Legal principle

An importer whose warehousing period under Section 61(1)(b) has expired and who has surrendered the goods cannot invoke Board circulars to claim re-export under Section 69 once the goods have been put to auction under Section 72(2), and an order cannot bind the Union as a consent order when no consent was in fact given by it or its counsel.

Court decision

The Supreme Court allowed both appeals without any order as to costs, ruling in favour of the Union of India. It held that the circular dated 14 January 2003 could not apply because it covered re-export only before goods were put to auction, whereas the first auction had been fixed for 28 September 2005 and was stalled by the importer's own conduct; that the surrender of title on 31 December 2004 could not be resiled from; that the re-export plea having been rejected up to the Supreme Court on 3 February 2006, no interference was called for; and that, notwithstanding the High Court's clarification, there was no consent by the Union of India or its counsel to the order of 9 August 2006. The Court expressly declined to decide the larger question whether the circulars could authorize deviation from the statute.

Facts

Shakti LPG Ltd. imported 1714.5 MT of boiler steel plates worth Rs. 4.79 crores in March 1996 for extension of its Kakinada storage terminal and, lacking certificates for concessional duty, bonded the goods with the Central Warehousing Corporation on 30 May 1996 for an initial one-year period. The warehousing period was extended six times, the last expiring on 31 January 2001, after which no further extension was sought; duty demands were raised under Section 72(1) and an auction notice under Section 72(2) was issued on 3 December 2001. The importer surrendered the goods by letter dated 31 December 2004 but then pursued repeated proceedings seeking re-export under Section 69(1), which were rejected by the Chief Commissioner (3 January 2006), the Bombay High Court, and the Supreme Court (3 February 2006). After a re-auction on 14 July 2006 fetched only Rs. 3.78 crores against a larger demand, the Bombay High Court by order dated 9 August 2006 accepted the importer's undertaking to re-export by 14 September 2006 without payment of duty, and later observed on 14 February 2007 that the order was by consent; the Union of India appealed against both orders.

Key provisions

• Section 61, Customs Act, 1962 — Period for which goods may remain warehoused
• Section 69, Customs Act, 1962 — Clearance of warehoused goods for export
• Section 72(1), Customs Act, 1962 — Goods improperly removed from warehouse, etc