By TIOL News Service

ERNAKULAM, OCT 16, 2015: THE Petitioner is in the business of importing edible oils like RBD Palmolein etc. They had been clearing the goods from warehouse on payment of duty by filing ex-bond bills of entry. In respect of certain quantities in the warehouse, the Petitioner filed ex bond bills of entry on different dates in the month of July 2001 and duty assessed was paid on 04.08.2001. On 03.08.2011, Notification No 36/2001 Cus (NT) was issued fixing tariff values for edible oils. The department refused to allow clearance of the goods unless the Petitioner pays differential duty by applying the tariff value. When the Petitioner approached High Court, an interim order was given and the issue is now finally decided.

The main issue to be decided is whether the tariff value fixed vide Notification No 36/2001 Cus (NT) is applicable to goods removed from warehouse after the issue of Notification though ex-bond bills were assessed, duty paid and out of charge was given. It was clarified by the CBEC vide Circular No 46/2001 that as per the per the provisions of Section 15(1)(b), if the actual clearances from a warehouse take place on or after 3 rd August, Tariff Values will be applicable for determining value for assessment purposes - even if ex-bond bill of entry may have been presented earlier to 3 rd August, 2001.

After hearing rival contentions, the High Court ruled:

+ In Commissioner of Customs, Calcutta v. Biecco Lawrie Ltd. 2008-TIOL-13-SC-CUS-LB a three-Judge Bench of the Apex Court held that, in the case of goods cleared from warehouse under Section 68, clause (b) of sub-section (1) of Section 15 of the Act 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. The subsequent storage of the goods in warehouse was under the provisions of Section 49 of the Act. Therefore, the clearance of warehouse goods for home consumption under Section 68 of the Act will be complete once duty on 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 of the Act. On clearance for home consumption the goods ceased to be imported goods within the meaning of the Act and the provisions of Section 15(1 )( b)could not be applicable.

+ In Priyanka Overseas (P) Ltd.'s case 2002-TIOL-676-SC-CUS the Apex Court held further that, whenever the Customs authorities permit storage of imported goods in a private warehouse, the provisions of Sections 58, 59, 68 and 73 of the Act would be applicable. After referring to Para.15 of the Central Manual published by the Director of Publications, Customs and Central Excise, which contains directions for determining the actual date of removal of goods from warehouse in terms of Section 15(1)(b) of the Act, the Apex Court held that, for purposes of Section 15(1)(b) of the Act, if the goods are in private warehouse the date of cancellation of the licence of the private warehouse should be taken as the actual removal of the goods for the purposes of Section 15(1)(b) of the Act.

+ The Apex Court in its order dated 05.05.2015 in Civil Appeal Nos.7801-7811 of 2004 = 2015-TIOL-140-SC-CUS has held that, Notification No.36/2001-CUS (NT) dated 03.08.2001 came into force only on 06.08.2001, in as much as it was offered for sale only on that date. In view of the law declared by the Apex Court in its order dated 05.05.2015 in Civil Appeal Nos.7801-7811 of 2004, Circular No.22/2001 issued by the Deputy Commissioner of Customs (Tariff Unit), Cochin dated 6.8.2001 and Circular No.46/2001-CUS dated 10.08.2001 of the Central Board of Excise and Customs have no existence in law and therefore, can only be ignored.

+ As held by the Apex Court in Biecco Lawrie Ltd.'s case, the clearance of warehouse goods for home consumption under Section 68 of the Act will be complete once duty on warehoused goods is paid and 'out of charge' order for home consumption is made by the proper officer in compliance of the provisions of said Section. Further, as held by the Apex Court in Priyanka Overseas (P) Ltd.'s case, if the goods are in private warehouse the date of cancellation of the licence of the private warehouse should be taken as the actual removal of the goods for the purposes of Section 15(1 )( b) of the Act.

+ The conclusion is irresistible that, if the petitioner had obtained 'out of charge' order for home consumption issued by the proper officer in compliance of Section 68 of the Act and the licence of the private warehouse stood cancelled before 06.08.2001, the date of which notification No.36/2001-CUS (NT) dated 03.08.2001 fixing the tariff value of RDB Palmolein at USD 372 came into force, the petitioner cannot be held liable to pay differential duty in respect of the balance quantity.

(See 2015-TIOL-2411-HC-KERALA-CUS)