A) ABSTRACT / HEADNOTE

This judgment pertains to a case of alleged unauthorized removal of goods from a notified public bonded warehouse. The appellant, M/s. Bisco Limited, imported second-hand steel mill machinery covered under three transit bonds. An inspection by the Preventive Branch revealed discrepancies in the warehousing and location of the imported goods, leading to confiscation, imposition of penalties, and demands for customs duty and interest. The Supreme Court deliberated on whether the goods found outside the notified warehouse but within factory premises were unauthorizedly removed and whether the confiscation and associated penalties were justified under Sections 71, 111, and 112 of the Customs Act, 1962. Ultimately, the Court ruled partly in favor of the appellant, setting aside penalties related to certain cases but sustaining the findings for others.

Keywords: Customs Duty, Public Bonded Warehouse, Unauthorized Removal, Confiscation, Customs Act, 1962.

B) CASE DETAILS

• Judgment Cause Title: M/s. Bisco Limited v. Commissioner of Customs and Central Excise
• Case Number: Civil Appeal No. 4663 of 2009
• Judgment Date: March 20, 2024
• Court: Supreme Court of India
• Quorum: B.V. Nagarathna and Ujjal Bhuyan, JJ.
• Author: Justice Ujjal Bhuyan
• Citation: [2024] 3 S.C.R. 890 : 2024 INSC 231
• Legal Provisions Involved:
  • Customs Act, 1962: Sections 2(43), 15, 28AB, 59, 64(d), 71, 111(j), 112.
  • Customs Tariff Act, 1975
  • Circulars of the Central Board of Excise and Customs
• Judgments Overruled by the Case: None
• Case Related to Law Subjects: Customs Law, Fiscal Law, and Administrative Law

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The dispute arose after a search conducted by customs authorities in 1992 at M/s. Bisco Limited’s industrial premises revealed that 264 cases of machinery, imported under a project import scheme, were stored outside a notified bonded warehouse. Additionally, 27 cases were found missing. The appellant contended that the goods were kept outside due to logistical challenges caused by heavy rains and with explicit permission from the Superintendent of Customs. The authorities, however, deemed this a violation of the Customs Act, leading to confiscation, penalty, and imposition of duty with interest. The matter underwent multiple rounds of adjudication and remand before reaching the Supreme Court.

D) FACTS OF THE CASE

1. Imports and Warehousing: The appellant imported 595 cases of machinery under three transit bonds. A portion of the goods was deposited in a public bonded warehouse notified within the appellant’s factory premises.

2. Inspection Findings: On inspection, only 304 cases were inside the warehouse, 264 were outside but within factory premises, and 27 cases were missing entirely.

3. Permissions Granted: The appellant claimed it had obtained written permission from the Superintendent to store some goods outside the bonded area due to poor soil conditions caused by heavy rains.

4. Allegations by Authorities: Customs alleged unauthorized removal of goods from the bonded warehouse, imposing fines and demanding duties for the 264 cases stored outside and the 27 missing cases.

5. Previous Adjudications: The Commissioner’s adjudication orders confirmed violations and imposed penalties. Appeals to the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) and subsequent remands upheld the majority of the Commissioner’s findings.

E) LEGAL ISSUES RAISED

1. Were the goods stored outside the bonded warehouse but within the factory premises improperly or unauthorizedly removed under Section 111(j) of the Customs Act, 1962?
2. Was the confiscation of the 264 cases and demand for duties and interest under Sections 71 and 28AB legally justified?
3. Did the missing 27 cases constitute unauthorized removal under the Customs Act?
4. Was the penalty imposed under Section 112 appropriate?

F) PETITIONER/APPELLANT’S ARGUMENTS

1. The goods were stored outside the warehouse due to heavy rains and with the explicit permission of the Superintendent, satisfying Section 64(d) of the Customs Act.
2. The warehousing period had not expired; hence, Sections 71 and 28AB were inapplicable.
3. The imposition of penalties and interest lacked legal basis since the goods had not been cleared from the bonded premises.
4. Missing 27 cases could not be conclusively attributed to any intentional violation.

G) RESPONDENT’S ARGUMENTS

1. The goods found outside the bonded warehouse violated Sections 71 and 111, as no customs duties were paid.
2. The permission to store goods outside the bonded area was temporary and did not absolve the appellant of statutory obligations.
3. The missing 27 cases demonstrated a breach of warehousing protocols and were rightfully confiscated.
4. Interest and penalties were lawful under the Customs Act and circulars issued by the Central Board of Excise and Customs.

H) RELATED LEGAL PROVISIONS

• Customs Act, 1962: Provisions related to warehousing, removal, confiscation, and penalties were central to the case, particularly Sections 64(d), 71, 111, and 112.
• Circulars: Circulars issued in 1989 and 1997 clarified the calculation of customs duties for warehoused goods, impacting the interpretation of the case.

I) JUDGMENT

a. Ratio Decidendi:

1. The goods stored outside the bonded area but within the factory premises were not improperly removed, as they were stored under explicit permission from the Superintendent.
2. Confiscation and duty demands for these goods under Section 71 were unjustified.
3. The missing 27 cases were unauthorizedly removed and attracted penalties under Section 111(j) and interest under Section 28AB.

b. Obiter Dicta: The case highlights the interplay of administrative permissions and statutory provisions in customs law. Authorities must balance procedural compliance with practical challenges faced by importers.

c. Guidelines:

• Permissions granted by customs officers must be explicitly documented and not rescinded without notice.
• Warehousing rules should consider unforeseen logistical constraints.

J) CONCLUSION & COMMENTS

The judgment underscores the importance of interpreting statutory provisions in the light of administrative permissions and factual circumstances. While procedural lapses cannot be overlooked, genuine challenges faced by businesses should be accommodated within the legal framework.

K) REFERENCES

1. Kesoram Rayon v. Collector of Customs, Calcutta, (1996) 5 SCC 576.
2. Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam, (2003) 5 SCC 528.
3. Paper Products Ltd. v. Commissioner of Central Excise, (1999) 7 SCC 84.
4. SBEC Sugar Ltd v. Union of India, (2011) 4 SCC 668.
5. Customs Act, 1962.
6. Central Board of Excise and Customs Circulars: 12.07.1989, 14.08.1997.