Ganesh Benzoplast Limited Vs Commissioner of Customs (CESTAT Mumbai)
In the case of Ganesh Benzoplast Limited Vs. Commissioner of Customs (CESTAT Mumbai), the impugned order dated 08.01.2024 invoked Section 111(h) and 111(j) for confiscation of goods and imposition of redemption fine on the appellants. However, the provisions of Section 111(h) were found inapplicable as the appellants had obtained permission for their activities within the bonded area. Similarly, Section 111(j) did not apply as the goods were not prohibited for importation, and the appellants had obtained due permission from the customs department. Therefore, neither Section 112 nor Section 114AA nor Section 117 were applicable for penalties or fines. Consequently, the impugned order was set aside entirely, and the appeal was allowed in favor of the appellants.
FULL TEXT OF THE CESTAT MUMBAI ORDER
Briefly stated, the facts of the case are that the appellants herein were issued with a Public Bonded Warehousing License by the jurisdictional Customs authorities at Jawaharlal Nehru Custom House (JNCH), Nhava Sheva. In total, there were 79 public bonded storage tanks located in the premises of the said warehouse. The said license was issued to the appellants in terms of Section 57 of the Customs Act, 1962. The license has provided various conditions to be fulfilled/observed by the license holder, the appellants herein. On 01.02.2023, a team of officers from the Import Bond section, JNCH visited the warehouse of the appellants and upon verification of the warehouse and various records, they observed that non-bonded goods had been stored in the bonded tanks, whereas bonded tanks are meant for storage of only customs bonded goods; that the bonded goods covered under Bill of Entry (B/E) No. 6749977 dated 06.07.2023 had been stored in non-bonded tanks in the month of July’ 2023, which is a clear violation of Section 60 ibid read with Section 71 ibid; that due to absence of the technical staff at the warehouse, the software maintained by the appellants could not be verified to ascertain, whether it is having audit trail facility as prescribed in para 2(c) of Circular No.25/2016 dated 08.06.2016. On the basis of investigation, the officers found that the appellants had failed to comply with the provisions of the Customs Act, 1962; Public Warehouse Licensing Regulations, 2016 and Warehouse (Custody and Handling of goods) Regulations, 2016 as well as the licensing conditions. For carrying out detailed investigation and to stop any further violations of the licensing conditions, the license of public bonded warehouse issued to the appellants was suspended on 07.12.2023 by the department as per the provisions of Sub-section (2) of Section 58B ibid. On detailed investigation into the matter, the department had submitted the inquiry report, based on which the Principal Commissioner of Customs vide the Order-in-Original No. 201/2023-24/COMMR/NS-I/Bond/JNCH dated 08.01.2024 (for short, referred herein as ‘the impugned order’), has adjudicated the matter and passed the following order:
“ORDER
i. I hold the goods mentioned in Table-C, valued at Rs. 48,43,70,293/ – (Rs. Forty-Eight Crores Forty-three Lakhs Seventy Thousand Two Hundred Ninety-Three only) and having duty involvement of Rs. 11,66,21,043/- (Rs. Eleven Crores Sixty-Six Lakhs Twenty-One Thousand Forty-Three only), liable for confiscation under Section 111(j) of the Customs A., 1962 for storing bonded goods in non-bonded tanks on 05 occasions. As the goods are not available for confiscation, I impose a redemption fine of Rs. 5,00,00,000/-(Rs. Five crores only) in respect of these goods in lieu of confiscation under Section 125 of the Customs Act, 1962. I impose penalty 50,00,000/- Fifty lakhs only) on the Licensee M/s. Ganesh Benzoplast Ltd. (NSA1U116) under Section 112 b(ii) of the Customs Act, 1962. Also, I impose a penalty of Rs. 1,00,00,000/- (Rs. One crore only) on the Licensee M/s. Ganesh Benzoplast Ltd. (NSA1U116) under Section 114AA of the Customs Act, 1962.
ii. I hold the goods covered under 02 Warehouse Bill of Entries i.e. 3786599 and 3787816 both dated 01/05/2021, valued at Rs. 3,58,84,240/- (Rs. Three crores, fifty-eight lakhs, eighty-four thousand, Two Hundred Forty only) and having duty involvement of Rs. 69,81,438/-(Rupees Sixty-nine Lakhs, Eighty-one Thousand, Four hundred Thirty-Eight only), liable for confiscation under Section 111(h) of the Customs Act, 1962, for storing the goods imported by the Licensee M/s. Ganesh Benzoplast Ltd. in their IEC and storing the same in their own public bonded warehouse. As the goods are not available for confiscation, I impose a redemption fine of Rs. 40,00,000/- (Rs. Forty lakhs only) in respect of these goods for their redemption under Section 125 of the Customs Act, 1962. I also impose a penalty of Rs. 3,50,000/- (Rs. Three lakhs fifty thousand only) on the Licensee M/s. Ganesh Benzoplast Ltd. (NSA1U116) under Section 112 a(ii) and 112 b(ii) of the Customs Act, 1962.
