Excise-registered factory — a practice followed since 1986 with the knowledge of Excise/Customs officers, audited and documented by them. The department, through the Principal Commissioner of Customs, Ahmedabad, passed an Order-in-Original dated 31.12.2020 demanding customs duty on the footing that the goods were improperly removed from the private bonded warehouse, invoking Section 72 read with Sections 73A and 28 of the Customs Act, 1962, along with penalties. On 01.09.2017 the department had amended the Section 58 licence and Section 65 permission (originally granted on 28.05.2014) to cover the entire factory premises, on the appellant's request made on 06.11.2015.

Key provisions

• Section 65, Customs Act, 1962 — Manufacture and other operations in relation to goods in a warehouse
• Section 58, Customs Act, 1962 — Licensing of private warehouses
• Section 28(4), Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 73A, Customs Act, 1962 — Custody and removal of warehoused goods
• Section 72, Customs Act, 1962 — Goods improperly removed from warehouse, etc
• Section 3, Customs Tariff Act, 1975 — Levy of additional duty equal to excise duty, sales tax, local taxes and other charges
• Section 111(j), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 71, Customs Act, 1962 — Goods not to be taken out of warehouse except as provided by this Act
• Section 112, Customs Act, 1962 — Penalty for improper importation of goods