Legal principle

Once the warehousing period under Section 61 expires, the goods are deemed improperly removed under Section 72(1)(b), cease to be 'warehoused goods', and the owner must pay duty leviable as on the date of expiry irrespective of any subsequent relinquishment or abandonment of title.

Court decision

The Tribunal dismissed the appeal, upholding the demand of duty of Rs. 7,15,28,985/- under Section 72(1)(b) with interest, the confiscation under Section 111(m) and the penalty, holding in favour of the Revenue that once the warehousing period expires the goods are deemed improperly removed and cannot be treated as warehoused goods, so duty is payable irrespective of any relinquishment of title; it further noted the relinquishment letter came over ten years after expiry, rent/interest/charges were unpaid, and the second proviso to Section 68 (w.e.f. 18.4.2006) bars relinquishment where an offence appears to have been committed.

Facts

M/s Allied Fibres Ltd imported eight consignments of acrylic fibre/polymerization/extrusion plant and machinery between October 1994 and September 1995, covered by eight Bills of Entry; goods under six Bills of Entry were kept in a bonded warehouse and the rest lay in the docks area. Intelligence revealed that a technical knowhow fee was payable to the supplier in addition to the invoice value, leading to a Show Cause Notice dated 24.3.1998. After remand by the Tribunal for de novo adjudication, the Commissioner confirmed duty of Rs. 7,15,28,985/- under Section 68 read with Section 72, ordered interest under Section 61 after expiry of 90 days from the initial warehousing period, confiscated the plant and machinery under Section 111(m) (declared value enhanced by the proportionate technical knowhow fee), and imposed a penalty of Rs. 25 lakhs. The importer's letter dated 14.3.2006 relinquishing title was accepted only for the goods lying in the docks area and rejected for the warehoused goods.

Key provisions

• Section 68, Customs Act, 1962 — Clearance of warehoused goods for home consumption
• Section 72, Customs Act, 1962 — Goods improperly removed from warehouse, etc
• Section 61, Customs Act, 1962 — Period for which goods may remain warehoused
• Section 69, Customs Act, 1962 — Clearance of warehoused goods for export
• Section 23, Customs Act, 1962 — Remission of duty on lost, destroyed or abandoned goods
• Section 111(m), Customs Act, 1962 — Confiscation of improperly imported goods etc