iii. I impose a penalty of Rs. 4,00,000/- (Four lakhs only) on the Licensee M/s. Ganesh Benzoplast Ltd. (NSA1U116) under Section 117 of the Customs Act, 1962 read with Regulation 12 of Warehouse (Custody and Handling of Goods) Regulations, 2016, for non-reporting of time expired bond for one consignment in their warehouse.
iv. For storing non-bonded goods in their bonded tanks 31 times, I impose a penalty of Rs. 1,00,000/- (Rs. One lakh only) on the Licensee M/s. Ganesh Benzoplast Ltd. (NSA1U116) for each count, totaling Rs. 31,00,000/- (Rs. Thirty-one lakhs only), under Section 117 of the Customs Act, 1962, read with Regulation 12 of Warehouse (Custody and Handling of Goods) Regulations, 2016.
v. I impose a penalty of Rs. 50,000/- (Rs. Fifty thousand only) on the Licenses M/s. Ganesh Benzoplast Ltd. (NSA1U116) under Section 117 of the Customs Act, 1962, read with Regulation 12 of Warehouse (Custody and Handling of Goods) Regulations, 2016, for not having an Audit trail facility in their software.
vi. I impose a penalty of Rs. 50,000/- (Rs. Fifty. thousand only) on the Licensee M/s. Ganesh Benzoplast Ltd. (NSA1U116) under Section 117 of the Customs Act, 1962, read with Regulation 12 of Warehouse (Custody and Handling of Goods) Regulations, 2016, for storing the goods in their warehouse by exceeding the approved duty limit.
vii, I order for revocation of suspension of warehousing operation of M/s. Ganesh Benzoplast Ltd. (NSA1U116), subject to payment of all the fines and penalties imposed in this order.”
Feeling aggrieved with the impugned order dated 08.01.2024, the appellants have filed this appeal before the Tribunal.
2. Learned Advocate appearing for the appellants submitted that in respect of the five numbers of B/Es dated 19.06.2023 (2 B/Es), 27.06.2023, 18.07.2023, and 22.09.2021, discharge permission was granted by the Customs department and the unloading of the consignment was done under their supervision. Thus, he submitted that when the permission has been granted by the competent authority, permitting the storage of bonded goods in non-bonded tanks, there is no violation or contravention on the part of the appellants. Learned Advocate further submitted that out of the said five B/Es, in case of two B/Es dated 27.06.2023 and 18.07.2023, the appellants had already applied for the bonding of non-bonded tanks prior to storing of the non-bonded goods. Accordingly, it has been pleaded on behalf of the appellants that the disputed goods cannot be confiscated, when subsequent permission for bonding of tanks was given by the department. With regard to two B/Es both dated 19.06.2023, the learned Advocate submitted due to operational reasons, the goods were stored in the non-bonded tanks and the importer had also paid the entire duty on the goods stored in the non-bonded tanks. As regards the B/E dated 22.09.2021, learned Advocate submitted that the department vide letter dated 17.09.2021 had accorded permission for discharging the goods i.e., refined palm oil. He further submitted that since the appropriate duty liability on the goods had already been discharged, there is no loss of revenue to the government exchequer and the appellants cannot be said to have contravened the provisions contained in the statute. With regard to remaining 31 B/Es, learned Advocate submitted that the goods covered thereunder cannot be confiscated inasmuch as requisite discharge permission was granted by the department prior to discharge of imported goods from the vessels. With regard to two B/Es both dated 01.05.2021, Learned Advocate submitted that the goods covered thereunder were discharged from the vessel through high pressured pipe lines, which cannot be stopped mid-way during the process of discharge to avoid accidents and as such the same were stored in the public bonded tanks after discharging from the vessel by obtaining due discharge permission dated 30.04.2021 of the department. On the basis of the above submissions, learned Advocate prayed for setting aside the impugned order, more particularly the charges levelled against the appellants for confiscation of goods, imposition of redemption fine and penalties etc.
