IMPORTANT POINTS
The order of precedence contained in Section 150(2) does not leave any room for doubt. Since the amount is received as a result of a public sale, the first priority is given as per Section 150(2)(a) to the expenses for sale. The second priority is given, as per Section 150(2)(b) to the expenses that were incurred prior to the goods coming into custody of the warehouse keeper, i.e. Freight etc. The third priority is to the State for its claim towards Customs Duty as can be seen from Section 150(2)(c). The fourth priority is for the dues to the warehouse keeper in the form of rent and charges as is seen from Section 150(2)(d). What is most relevant is Section 150(2)(e), which says that after the claim under Sub clause 2(d), the next priority is for the payment of any amount due from the owner of the goods to the Central Government under the provisions of this Act or any other law relating to customs. Any claim other than customs duty, which comes under sub rule (2)(c), under the Act, can be settled only after the claim under Section 150(2)(d) is settled. In our opinion, the claim for interest can come only under Section 150(2)(e).

JUDGMENT :

The Commissioner of Customs has filed this appeal under Section 130 of the Customs Act, 1962, challenging the final order No.21619 of 2018 in Appeal C/2780/2012 of CESTAT, South Zone Bench, Bangalore.

2. The facts relevant for deciding the appeal are as follows:-As per bill of exchange No.150537 dated 01.11.2004, 16020 metric tonnes of cane molasses were imported and these were warehoused in the storage tanks of the respondent. Disputes arose between the consignor and the consignee of the goods, and, by order dated 16.11.2007, the District Court directed sale of the stored goods. The Department was directed to sell 10291.31 metric tonnes by auction and to deposit the balance amount after settling the dues under the Customs Act, 1962 and other statutory claims. From an amount of Rs.5,00,00,001/-realised in the auction sale, after adjusting an amount of Rs.1,62,66,143/-towards customs duty and Rs.1,05,01,111/-towards interest, the balance amount of Rs.2,32,32,747/- was deposited in the District Court.

3. The manner in which the customs duty was quantified was contested by the respondent. According to him, the quantification should have been done on cum-duty basis as per CBEC Circular No.71/2001 dated 28.11.2001. The respondent also contended that the claim for interest cannot prevail over the claim for warehouse rent under Section 150(2) of the Customs Act, 1962. The Commissioner of Customs (Appeals), Customs House, Cochin, before whom the above challenge was raised, rejected the same as per Annexure 1 order dated 11.07.2012. The respondent preferred an appeal before the Tribunal. By Annexure 2 order dated 22.10.2018, the Tribunal set aside the Annexure 1 order and remanded the matter to the original authority. The Tribunal has found that the warehouse rent and the charges are inbuilt into the bond amount as per Section 69 of the Customs Act, 1962, that under Section 63 the warehouse keeper has a statutory right to sell the warehouse goods for recovering the unpaid rent and warehouse charges, that Section 150 does not make any difference between sale of goods in terms of Section 48 or other Sections, that interest on customs duty cannot take precedence over rent and other claims of the warehouse keeper and that the method of calculation of duty was not in accordance with the Circular dated 28.11.2001. The appellant is aggrieved by Annexure 2 order.

4. Heard Sri P.R.Sreejith, Senior Standing Counsel (CBIC) on behalf of the appellant and Advocate Sri S.Santhosh Kumar on behalf of the respondent. According to the counsel for the appellant, the scheme of the Customs Act is such that the control over any goods brought into India from a place outside India, remains with the proper Officer and even goods which are warehoused are under the control of the proper Officer. The counsel further submits that the right of the warehouse keeper for receiving rent has to be exercised under Section 63 of the Customs Act. But in the case on hand, it is not a sale conducted by the warehouse keeper for realising his dues. He further submits that Section 62 vests control over the warehoused goods in the proper Officer. Counsel contends that in the above circumstances, the claim of the warehouse keeper can only be after satisfaction of the entire claim of the Customs Department. According to the counsel, the mere warehousing of goods does not mean that the warehouse keeper is in custody of the goods so as to justify a better claim under Section 150(2)(d) of the Customs Act. It is the Customs Department or the proper Officer who has the custody of the goods, is the argument.

5. The counsel for the respondent on the other hand submits that the warehouse keeper is a person in custody of the goods having regard to the fact that the Statute permits the warehouse keeper to sell the goods for realisation of his dues. He further submits that the Central Board of Excise and Customs has clarified that the interest on customs duty cannot take precedence ove