AGENCIES INTERNATIONAL (IMPEX DIVISION) Vs. BANGALORE-SERVICE TAX

JUDGEMENT

(1.) THE appellant is a proprietary concern engaged in importing liquor for domestic consumption and sale through Karnataka State Beverages Corporation which regulates sale of liquor in the State of Karnataka. The appellant filed bill of entry No.10726 dt. 27/11/2004 warehousing the goods at M/s. Container Corporation of India Ltd. by executing a double duty bond No.4638/04 dt. 27/11/2004 valid upto 26/11/2005. Due to business exigencies they could not clear the goods within the permissible time and sought for relinquishment of 912 cases of 'beer' vide their letter dt. 03/08/2005 before the goods were cleared for home consumption. They had a balance stock of 912 cases of beer to be relinquished under proviso to Section 68 of the Customs Act, 1962. The original authority dropped the demand of customs duty of Rs.4,54,570/ - on the balance quantity of 912 cases of beer and detained the same under Section 72 of the Customs Act, 1962 for disposal by way of destruction as the goods are past the date of expiry. Further an amount of Rs.45,395/ - was demanded being the interest at appropriate rate on the amount of duty payable from the date of warehousing till the date of relinquishment of the title to the goods under proviso to Section 68 read with Section 72(1) of the Customs Act, 1962 and imposed a penalty of Rs.10,000/ - under proviso to Section 68 read with Section 117 of the Customs Act, 1962. The appeal filed by the appellant against this decision has been rejected and hence the matter is before me today.

(2.) HEARD both sides. The learned counsel for the appellant submits that when the duty itself is not demandable and demand has been dropped, the question of payment of interest and penalty does not arise. Further he draws my attention to Circular No.42/2003 -Customs dt. 20/05/2003 wherein the Board had clarified the scope of Section 68 as under: -