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CASE NO.: Appeal (civil)  2018-2019 of 2002

PETITIONER: Commissioner of Customs,Calcutta & Another

RESPONDENT: Biecco Lawrie Ltd.

DATE OF JUDGMENT: 01/02/2008

BENCH: ASHOK BHAN,DALVEER BHANDARI & P. SATHASIVAM

JUDGMENT: JUDGMENT        

BHAN, J.

1.      The present appeal has been filed under Section 130-E  of the Customs Act, 1962 (for short, \023the Act\024) against the  judgment and final order dated 9th of August, 2001 passed by  the Customs Excise and Gold (Control) Appellate Tribunal,  ERB, Cal. in Appeal Nos. C/R-84 & 116/1999.

2.      Respondent-assessee (hereinafter referred to as  \021respondent\022) imported 5273.156 M.T. of Superior Kerosene  Oil (hereinafter referred to as \021SKO\022) on 15th of May, 1998.  At that time, the duty payable on importation of SKO was  only the countervailing duty of 10% ad valorem. The imported  quantity of SKO was stored in a private warehouse of M/s.  IBP Ltd. at Budge Budge at the port under the Bill of Entry  No. 302(OIL).

3.      On 20th May, 1998, respondent filed Ex bond bill of  Entry (to get them de-bonded) for home consumption for a  quantity of 5140 M.T. The full amount of duty was paid  thereon amounting to Rs.35,75,836/-. The proper officer  endorsed on the reverse of the Bills of Entry to the effect  that the goods may be released by the Officer-in-charge of  the warehouse. The Officer-in-charge, in turn, released the  goods and made an endorsement to this effect on the reverse  of the Bill of Entry.          4.      Ex Bond bill of Entry for home consumption for quantity  of 133.156 M.T. was filed on 28th May, 1998. The full amount  of duty was paid thereon amounting to Rs.92,635/-. The  proper officer endorsed on the reverse of the Bill of Entry  to the effect that the goods may be released by the officer- in-charge of the warehouse. The officer-in-charge, in turn,  released the goods and made an endorsement to this effect on  the reverse of the Bill of Entry.

5.      In view of the fact that SKO is a highly combustible  material and cannot be taken out of storage tank to store  elsewhere, the respondent made an application to the  Assistant Commissioner of Customs, under Section 49 of the  Act, requesting him to permit storage of goods, which had  been cleared for home consumption, in the same  warehouse/tank.       

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6.      It may be mentioned here that the respondent had  obtained a registration certificate from the concerned  Central Excise Authorities under Rule 174 of the Central  Excise Rules (for short, \021the Rules\022) in order to sell SKO  to dealers/customers who required an invoice for Modvat  purposes. In the said registration certificate, it was  clearly mentioned that SKO would be stored by the respondent  in IBP\022s storage tank at Budge Budge. The respondent had  also subsisting contract with IBP Company Ltd., the owners  of the storage tank for storage of SKO belonging to the  respondent in the said tanks. The respondent had paid hire  charges for the said tank to IBP under the agreement dated  22nd of October, 1997 which was further extended by an  agreement dated 7th of July, 1998.

7.      According to the respondent, with effect from 28th of  May, 1998, upon clearance of the material for home  consumption, the appellant stopped levying, Preventive  Officer Charge (P.O. Charge), which is collected for  supervision of the goods in warehouse, so long as they  remain under the control of Preventive Officer of Customs.  That, after the duty was paid, the control over the goods  was lifted and no such charge was thereafter collected.  Respondent, thereafter, started lifting goods from the  storage tank from time to time in accordance with the  requirements of its customers. During the period 28th of  May, 1998 to 1st of June, 1998, the respondent lifted a  quantity of 463.31 M.T. of SKO from the storage tank.

