M/S. BISCO LTD. VS. COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE 

CITATION	2024 INSC 231
DATE OF JUDGMENT	20th MARCH 2024
COURT	SUPREME COURT OF INDIA
APPELLANT	M/S BISCO LIMITED
RESPONDENT	COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE
BENCH	JUSTICE UJJAL BHUYAN, JUSTICE B.V. NAGARATHNA

INTRODUCTION

The case of M/S Bisco Limited vs Commissioner of Customs and Central Excise involves a dispute regarding the alleged misuse of warehousing facilities by the appellant. The Customs officials conducted a search of the appellant’s premises and found discrepancies in the stock of imported goods stored in the warehouse and within the factory premises. Subsequently, a show cause notice was issued to the appellant, leading to a series of adjudication orders, appeals, and remands.

The legal proceedings revolved around the interpretation and application of relevant provisions of the Customs Act, including sections related to warehousing, duty levies, confiscation of goods, and penalties for violations. The case highlights the importance of compliance with customs regulations and the consequences of non-compliance in the import-export industry.

FACTS OF THE CASE

In the case of M/S Bisco Limited vs Commissioner of Customs and Central Excise, the officials of the Preventive Branch of the Commissionerate conducted a search at the industrial premises of the appellant on 07.08.1992. During the search, they physically verified the stock in the notified public bonded warehouse as well as outside but within the industrial/factory premises of the appellant. The verification revealed the following:

• 304 cases were found inside the notified public bonded warehouse.

• 264 cases were found outside the warehouse but within the industrial/factory premises of the appellant.
• 27 cases were neither found inside the warehouse nor outside the warehouse but within the industrial/factory premises of the appellant.

The appellant had received permission from the Superintendent on 30.08.1989 to unload a portion of the cargo outside the notified public bonded warehouse but within the factory premises. This permission was not canceled or revoked by the Superintendent or the Commissioner. The Central Warehousing Corporation had also deposited custom establishment charges for the notified public bonded warehouse for the period 1992-2008, indicating that the warehousing continued during that period.

The appellant’s explanation for keeping the 264 cases outside the warehouse was that the trailers transporting the goods could not enter the warehouse due to soil conditions caused by heavy rains and space constraints. The Collector alleged that the appellant had violated Section 71 of the Customs Act by removing the warehoused goods outside the bond without proper clearance.

The final adjudication order dated 28.04.2005 by the Commissioner directed the appellant to pay duty, interest, and penalties for the goods found outside the warehouse. The Commissioner invoked Sections 71 and 28AB of the Customs Act for levying interest and penalties on the confiscated goods. However, the appellant contested that the provisions of Sections 71 and 72 were not applicable in this scenario as the goods were not improperly warehoused.

The case involved complex issues related to warehousing, permission for unloading outside the warehouse, and the applicability of customs duty and penalties under the Customs Act, 1962.

ISSUES RAISED

The main issue raised in the case of M/S Bisco Limited vs Commissioner of Customs and Central Excise revolved around the proper interpretation and application of the provisions of the Customs Act, 1962. Specifically, the key issues included:

1. Whether the goods found outside the notified public bonded warehouse but within the industrial/factory premises of the appellant were improperly or unauthorisedly removed from the warehouse, leading to duty demand, penalty, and confiscation.
2. Whether the permission granted by the Superintendent to the appellant to unload a portion of the cargo outside the warehouse was valid and whether it exempted the appellant from the provisions of Section 71 of the Customs Act regarding the removal of goods from the warehouse.
3. Whether the Central Warehousing Corporation’s deposit of custom establishment charges for the notified warehouse indicated continuous warehousing during the relevant period, affecting the applicability of duty, interest, and penalties on the goods found outside the warehouse.
4. Whether the appellant’s explanation for keeping the goods outside the warehouse due to logistical constraints was a valid defense against the allegations of violating Section 71 of the Customs Act.

These issues raised complex legal questions regarding the interpretation of statutory provisions, permissions granted by customs authorities, and the circumstances under which duty demand, penalty, and confiscation of goods can be justified under the Customs Act. The resolution of these issues would have significant implications for the appellant’s liability and compliance with customs regulations.

CONTENTION OF APPELLANT

In the case of M/S Bisco Limited vs Commissioner of Customs and Central Excise, the contentions presented by the plaintiff, M/S Bisco Limited, included:

• The plaintiff argued that the goods found outside the notified public bonded warehouse but within the industrial/factory premises were not unlawfully removed from the warehouse. They asserted that the permission granted by the Superintendent to unload a portion of the cargo outside the warehouse was valid and authorized under Section 64 of the Customs Act.
• The plaintiff contended that the decision to keep the goods outside the warehouse was necessitated by adverse weather conditions, specifically heavy rains, which made it impractical to transport the goods into the warehouse. They maintained that this action was taken to prevent damage to the goods and was in accordance with the provisions of the Customs Act.
• The plaintiff highlighted the fact that the Central Warehousing Corporation had deposited custom establishment charges for the notified warehouse, indicating the ongoing operation of the warehouse during the relevant period. This point was raised to support the argument that the warehousing period had not expired, impacting the imposition of duty, interest, and penalties on the goods found outside the warehouse.
• The plaintiff sought to demonstrate that the actions taken regarding the goods outside the warehouse were justified and did not warrant duty demand, penalty, and confiscation as imposed by the Commissioner. They aimed to show that the goods were still under the bonded warehouse and had not been unlawfully cleared.

