UNION OF INDIA & ORS. versus M/S. ASSOCIATED CONTAINER TERMINAL LTD.

Citation: [2020] 2 S.C.R. 859 · Decided: 14-02-2020 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Disposed off

Judgment (excerpt)

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859
UNION OF INDIA & ORS.
v.
M/S. ASSOCIATED CONTAINER TERMINAL LTD.
(Civil Appeal No. 4490 of 2008)
FEBRUARY 14, 2020
[A. M. KHANWILKAR, HEMANT GUPTA AND
DINESH MAHESHWARI, JJ.]
Customs Act, 1962: ss.61, 63, 72 and 150 – Imposition of
custom duty – Auction of warehoused goods in case importer/owner
of imported goods fails to seek release of such goods – Whether
calculation of the custom duty would be assessed as on the date of
the deemed removal of goods from the warehouse in terms of s.61
or on the date of sale for the reason that the importer has failed to
seek clearance of the goods imported –  Held: In view of the Circular
issued by the Central Board of Excise & Customs dated 28th
November, 2001, the custom duty is to be calculated on the sale
price and not on the duty as is payable on the date of deemed
expiration of permitted period of warehouse – Such Circular of the
Board is binding on the Revenue – Therefore, the custom duty has
to be paid on the basis of sale proceeds realised from the sale of the
goods kept in a warehouse and not on the basis of the custom duty
payable at the time of filing the Bill of Entry or on the date of expiry
of permitted period of warehouse.
Disposing of the appeal, the Court
HELD: 1. *Kesoram is a case where the importer claimed
levy of custom duty on goods which remained in bonded
warehouse beyond the permitted period claiming that the duty
as is applicable on the date the goods were sought to be removed
for home consumption, will be chargeable. This Court found that
the goods can be kept in a warehouse in terms of the period
specified under Section 61 of the Act and, therefore, Section 68
and Section 15(1)(b) apply only when the goods were cleared from
the warehouse within the permitted period or with permitted
extension and not beyond the permitted period or permitted
extension. The present case is not a case of levy of custom duty
 [2020] 2 S.C.R. 859
859
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SUPREME COURT REPORTS
[2020] 2 S.C.R.
on the importer. The importer has not sought the release of goods
within the permitted period of warehouse. Therefore, the
judgment in *Kesoram will not be applicable in respect of the
goods to be auctioned on account of failure to seek the release of
imported goods by the importer though after the permission from
the proper officer. [Para 14-15][867-G-H; 868-A-C]
*Kesoram Rayon v. Collector of Customs, Calcutta
(1996) 5 SCC 576 : [1996] 5 Suppl. SCR  77 – Held
inapplicable.
2. The purpose of Section 63 is to ensure that the
warehouse-keeper recovers the rent or warehouse charges from
the importer. Section 150 deals with the distribution of sale
proceeds if the goods other than the confiscated goods are sold
under any provision of the Act. The Central Board of Excise &
Customs had issued a clarification on 28th November, 2001
keeping in view divergence of practice with regard to
apportionment of sale proceeds from disposal/sale of unclaimed/
uncleared goods under Section 150 of the Act. It was
communicated that the custom duty shall be determined by
backward calculation considering the sale proceeds of unclaimed/
uncleared goods as the cum-duty price. For calculation of duty,
total sale proceeds without allowing any deduction towards sales
expenses or any other charge is to be taken as cum-duty price.
In view of the Circular issued by the Central Board of Excise &
Customs, the custom duty is to be calculated on the sale price
and not on the duty as is payable on the date of deemed expiration
of permitted period of warehouse. Such Circular of the Board is
binding on the Revenue. Therefore, the custom duty has to be
paid on the basis of sale proceeds realised from the sale of the
goods kept in a warehouse and not on the basis of the custom
duty payable at the time of filing the Bill of Entry or on the date of
expiry of permitted period of warehouse. [Paras 16-18]
[868-D-H]
Case Law Reference
[1996] 5 Suppl. SCR 77
Held inapplicable
Para 3
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861
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4490
of 2008.
From the Judgment and Order dated 28.11.2007 of the  High Court
of Delhi at New Delhi in W.P. (C) No. 7995 of 2005.
Tushar Mehta, SG, K. Radhakrishnan, Sr. Adv., Mrs. B. Sunita
Rao, Mrs. Neelam Chand, Mrs. Shirin Khajuria, Shankar Devate,
B. Krishna Prasad, Advs. for the Appellants.
Rupesh Kumar, Mrs. Pankhuri Srivastava, Rajeev Sharma,
Ms. Neelam Sharma, Advs. for the Respondent.
The Judgment of the Court was delivered by
HEMANT GUPTA, J.

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