of Customs, Calcutta & Another Vs. Biecco Lawrie
Ltd.  Insc 121 (1
Bhan, Dalveer Bhandari & P. Sathasivam Bhan, J.
present appeal has been filed under Section 130-E of the Customs Act, 1962 (for
short, the Act) 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.
Respondent-assessee (hereinafter referred to as respondent) imported 5273.156
M.T. of Superior Kerosene Oil (hereinafter referred to as SKO) 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.
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.
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.
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, the Rules) 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 IBPs 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.
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
after the duty was paid, the control over the goods was lifted and no such
charge was thereafter collected.
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.
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 appellant 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.
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.
The Commissioner of Customs, Calcutta vide his order 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.
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
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
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 cause is the physical
removal of goods from warehouse and the effect is the payment of
duty for such removal of goods and not otherwise.
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
imported goods 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.
Section 15(1) at the relevant time read as under: - 15. Date for
determination of rate of duty and tariff valuation of imported goods.-
The rate of duty and tariff valuation, if any, applicable to any imported
goods, shall be the rate and valuation in force, -
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 presented under that section;
the case of goods cleared from a warehouse under section 68, on the date on
which the goods are actually removed from the warehouse;
the case of any other goods, on the date of payment of duty;
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.]
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.
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.
Section 15(1) provides for the rate of duty and tariff valuation applicable to
any imported goods. The term imported goods 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 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.
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: -
...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...(Para 14).
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: - In 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.
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: - The first aspect to be noticed is that Section 12 opens with
the words except as otherwise provided in this Act or any other law for
the time being in force. 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 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.
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.
is also no presumption that rate of duty always goes up. It may also go down,
in which case, the importer stands to gain.
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].
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.
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
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 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
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.
The Customs Authorities now may proceed to decide the application filed by the
respondent for interest on the delayed payment in accordance with law.
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