8.      In the Budget for the year 1998-99, Basic Customs Duty  and Special Customs Duty was levied on SKO @ 30% and 2% ad  valorem respectively. Thereafter, the Customs Authority (the  \021appellant\022 hereinafter) withheld the clearance of SKO from  the said tank on the contention that the respondent was  required to pay Basic and Special Customs Duty @ 30% and 2%  ad valorem and accordingly, wrote a letter to the respondent  on 18th of June, 1998 contending that the differential duty  would be payable on SKO not physically lifted before 2nd of  June, 1998. Keeping in view the fact that lifting of goods  was stopped by the Customs Authorities, the respondent  deposited under protest an amount of Rs.24,48,822/- towards  Basic and Special Customs Duty on 1000 M.T. of SKO under the  Customs Receipt No. 1-1631 dated 25th of June, 1998. The  respondent made a further deposit under protest of  Rs.12,78,116/- towards Basic and Special Customs Duty on the  quantity of SKO lifted between 2nd of June, 1998 and 6th of  June, 1998.

9.      A show-cause notice was issued by the appellant to the  respondent for charging the enhanced rate of duty. In the  said show-cause notice, the claim of the appellant was,  inter alia, for appropriation of the sum of Rs.12,78,116/-  paid towards differential duty on the material removed  between 2nd of June, 1998 and 6th of June, 1998,  appropriation of the sum of Rs.24,48,822/- deposited towards  differential duty on 1000 M.T. of SKO and for levy of  enhanced rate of duty on the further remaining quantity of  SKO. The respondent deposited a further sum of Rs.  62,63,000/- on 3rd of August, 1998 under protest Basic and  Special Customs Duty towards balance quantity of the said  material lying in the storage of IBP. Respondent filed his  reply to the aforesaid show-cause notice dated 23rd of July,  1998.

10. The Commissioner of Customs, Calcutta vide his order

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dated 5th of November, 1998 confirmed the assessment as  detailed in the show-cause notice and also imposed a penalty  of Rs.5,000/- upon the respondent. The respondent being  aggrieved, filed statutory appeal before the Tribunal. The  Tribunal accepted the appeal and set aside the order of the  Commissioner of Customs. It was held that once full duty has  been paid by the importer and the clearance for home  consumption has been permitted by the Customs Officers, any  subsequent enhancement of the rate of duty would not be  leviable on the goods which remain stored in the warehouse  under the provisions of Section 49 of the Act.        11.     After the passing of the order by the Tribunal,  respondent filed a miscellaneous application before the  Tribunal praying for a direction upon Customs Authorities to  refund the amount deposited. Tribunal by its order dated 1st  of November, 2002 directed the Revenue Authorities to refund  the amount of duty inter alia in order to avoid uncalled for  interest liability on the public exchequer. In terms of the  orders passed by the Tribunal, a sum of Rs.99,89,938/- which  was deposited under protest by the respondent, was refunded  to it. Respondent, thereafter, filed an application before  the Customs Authorities seeking payment of interest in terms  of Section 27A of the Act on the aforesaid amount for the  period during which the said sums were lying deposited with  the appellant. The claim of the respondent on this account  was for the sum of Rs.61,97,886/-. As the appellant had, in  the meanwhile, filed an appeal in this Court, the appellant  vide communication dated 15th of January, 2004 informed the  respondent that the claim cannot be considered due to  pendency of the matter in this Court.

12.     Counsel appearing for the Revenue contends that the  Tribunal fell in error of law as it failed to correctly  appreciate the import of Section 15(1)(b) of the Act.  According to him, the duty payable for the warehoused goods  is at the rate prevalent on the date of removal of the goods  from the warehouse under Section 68. According to him, in  terms of Section 15(1)(b), the \023cause\024 is \023the physical  removal of goods from warehouse\024 and the \023effect\024 is the  payment of duty for such removal of goods and not otherwise.  The Learned Senior Counsel appearing for the respondent  controverts the submissions made by the Learned Counsel  appearing for the Revenue. He submits that the Tribunal did  not fall in any error while appreciating the provisions of  Section 15(1)(b). According to him, the present case would  fall under Section 15(1)(a). By referring to Section 2(25)  of the Act, it was contended that the expression \023imported  goods\024 means any goods brought in India but does not include  goods which had been cleared for home consumption. Since, in  the present case, goods had been cleared by the Customs  Officers for home consumption and out of charge order was  passed, provisions of Section 15(1)(a) would be more  appropriately applicable in the present case.

