Commissioner of Customs Vs Ganesh Benzoplast Limited (Supreme Court of India)
Redemption fine and penalty was set aside by SC when there was no breach of licence conditions for bonded warehousing
In the case of Commissioner of Customs, Nhava Sheva-I v. Ganesh Benzoplast Limited, the Supreme Court upheld the decision of the Bombay High Court, which had dismissed the Customs Appeal. The central issue was whether redemption fines and penalties were correctly imposed on Ganesh Benzoplast Limited for alleged breaches of its public bonded warehouse license. The Commissioner of Customs had alleged violations, including the storage of non-bonded goods, non-reporting of expired bonds, and a lack of proper audit trails. However, the CESTAT had previously set aside these penalties, noting that all of the company’s actions were conducted with explicit permissions from customs authorities and under their supervision. The Bombay High Court affirmed this, stating that no substantial question of law existed to challenge the CESTAT’s factual findings. The Supreme Court, in its decision, observed that the Bombay High Court was correct in its approach of confining the appeal to whether a substantial question of law was involved under Section 130 of the Customs Act. The court noted that the CESTAT had made detailed factual findings, which were not shown to be perverse. It was established that Ganesh Benzoplast’s operations, particularly the high-pressure pipeline discharge and storage of edible oils, were carried out with the full knowledge and consent of the customs authorities. Therefore, an action taken with official permission and supervision could not be considered a breach of license conditions. The dismissal of the Special Leave Petition by the Supreme Court effectively affirmed the judgments of both the High Court and the CESTAT, reinforcing that penalties and fines cannot be imposed when a company operates in accordance with permissions granted by the very authority that later seeks to penalize it. This ruling aligns with previous judgments, such as BISCO Ltd. v. Commissioner of Customs & Central Excise, which similarly held that activities conducted with express customs permission cannot form the basis for a penalty.
