Summary
For uncleared warehoused goods sold by the warehouse-keeper, customs duty had to be calculated backwards from the total sale proceeds treated as the cum-duty price, under the Board’s binding circular. The Supreme Court distinguished an importer’s liability on deemed removal after expiry of the warehousing period. Sale proceeds remained subject to the statutory order of distribution, including payment of duty before custody charges.
Issues
- Whether duty on warehoused goods sold for unpaid charges was to be based on deemed removal or calculated from the auction proceeds.
- How the sale proceeds and the amount secured by bank guarantee were to be adjusted.
Provisions considered
- Section 63, Customs Act, 1962Permits sale by the warehouse-keeper, after notice and permission, to recover unpaid rent and warehouse charges. (¶¶ 8, 16)
- Section 150, Customs Act, 1962Governs distribution of proceeds of sale of non-confiscated goods in the statutory sequence. (¶¶ 8, 17, 19)
Held
- The rule governing an importer’s duty liability when goods remain beyond the permitted warehousing period did not determine the present warehouse-keeper’s sale of uncleared goods. Kesoram Rayon was distinguished on that basis. (¶¶ 14, 15)
- The Board’s circular bound the Revenue: total sale proceeds, without deduction for sale expenses or other charges, constituted the cum-duty price for backward calculation of duty. Duty was not to be calculated on the original bill-of-entry value or the duty payable at expiry of warehousing permission. (¶¶ 10, 17, 18)
- After calculating duty, sale proceeds must be applied in the priority specified by Section 150(2). This preserves the statutory distribution sequence rather than giving warehouse charges an overriding priority. (¶¶ 8, 17, 19)
Result
Appeal disposed of without costs. Authorities directed to ascertain duty under the statutory provisions, Manual and Board circular and adjust sale proceeds under Section 150(2). If the Rs 27,47,146 bank guarantee had been invoked, the amount was to be returned in terms of the High Court’s directions within three months, after the directed adjustments.