13.     Section 15(1) at the relevant time read as under: - \02315. Date for determination of rate of duty  and tariff valuation of imported goods.-(1)  The rate of duty and tariff valuation, if  any, applicable to any imported goods, shall  be the rate and valuation in force, - (a)  in the case of goods entered  for home consumption under section  46, on the date on which a bill of  entry in respect of such goods is

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presented under that section; (b)  in the case of goods cleared  from a warehouse under section 68,  on the date on which the goods are  actually removed from the  warehouse; (c)  in the case of any other goods,         on the date of payment of duty; [Provided that if a bill of entry has  been presented before the date of entry  inwards of the vessel or the arrival of  the aircraft by which the goods are  imported, the bill of entry shall be  deemed to have been presented on the  date of such entry inwards or the  arrival, as the case may be.]\024

14.     Section 15(1) provides for the date for determination  of rate of duty and tariff valuation of imported goods. In  the case of goods cleared from warehouse under Section 68,  Section 15(1)(b) provides that the rate of duty and tariff  valuation applicable to any imported goods shall be the  rate and valuation in force on the date on which the goods  are actually removed from the warehouse. The relevant date  for determination of rate of duty and tariff valuation is  the date on which a Bill of Entry in respect of such goods  is presented for home consumption.  In the present case,  the goods were cleared for home consumption upon payment of  full duty thereon as applicable on 28th May, 1998. The  subsequent storage of the goods in warehouse was under the  provisions of Section 49. Clearance of warehouse goods for  home consumption under Section 68 was, therefore, complete  prior to 2nd of June, 1998. The Bill of Entry for home  consumption had been presented in the prescribed form much  prior to the coming into force of the amended provisions  providing for enhanced rate of duty. The import duty  leviable had been paid and the order of clearance of the  goods for home consumption had been made by the proper  officer. On  the  fulfilling of the requirements of Section  68, Section 15(1)(b) would cease to operate. Section 49,  provides that in the case of imported goods, whether  dutiable or not, which have been cleared for home  consumption on an application filed by the importer, the  Assistant Commissioner of Customs or the Deputy  Commissioner of Customs, on being satisfied that the goods  cannot be cleared within a reasonable time, may permit the  storage of such goods in a public warehouse, or in a  private warehouse if facilities for deposit in a public  warehouse is not  available and such goods shall not be  deemed to be warehoused goods for the purposes of the Act  and, accordingly, the provisions of  Chapter IX shall not  apply to such goods. Section 68 falls in Chapter IX.  Section 15(1)(b) expressly refers to the clearance from the  warehouse under Section 68 and the same would not be  applicable to the present case.

15.     Section 15(1) provides for the rate of duty and tariff  valuation applicable to any \023imported goods\024. The term  \023imported goods\024 is defined in Section 2(25) of the Act to  mean any goods brought into India from a place outside  India, but does not include goods, which have been cleared  for home consumption. In view of the fact that the imported  goods in the present case had been cleared for home

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consumption on 28th of May, 1998, they ceased to be imported  goods within the meaning of the Act and the provisions of  Section 15(1)(b)could not be applicable.

16.     The Constitution Bench of this Court, in Bharat  Surfactants (Private) Ltd. and Anr. vs. Union of India  (UOI) and Anr. [(1989) 4 SCC 21], observed as under: -

     \023...The provisions of Section 15 are  clear in themselves. The date on which a  Bill of Entry is presented under Section  46 is, in the case of goods entered for  home consumption, the date relevant for  determining the rate of duty and tariff  valuation...\024(Para 14).

17.     Following the Judgment of the Constitution Bench  referred to above, this Court in Shah Devchand & Co. and  another vs. Union of India and another [AIR 1991 SC (1931)]  held as under: -       \023In Bharat Surfactant’s case it has  been held that the rate of duty and tariff  valuation has to be determined in  accordance with Section 15(1) of the  Customs Act. Under Section 15(1)(a), the  rate and valuation is the rate and  valuation in force on the date on which  the Bill of Entry is presented under  Section 46. Thus all the contentions  raised in the cases in hand before us are  fully covered by the above-mentioned cases  decided by the Constitution Bench of this  Court. In the result we find no force in  any of the grounds raised in these cases  and the same are dismissed with no order  as to costs.\024

