Custodian not supposed to take Custody of Goods treating entire Customs Area as a Warehouse: CESTAT [Read Order]

The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the custodian is not supposed to take custody of goods treating the entire customs area as a warehouse.

The appellant, M/s.MTI Materials Pvt. Ltd. filed two different claims of refund for the identical issues of custom duty paid on pilfered goods imported at ICD Tughlakabad, New Delhi Port. The refund claims were initially rejected on the ground that goods

were pilfered after the order of clearance by the Customs Officer. The said order was challenged. The Appellate Authority of the Department, however, restored the refund application with a direction to pass a speaking order about the applicability of Section 27 of the Act. The refund claim was again rejected again on the same ground that the pilferage was noticed after the out-of-charge order for clearance for home consumption was already given by the Customs Officer in terms of Section 47 of the Customs Act. The said order was challenged before the Commissioner (Appeals) who had rejected the appeal. Still being aggrieved the appellant is before this Tribunal.

The Coram of Judicial Member, Rachna Gupta ruled that irrespective of applicability of Section 13 importer was still not liable as the goods were still in the possession of the custodian (CONCOR) even after the order of clearance (OOC) was passed.

“I am of the opinion that once an out-of-charge order has been given it will clearly indicate that the customs are no longer interested in keeping the goods and the importers are at liberty to clear the goods. If the importer continues to keep the goods in the Customs area under the custody of the custodian, the Legislature has intended that it is at their own risk and responsibility, in so far as duty liability is concerned in respect of the pilferage,” the CESTAT said.

The tribunal said that the Legislature has thought it fit to consider remission of duty held in the Customs area only for the period required for completion of Customs formalities and not beyond that. The appointment of the custodian is mainly for the purpose of getting the customs formalities completed. Hence, his responsibilities also continued

only to the stage when out of charge order for clearance either for home consumption or for depositing in a warehouse is passed by the proper officer. Custodians are not supposed to take custody of goods treating the entire custom area as a warehouse. If the importers still choose to keep the goods in the customs area, it is possible only at the importers’ own risk. Hence the provisions of Section 45 when read with sections 47, 13, and 23 harmoniously, make it abundantly clear that the submissions made on behalf of the appellant are not acceptable to the given facts and circumstances

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