The Bombay High Court has dismissed two appeals filed by the Commissioner of Customs against a CESTAT order concerning the storage of imported edible oil in tanks within a port complex.
The bench of Justices M.S. Sonak and Jitendra Jain has observed that the department’s objections turned on facts already examined by the Tribunal and raised no substantial question of law under Section 130 of the Customs Act, 1962.
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The dispute concerned imported edible oil discharged from vessels through pipelines into tanks in a gated complex in the port area.
The department sought to restore confiscation and redemption fine in relation to goods unloaded or removed, invoking Sections 111(h), 111(j) and 125 of the Customs Act. It argued that some material had been stored in non-bonded tanks and that, in certain instances, the value of the stored goods exceeded the permitted limit.
The Commissioner also questioned the Tribunal’s findings concerning whether the tanks fell within the customs area, how the assessable value should have been determined, and the application of Regulation 12 of the Handling of Cargo in Customs Areas Regulations, 2016. The department contended that CESTAT had wrongly relied on the Bombay High Court’s ruling in Finesse Creation Inc. despite decisions of the Gujarat and Madras High Courts that, according to the department, supported a different view.
Representing the company, Dr Sujay Kantawala submitted that the additional storage was for a limited period, in tanks within the same gated complex, and had been undertaken after obtaining permissions. He argued that CESTAT had examined the circumstances, including the instances of excess value, and that the appeals sought to reopen factual findings.
The High Court noted that an appeal under Section 130 can be entertained only when it involves a substantial question of law. In its view, the department’s proposed questions attacked findings of fact that CESTAT had considered in detail. The Court found no perversity in the Tribunal’s assessment of the instances where the permitted value was said to have been exceeded.
The Bench also found the circumstances materially similar to those considered in Commissioner of Customs, Nhava Sheva-I v. Ganesh Benzoplast Limited. It noted that the imported goods were discharged directly from vessels through pipelines into tanks in the gated port complex, and that permission had been obtained before some material was stored in non-bonded tanks within that complex. The Court said its ruling in Ganesh Benzoplast Limited and the Supreme Court’s decision in BISCO Limited supported the company’s case.
On the competing High Court decisions, the Bench held that CESTAT was justified in following Finesse Creation Inc., a decision of the jurisdictional Bombay High Court, rather than the Gujarat and Madras High Court rulings cited by the department.
The Court also addressed the Commissioner’s reliance on Section 117, the Customs Act’s residual penalty provision. Referring to its reasoning in Ganesh Benzoplast Limited, the Bench disapproved of invoking Section 117 after finding that fines or penalties could not be imposed under Sections 111 and 112.
The High Court dismissed both appeals without costs. The connected interim applications were also dismissed as they no longer survived.
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