18.     Subsequent to this, a two-Judge Bench of this Court,  in D.C.M. & Anr. vs. Union of India & Anr. [(1995) Supp (3)  SCC 223], held as under: -

     \023The first aspect to be noticed is  that Section 12 opens with the words  \023except as otherwise provided in this Act  or any other law for the time being in  force\024. Thus, Section 12 is subject to  Section 15 among others. Secondly, Section  12 does not purport to prescribe the date  with reference to which rate of duty shall  be determined. It only says that duties of  customs shall be levied at such rate as  may be specified under the Customs Tariff  Act on goods imported. It is Section 15  that prescribes the date with reference to  which the rate of duty and tariff  valuation of imported goods shall be  determined. A reading of Section 15, 46  and 68 makes it clear that they provide an  option to the importer either to file a  bill of entry for home consumption  straight away (in which case he has to pay  the duty determined with reference to that  date) or to file a bill of entry for  warehousing. In the latter case, the goods  are merely warehoused. The import duty

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will be levied at the rate and on the  basis of the valuation determined in  accordance with the provisions prevailing  on the date of clearance from the  warehouse for which purpose the importer  has to file a fresh bill of entry for home  consumption. In other words, it is the  date of filing the bill of entry for home  consumption which determines the rate of  duty in clauses (a) and (b) of Section 15.  Inasmuch as the matter is left to the  option of the importer and also because a  uniform principle is adopted by the Act,  as explained above, we see no room for any  legitimate grievance of discrimination.  There is also no presumption that rate of  duty always goes up. It may also go down,  in which case, the importer stands to  gain.\024

19.     The same principle was laid down by this Court in  Dhiraj Lal H. Vohra & Ors. vs. Union of India & Ors. [1993  Suppl.(3) SCC 453] and in Union of India & Ors. vs. Apar  Private Ltd. & Ors. [(1999) 6 SCC 117].          20.     There is no dispute that where the imported goods are  allowed to be warehoused under Section 68 of the Act and  are subsequently cleared from the warehouse, the rate as  applicable on the date of actual removal of the goods from  the warehouse, is applicable. But where the goods are  cleared for home consumption under Section 46, the duty  payable would be as on the date the goods were cleared for  home consumption. In the present case, not only the full  duty stood paid by the respondent, but the Customs Officer  had also permitted clearance of the same, as is evident  from the endorsement made on the back of the bill of  entries. As such, the goods cannot be held to be the  warehoused goods and the same were allowed to be kept in  the warehouse only on account of an application made by the  appellants in terms of the provisions of Section 49 of the  Act. The respondents have been clearing the goods from the  storage tank as and when required. They were permitted to  store the goods in a private warehouse as if it was their  own godown. The goods were stored in the IBP storage tank  under an agreement entered into by the respondent with IBP  and the storage charges were paid by the respondent.  Thereafter, the Preventive Officer Charges were  discontinued to be levied. Where duty on the warehoused  goods is paid and out of charge order for home consumption  is made by the proper officer in compliance of the  provisions of Section 68, the goods removed in smaller lots  have to be treated as cleared for home consumption.

21.     For the reasons stated above, we are of the view that  since the entire duty required to be paid by the importer  has been paid and an out of charge order had been passed by  the Customs Authorities, nothing more remained to be paid  by the importer. In this view of the matter, the question  of applicability of provisions of Section 15(1)(b) becomes  irrelevant. The goods would be more appropriately governed  under Section 15(1)(a) which provides that in the case of  goods entered for home consumption under Section 46, the  duty leviable would be as on the date on which the bill of  entry in respect of such goods is presented. In this case,  the bill of entry was presented by the respondent on 20th of

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May, 1998 and 28th of May, 1998 and full duty was paid. The  goods were got cleared on the payment of the entire duty as  applicable on that date. Once, goods are cleared for home  consumption, the duty payable would be on the date on which  the Bill of Entry in respect of such goods is presented,  under Section 46.

22.     For the reasons stated above, we do not find any merit  in these appeals and dismiss the same leaving the parties  to bear their own costs.

23.     The Customs Authorities now may proceed to decide the  application filed by the respondent for interest on the  delayed payment in accordance with law.