Legal principle

A duty-free shop/private bonded warehouse licensee who clears warehoused goods or fails to duly account for them in violation of the licence, bond and prescribed procedures is liable under Section 72 to pay the full duty with interest, the question of demanding that duty from the passengers not arising, though penalty requires an intention to evade.

Court decision

The Tribunal upheld the duty demand of Rs.14,21,751 along with interest against the appellant-licensee under Section 72, holding that the question of passengers paying duty does not arise (following Alpha Future Airport Retail, affirmed at 2021 (378) ELT 4 (SC)), but set aside the Rs.50,000 penalty for absence of intention to evade duty, noting that customs officers themselves verified and countersigned the sale vouchers.

Facts

M/s. Nuance Group (India) Pvt. Ltd. operated a private bonded warehouse and duty-free shop at Bengaluru International Airport under Section 58 of the Customs Act, 1962, subject to Trade Facility No.50/2005. Between 17.9.2008 and 17.11.2008 it ran an undisclosed '3 for 2' promotional offer on Johnnie Walker and Smirnoff liquor (effectively a 33% discount), with sale vouchers (Annexure-G) lacking passenger and customs-officer signatures. On investigation, the department found this violated Section 72 and the Trade Facility procedures; the appellant admitted liability for 1716 bottles and paid Rs.14,21,751 during investigation. The Original Authority confirmed the duty demand with interest and imposed a Rs.50,000 penalty, which the Commissioner (Appeals) upheld, leading to this appeal.

Key provisions

• Section 72, Customs Act, 1962 — Goods improperly removed from warehouse, etc
• Section 71, Customs Act, 1962 — Goods not to be taken out of warehouse except as provided by this Act
• Section 58, Customs Act, 1962 — Licensing of private warehouses
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 68, Customs Act, 1962 — Clearance of warehoused goods for home consumption
• Section 69, Customs Act, 1962 — Clearance of warehoused goods for export