Legal principle

Violations of bonded warehouse licence conditions that are merely typographical, curable, or not breaches of any legal provision are not serious enough to warrant cancellation of the licence under section 58B, and proportionality requires that lesser penalties with restoration, rather than revocation, meet the ends of justice.

Court decision

The Tribunal allowed all three appeals, modifying the impugned order: the penalty on Shiv Probuild under section 117 was reduced to Rs. 50,000; on payment of that fine, its section 58 private bonded warehouse licence and section 65 manufacturing licence were to be restored and the premises address corrected; the penalties on directors Kuldeep and Rajkumar under section 117 were set aside; and the appellants were entitled to consequential relief.

Facts

M/s Shiv Probuild Pvt Ltd, an importer of Walnuts and Areca/Betel Nuts, was granted a private bonded warehouse licence under section 58 and permission for manufacturing and other operations under section 65 of the Customs Act, 1962 on 30.12.2022 at Samalkha, New Delhi. After a show cause notice dated 26.9.2023 alleging four violations of the licence conditions, the Commissioner of Customs (Air Cargo Complex, Export), New Delhi, by order dated 06.12.2023, cancelled the private bonded warehouse licence under section 58B, dropped the charge of not filing monthly returns, refrained from imposing penalty under section 114AA, imposed a penalty of Rs. 1,00,000 on the company and Rs. 50,000 each on its directors Kuldeep Singh and Rajkumar under section 117. The company and its two directors appealed to the CESTAT, New Delhi.

Key provisions

• Section 58B, Customs Act, 1962 — Cancellation of licence
• Section 58, Customs Act, 1962 — Licensing of private warehouses
• Section 117, Customs Act, 1962 — Penalties for contravention etc not expressly mentioned
• Section 65, Customs Act, 1962 — Manufacture and other operations in relation to goods in a warehouse
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material