Legal principle

Section 158 of the Customs Act, 1962 is an enabling rule-making provision under which no penalty can be directly imposed, and a warehouse licence cannot be cancelled on mere possibilities of intention without independent application of mind and due regard to proportionality.

Court decision

The appeal was partially allowed in favour of the appellant: the cancellation of the public warehouse licence was held unsustainable (the Tribunal found no merit in it), the penalty of Rs.2 lakhs under Section 158 was held unjustifiable and could not stand, and the penalty under Section 117 was reduced from Rs.3 lakhs to Rs.50,000, since admitted contraventions did exist and some penalty was warranted.

Facts

The appellant, Poonam Pundir, held a licence for a public bonded warehouse under Section 58 of the Customs Act, 1962. On scrutiny of space/re-warehouse certificate dated 10.01.2022, Export Processing Circle-I, Ghaziabad found non-duty-paid foreign liquor of M/s Meastro Spirit & Wine stored in the warehouse, with the warehouse and the importer sharing the same PAN (BWWPP2488Q) in the name of Poonam Pundir, Proprietor. Revenue treated storage of self-goods in a public bonded warehouse as contravention of Sections 57 and 58 read with Circular 26/2016 dated 09.06.2016. After an enquiry (report dated 04.05.2022), the Commissioner of Customs, Noida cancelled the public warehouse licence under Section 58B and imposed penalties of Rs.3,00,000 under Section 117 and Rs.2,00,000 under Section 158 of the Customs Act, 1962.

Key provisions

• Section 158, Customs Act, 1962 — Provisions with respect to rules and regulations
• Section 117, Customs Act, 1962 — Penalties for contravention etc not expressly mentioned
• Section 57, Customs Act, 1962 — Licensing of public warehouses
• Section 58B, Customs Act, 1962 — Cancellation of licence
• Section 58, Customs Act, 1962 — Licensing of private warehouses
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 114A, Customs Act, 1962 — Penalty for short-levy or non-levy of duty in certain cases
• Section 116, Customs Act, 1962 — Penalty for not accounting for goods
• Section 112, Customs Act, 1962 — Penalty for improper importation of goods
• Section 8(b), Customs Act, 1962 — Power to approve landing places and specify limits of customs area
• Section 141(2), Customs Act, 1962 — Conveyances and goods in a customs area subject to control of officers of customs
• Section 114, Customs Act, 1962 — Penalty for attempt to export goods improperly etc