RAYMOND SYNTHETICS LTD Vs. COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) THIS Larger Bench has been constituted to resolve the conflict between the decision of the Tribunal in the case of Kesoram Rayon v. Collector of Customs reported in 1989 (44) E.L.T. 37 and CBS Gramophone Records and Tapes (India) Ltd. v. Collector of Customs reported in 1991 (54) E.L.T. 399. The issue relates to relevant date for determination of rate of duty applicable to goods cleared from a warehouse after the expiry of the warehousing period. In the case of Kesoram Rayon, the Tribunal has held that "in this case, no ex -bond Bill of Entry for home consumption was filed by the appellants in the prescribed form and no order for clearance for home consumption was made by the proper officer on the Bill of Entry. The conditions of Section 68 of the Customs Act were not fulfilled by the appellants. Section 15(1)(b) of the Customs Act becomes applicable when the goods are cleared from a warehouse under Section 68. In the present case the imported wood pulp was not cleared from the warehouse under that Section. After the expiry of warehousing period, the goods ceased to be warehoused goods and the removal of the goods was under an order passed by the Assistant Collector under Section 72 of the Customs Act. In such a case, the rate of duty applicable to the goods will be the rate of duty in force on the day of filing of Into -Bond of Bill of Entry as provided in Section 15(1)(a) of the Customs Act read with proviso to Section 15(1) and Section 46 ibid". As against the above, it was held in the CBS Gramophone Records and Tapes (India) Ltd. that "a plain reading of the above provision (Section 61(2) of the Customs Act) shows that it envisages a situation where warehoused goods continued to remain in the warehouse beyond the permissible period of three months or one year, as the case may be, by reason of the extension of the said period or otherwise, and provides for payment of interest on the amount of duty on the goods from the expiry of the bond period till the date of clearance of the goods from the warehouse. "Otherwise" here could be read, in my opinion, to mean also refusal of extension. Thus, whether extension is given or not, payment of interest is attracted on the expiry of the period of 3 months or 1 year. It follows that in a case where extension is refused or has not been granted, the goods continued to be "warehoused goods" till the date of clearance of the goods from the warehouse". If this be so, the applicable rate of duty will be that in force on the date of actual removal of the goods from the warehouse in terms of Section 68 of the Act." The Tribunal further held, "in Section 72 there is no mention about the date with reference to which the applicable rate of duty is to be determined in the case of goods in respect of which the proper officer is authorised to demand duty because of the goods not having been removed from the warehouse on the expiry of the warehousing period. The basic conflict between the two decisions is that, while Kesoram's judgment holds that after the expiry of warehousing period, the goods ceased to be warehoused goods, the CBS Gramophone Records and Tapes decision lays down that, even in cases where warehousing period extension has not been granted or has been refused, goods continued to be warehoused goods till the date of their clearance from the warehouse. Secondly whereas, the Kesoram's decision states that in such a case, rate of duty applicable will be that in force on the date of filing of Into -Bond Bill of Entry as provided under Section 15(1)(a). The CBS Gramophone Records case finds that the rate of duty under Section 15(1)(b) is applicable in such a situation. Let us set out the factual background of each case.

(2.) RAYMOND Synthetics Ltd. v. Collector of Customs, Allahabad:

(3.) WE have carefully considered the rival submissions and perused the records. We find that the decision of the Tribunal in the case of Kesoram Rayon Ltd. was challenged by the importers before the Apex Court which by its decision reported in 1996 (86) E.L.T. 464 (SC) has dismissed the appeal holding that the goods which are not removed from the ware house within a permissible period are treated as goods improperly removed from the ware -house and duty is payable at the rate applicable on the date of their deemed removal from the ware house i.e. the date on which the permitted period or its permitted extension came to an end. The relevant paragraphs of the Apex Court judgment are reproduced below: