Legal principle

Storage or unloading of imported goods, even in non-bonded tanks or through pipelines into a bonded warehouse, attracts no confiscation, redemption fine or penalty where it is done with the prior permission of the proper officer, under customs supervision, and on payment of duty wherever required.

Court decision

The Tribunal set aside the impugned order dated 08.01.2024 in its entirety, holding that the goods were not liable for confiscation, the redemption fine and all penalties were unsustainable, and the conditional revocation of suspension could not survive; the appeal was allowed in favour of the appellants with consequential relief as per law.

Facts

M/s Ganesh Benzoplast Ltd held a Public Bonded Warehousing License under Section 57 of the Customs Act, 1962 at JNCH, Nhava Sheva, operating 79 public bonded storage tanks for bulk liquid cargo such as refined palm oil, base oil and palm olein. On 01.02.2023, customs officers verified the warehouse and found bonded goods stored in non-bonded tanks, non-bonded goods in bonded tanks, storage by the licensee in its own warehouse, absence of technical staff and no audit-trail facility in the software as prescribed by Circular No. 25/2016. The department suspended the license on 07.12.2023 under Section 58B(2) of the Customs Act, and the Principal Commissioner, by Order-in-Original No. 201/2023-24 dated 08.01.2024, held goods valued at Rs. 48.43 crore (duty Rs. 11.66 crore) liable for confiscation under Sections 111(j) and 111(h), imposed a redemption fine of Rs. 5 crore under Section 125, penalties under Sections 112, 114AA and 117 read with Regulation 12 of the Warehouse (Custody and Handling of Goods) Regulations, 2016, and revoked the suspension only subject to payment of all fines and penalties.

Key provisions

• Section 33, Customs Act, 1962 — Unloading and loading of goods at approved places only
• Section 117, Customs Act, 1962 — Penalties for contravention etc not expressly mentioned
• Section 111(h), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Regulation 12, Warehouse (Custody and Handling of Goods) Regulations, 2016 — Penalty
• Section 112, Customs Act, 1962 — Penalty for improper importation of goods
• Section 57, Customs Act, 1962 — Licensing of public warehouses
• Section 59, Customs Act, 1962 — Warehousing bond
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 58, Customs Act, 1962 — Licensing of private warehouses