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2025 Supreme(Guj) 1836
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Bhargav D. Karia, Pranav Trivedi, JJ.
Commissioner Of Customs (Preventive) – Appellant
Versus
Indian Oil Corporation Limited – Respondent
R/Tax Appeal No. 1417 of 2008
Decided On : 01-10-2025
The proper officer for reassessing customs duties on goods stored in warehouse is the one with jurisdiction over the clearance location, not the original point of import.
Headnote:(A) Customs Act, 1962 - Sections 17(4), 59(2), 67, 46, 15(1)(b), 68 - Jurisdiction of Customs Commissioner - Appeal under Section 130 against Tribunal's order quashing the demand for differential duties due to jurisdictional issues - Tribunal held that the Commissioner at Jamnagar lacked jurisdiction over goods cleared from warehouses outside his authority - Proper officer for reassessment identified as the one with jurisdiction over the receiving warehouses. (Paras 3-8)
(B) Legal Principles - Goods stored under warehousing bonds are subject to provisional assessments, making the demand for duty contingent on jurisdiction - Final duty determination lies with the officer at the jurisdiction of clearance, confirming earlier principles established in case law. (Paras 5.1, 6.2)
Facts of the case:
The respondent imported petroleum products and filed Into-Bond Bills of Entry at Vadinar Port, subsequently transporting goods to refineries and paying duties at the point of clearance. Final assessments were challenged based on the jurisdiction of customs officials.
Findings of Court:
The Tribunal upheld that jurisdiction for reassessing differential duties lies with the customs house handling the clearance, not the original port of import.
Issues: The key questions were the jurisdiction of the Commissioner and the applicability of previous case law regarding reassessment.
Ratio Decidendi: The court affirmed that only the officer at the jurisdiction of the receiving warehouse could reassess duties, invalidating the actions taken by the Commissioner at Vadinar Port.
Result: Appeal dismissed.
ORDER :
BHARGAV D. KARIA, J.
1 Heard learned advocate Mr.C.B.Gupta for the appellant and learned advocate Mr.Hardik Modh for the respondent. By this appeal under Sec.130 of the CUSTOMS ACT , 1962 (for short ‘the CUSTOMS ACT ), the appellant – revenue has challenged the order dated 08.01.2008 passed by the Customs Excise and Service Tax Appellate Tribunal, West Zonal Branch, Ahmedabad (for short “the Tribunal”) in Appeal No.C/667-669/205.
2 This Court, by order dated 21.07.2009, admitted the appeal for consideration of the following substantial questions of law:
“1. Whether in the facts and in the circumstances of the case the Commissioner of Customs, Jamnagar has jurisdiction to reassess into bond bills of entry under Section 17(4) of the CUSTOMS ACT , 1962 and to demand differential duty in respect of clearances effected by the respondent- Corporation from the private bonded warehouses situated at Madura, Koyuali and Panipat ?
2. Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in holding that when the goods are received in the warehouses at Madura, Koyali and Panipat and the duty payments are made only at the time of clearances of the goods from the warehouses, the proper officer at the port of import has no jurisdiction to demand differential duty?
3. Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in applying ratio of the decision in case of M/s.Ferro Alloys Corporation Ltd., reported in 1995(77) ELT 302 (T) 1997 (77) ELT 310 (T)?
4. Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law by applying principles of merger in case of M/s. Ferro Alloys Corporation Ltd., reported in 1996 (88) ELT A-1267?”
3 The respondent imported petroleum products like Crude Oil during the years 1997-98 and 1998-99 at Vadinar Port, Gujarat. The respondent filed Into- Bond Bills of Entry with Customs House Vadinar, Jamnagar for warehousing the imported goods at their private licensed warehouse tanks. The Into-Bond Bills of Entry were assessed provisionally for want of original import documents like invoice, bill of lading, insurance etc., and imported goods were allowed to be kept in warehouse on execution of warehousing bonds in terms of Sec.59(2) of the CUSTOMS ACT .
3.1 The respondent, subsequently, in order to transport the warehoused goods without payment of duty through pipeline to their refineries at Mathura, Koyali and Panipat, executed a bond under Sec.67 of the CUSTOMS ACT , and thereafter, filed Ex-Bond Bills of Entry on payment of duty assessed by the proper officer at the respective refineries within whose jurisdiction the respective refinery is situated.
3.2 Accordingly, the provisional assessment made at Vadinar Port was finalized by the respective Customs Authorities and differential duty recovered/refund sanction was made under Sec.1 r/w. Sec.17(4) of the CUSTOMS ACT .
3.3 It appears that subsequently, in view of the investigation it was alleged that the value adopted at the time of final assessment was incorrect and the value was required to be enhanced by adding expenses like “load port survey fees”, “tank charges”, “payments made to the Shipping Corporation of India as per Contract of Affreightment (COA)”.
3.4 The Commissioner of Customs having jurisdiction over Vadinar Port passed an Order-in-Original confirming the differential duties of varying amounts along with the interest and penalty.
4 Being aggrieved, the respondent preferred an appeal before the Tribunal. The Tribunal, after considering the facts of the case and contentions raised on behalf of the respondent, to the effect that the Commissioner at Jamnagar has no jurisdiction to demand differential duty in respect of the clearance affected from warehouse situated in jurisdiction of the other Commissioner, quashed and set aside the order passed by the Commissioner levying differential duties of varying amount along
