Legal principle

Section 69 and the right of relinquishment under Section 68 operate only during the validity of the warehousing period under Section 61, and once the bond period expires, Section 72(b) applies and duty with penalties, rent, interest and other charges becomes demandable, the goods being treated as improperly removed with duty at the rate prevailing on the date of deemed removal (Kesoram Rayon).

Court decision

The Tribunal disposed of the appeal against the appellants: the demand of duty on the time-expired warehoused goods was confirmed, the penalty was upheld, and the claim for relinquishment of title was rejected; however, the exact amount payable was left to be worked out by the adjudicating authority corresponding to the amounts in the time-expired bonds.

Facts

M/s Videocon Industries and associate companies stored imported goods in their private bonded warehouse at Vashi, where 28 bonds expired between 16.7.1996 and 29.6.2001. The appellants sought extension of the time-expired bonds and re-export of the goods under Section 69, but the Bombay High Court held that Section 69 operates only within the validity of the bond period, and subsequent requests for extension/re-export were rejected. On 28.10.2009 the appellants sought relinquishment of title to the goods in respect of 24 bonds, relying on the Karnataka High Court decision in i2 Technology Software. A show cause notice dated 1.10.2010 demanded duty of Rs.3.61 crores under Section 72, interest under Section 47 and penalty under Section 117; the adjudicating authority confirmed the demand, and the Commissioner (Appeals) upheld duty of Rs.3,61,21,722/- under Section 72(1), imposed penalty of Rs.1 lakh under Section 117 and rejected the relinquishment request under Section 68.

Key provisions

• Section 72(1), Customs Act, 1962 — Goods improperly removed from warehouse, etc
• Section 47, Customs Act, 1962 — Clearance of goods for home consumption
• Section 122, Customs Act, 1962 — Adjudication of confiscations and penalties
• Section 117, Customs Act, 1962 — Penalties for contravention etc not expressly mentioned