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No in Warehousing: CESTAT Hyderabad Upholds Confiscation Against Oswal Minerals
A two-member bench of the , , has firmly shut the door on importers seeking to dilute warehousing obligations, holding that Customs law recognises no concept of "" when goods are diverted from an approved bonded warehouse.
Judicial Member Angad Prasad and Technical Member A.K. Jyotishi dismissed the appeal filed by , affirming the confiscation of 5,500 metric tonnes of Gabon-origin manganese ore, along with a of ₹80 lakh and a penalty of ₹9 lakh.
Ore Meant for Bonded Warehouse Ended Up in Private Yard
The dispute traces back to , when Oswal Minerals imported manganese ore through . The company filed Warehouse Bill of Entry No. 9065422 dated , designating Public Bonded Warehouse No. 05/2023 (Code — VTZ1U093) as the destination. It executed the statutory warehousing bond under , and obtained permission from the proper officer under for removal of the goods from Customs area WQ-6 to the specified warehouse.
However, acting on intelligence, officers of the discovered that the cargo was never deposited in the designated bonded warehouse. Instead, the entire consignment was transported directly to Dolphin Yard, an open private yard belonging to — a premises that was neither approved nor notified as a warehouse under the Customs Act.
Investigations, including statements recorded under , transport challans, gate records and WhatsApp communications, revealed that the diversion was undertaken with the knowledge of officials connected with the importer. The Adjudicating Authority held the goods liable to confiscation under , imposed a of ₹80 lakh under and a penalty of ₹9 lakh under . The upheld these findings, prompting Oswal Minerals to appeal before CESTAT.
Importer's Defence: 'It Was the Agent's Doing'
Counsel for the appellant, , argued that there was no deliberate intention to evade customs duty or clandestinely clear the goods into the domestic market. The cargo, he contended, remained under the effective control of , the warehouse operator appointed by the appellant. Any temporary stacking at Dolphin Yard, he submitted, was an independent act of the warehouse operator, for which the importer could not be held .
The appellant further challenged the investigation, alleging that the search was not conducted by an authorised officer and that WhatsApp messages were collected in violation of of the Customs Act. Reliance was placed on the decisions in M/s Bisco Ltd. v. Commissioner of Customs [2024 (3) TMI 1001 (SC)] and Vamsee Overseas Marine Pvt Ltd. v. Commissioner of Customs [2009 (11) TMI 878 (CESTAT)] to argue that mere in warehousing would not attract confiscation absent proof of .
Revenue's Riposte: Permission Was Specific, Not General
Opposing the appeal, Authorised Representative contended that the permission granted under was neither unconditional nor general. It authorised removal of goods only to the designated warehouse named in the Warehouse Bill of Entry. Transporting the cargo to Dolphin Yard, he argued, was a clear deviation from the statutory permission.
The Revenue further invoked of the Customs Act, which creates a that acts done by an authorised agent are deemed to have been done with the knowledge and consent of the importer, unless the contrary is proved. Since had been appointed by Oswal Minerals for handling, transportation and warehousing, its acts were attributable to the importer. The appellant, the Revenue argued, had produced no contemporaneous material to rebut this presumption.
'' Has No Place in Customs Law
The Tribunal rejected the appellant's core defence in unambiguous terms. Examining the statutory scheme of , the bench observed that warehousing is a self-contained code designed to ensure uninterrupted customs control over imported goods until their lawful clearance. Section 59 obliges an importer to execute a bond undertaking that goods shall be duly deposited in the approved warehouse, while confers permission confined to the specific warehouse named by the proper officer.
The Tribunal held that the concept of "" has no application in warehousing matters:
"What the statute requires is deposit of the imported goods in the warehouse specifically approved and licensed under the Customs Act. Storage of warehouse goods in any premises other than the approved bonded warehouse cannot be treated as compliance merely because both premises were under the management of the same operator."
The Court likewise dismissed the suggestion that confiscation under requires proof of actual duty evasion:
"The Customs Act envisages over warehouse goods and any unauthorised diversion from the approved warehousing chain constitutes an irrespective of whether duty evasion has actually occurred."
: The That Sealed the Case
Addressing the appellant's attempt to shift blame entirely onto , the Tribunal held that the importer cannot avoid statutory obligations by delegating operational activities to an agent or contractor. , it noted, creates a that every act of an authorised agent is performed with the knowledge and consent of the principal unless the contrary is established. The appellant's bald assertion that the warehouse operator acted independently, unsupported by any contemporaneous correspondence or written instructions, was insufficient to rebut this presumption.
The bench also disposed of the procedural objections. Even assuming any irregularity in the authorisation of the search, the Tribunal held, the contravention stood independently established by documentary records, statements and the admitted fact that the goods never reached the designated warehouse. The WhatsApp communications were merely corroborative, and excluding them would not dent the Revenue's case.
Precedents Distinguished, Affirmed
The Tribunal distinguished M/s Bisco Ltd. and Vamsee Overseas Marine Pvt Ltd. , noting that in those cases, either Customs authorities had granted permission for the storage arrangement or the dispute concerned storage within approved premises. Neither authority sanctioned diversion to an unauthorised private yard.
As for the , the Tribunal applied the 's ruling in Western Components Ltd. v. Commissioner of Customs [2000 (115) ELT 278 (SC)] to hold that provisional release of goods against a bond and bank guarantee does not extinguish the adjudicating authority's power to impose a once confiscation is ordered.
The Final Word
The Tribunal concluded that both lower authorities had based on adequate evidence, with no or warranting interference. The importer's obligation to ensure deposit of goods in the designated warehouse was absolute, and its failure directly rendered the goods liable to confiscation under . The penalty under was equally sustainable, given that the appellant's omission in ensuring compliance with Sections 59 and 60 squarely attracted the provision.
The appeal was dismissed, with the Tribunal pronouncing its decision in open court on . The ruling serves as a clear warning to importers that warehousing permissions are location-specific and that contractual arrangements with service providers cannot be used as a shield against statutory liability under the Customs Act.
