Permission Under Section 64(d) Custom Act Deems Removal of Goods Not Unauthorized – Supreme Court Modifies CESTAT Order

In a significant judgement, the Supreme Court partially allowed the appeal of M/S. Bisco Limited against the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), offering clarity on warehousing regulations under the Customs Act.

The core legal issue revolved around the misuse of warehousing facilities, interpretation of warehousing regulations under the Customs Act, and the applicable sections for the calculation of customs duty.

M/S. Bisco Limited was accused of misusing warehousing facilities, leading to the confiscation, imposition of duty, and penalties on 27 missing cases and 264 cases of goods found outside the warehouse but within the company’s premises.

The Supreme Court, led by Justices B. V. Nagarathna and Ujjal Bhuyan, found that the 264 cases of goods were not unauthorizedly removed, as they were outside the notified warehouse but within the appellant’s premises with valid permission. However, the court upheld the respondent’s claim regarding the 27 missing cases, deeming their removal unauthorized.

Permission for Storage Outside Warehouse Valid: The court noted the appellant had permission under Section 64(d) to store goods outside the bonded warehouse due to heavy rain, making the removal temporary and not unauthorized.

Reevaluation of Applicable Sections: The Supreme Court stated that Section 15(1)(c) of the Customs Act applied, as the warehousing period was still operational, marking a departure from the respondent’s and CESTAT’s interpretation.

For 264 Cases: The court set aside the demand of customs duty and interest, directing a reevaluation under Section 15(1)(c) within eight weeks.

For 27 Missing Cases: The court sustained the demand of customs duty and interest, along with maintaining the penalty under Section 112 due to unauthorized removal.

Date of Decision: March 20, 2024

M/S. Bisco Limited vs Commissioner of Customs and Central Excise