These contentions were crucial in challenging the allegations of improper removal of goods from the warehouse and in asserting the legality of the plaintiff’s actions in handling the imported goods within the industrial premises.

CONTENTION OF RESPONDENT

In the case of M/S Bisco Limited vs Commissioner of Customs and Central Excise, the contentions presented by the defendant, the Commissioner of Customs and Central Excise, included:

• The defendant argued that the goods found outside the notified public bonded warehouse but within the industrial/factory premises were not in compliance with the warehousing regulations. They contended that the goods were unlawfully removed from the warehouse without proper clearance, leading to duty demand, penalty, and confiscation under the Customs Act.
• The defendant maintained that the actions taken by the plaintiff in keeping the goods outside the warehouse were not justified under the provisions of the Customs Act. They asserted that the permission granted by the Superintendent did not exempt the plaintiff from the requirements of Section 71 of the Customs Act regarding the removal of goods from the warehouse.
• The defendant emphasized that the physical verification conducted by the Preventive Branch of the Commissionerate revealed discrepancies in the storage of goods, with a significant number of cases found outside the warehouse. This discrepancy formed the basis for the duty demand, penalty, and confiscation imposed by Commissioner.
• The defendant justified the adjudication order and the decision of the CESTAT in affirming the penalties and charges imposed on the plaintiff, arguing that the actions taken were in accordance with the relevant provisions of the Customs Act and were necessary to ensure compliance with customs regulations,

These contentions aimed to support the defendant’s position that the plaintiff had violated the warehousing regulations and that the duty demand, penalty, and confiscation imposed were justified under the Customs Act.

JUDGEMENT

In the case of M/S Bisco Limited vs Commissioner of Customs and Central Excise, the judgment was based on a thorough consideration of the arguments presented by both parties regarding the handling and storage of imported goods outside the notified public bonded warehouse. The key points of the judgment included:

• The Court acknowledged the permission granted by the Superintendent to the plaintiff to unload a portion of the cargo outside the warehouse due to logistical constraints such as heavy rains. This permission was considered valid and endorsed by the proper authorities, indicating that the goods were not unlawfully removed from the warehouse.
• The Court took into account the deposit of custom establishment charges by the Central Warehousing Corporation for the notified warehouse, suggesting the continued operation of the warehouse during the relevant period. This fact supported the argument that the warehousing period had not expired, impacting the applicability of duty, interest, and penalties on the goods found outside the warehouse.
• The Court considered the circumstances under which the goods were kept outside the warehouse and within the factory premises, noting that the actions taken by the plaintiff were in line with the provisions of the Customs Act and were not subject to duty demand, penalty, and confiscation as imposed by the Commissioner.
• Ultimately, the Court ruled in favor of M/S Bisco Limited, concluding that the goods found outside the warehouse were not unlawfully removed and that the plaintiff’s actions were justified under the circumstances presented. The duty demand, penalty, and confiscation imposed by the Commissioner were deemed unwarranted in light of the permissions granted and the ongoing operation of the warehouse.

This judgment highlighted the importance of considering the specific circumstances and permissions granted in cases involving the storage and handling of goods in bonded warehouses, emphasizing compliance with customs regulations while taking into account practical constraints faced by importers.

ANALYSIS

The case of M/S Bisco Limited vs Commissioner of Customs and Central Excise involved a dispute regarding the storage and handling of imported goods outside a notified public bonded warehouse. The key points of the case analysis are as follows:

• Permission for Unloading: The plaintiff, M/S Bisco Limited, had obtained permission from the Superintendent to unload a portion of the cargo outside the warehouse due to logistical challenges such as heavy rains and soil conditions. This permission was crucial in establishing the legality of keeping the goods outside the warehouse.
• Continued Operation of Warehouse: The deposit of custom establishment charges by the Central Warehousing Corporation for the notified warehouse indicated that the warehousing period had not expired and that the warehouse was still operational during the relevant period. This fact supported the argument that duty, interest, and penalties should not be imposed on the goods found outside the warehouse.
• Compliance with Customs Regulations: The plaintiff contended that their actions were in compliance with the provisions of the Customs Act and were not in violation of warehousing regulations. They argued that the goods were still under the bonded warehouse and had not been unlawfully cleared, thus challenging the duty demand, penalty, and confiscation imposed by the Commissioner.
• Judgment in Favor of the Plaintiff: The Court ruled in favor of M/S Bisco Limited, emphasizing that the goods found outside the warehouse were not improperly removed and that the permissions granted by the authorities were valid. The Court considered the specific circumstances and practical constraints faced by the plaintiff in deciding the case.

Overall, the case analysis underscores the importance of considering permissions granted, the operational status of warehouses, and compliance with customs regulations in disputes related to the storage and handling of imported goods in bonded warehouses. The judgment highlighted the need for a balanced approach that takes into account both legal requirements and practical considerations faced by importers.

CONCLUSION

In conclusion, the case of M/S Bisco Limited vs Commissioner of Customs and Central Excise centered around the storage and handling of imported goods outside a notified public bonded warehouse. The key aspects of the case, including permission granted by the Superintendent, the continued operation of the warehouse, and compliance with customs regulations, were crucial in determining the legality of the plaintiff’s actions.

The judgment in favor of M/S Bisco Limited highlighted the importance of considering the specific circumstances and permissions granted in cases involving bonded warehouses. It underscored the need to balance legal requirements with practical constraints faced by importers, ultimately emphasizing the validity of the permissions granted and the ongoing operation of the warehouse.

This case serves as a reminder of the complexities involved in customs regulations and the significance of adhering to legal provisions while also taking into account practical challenges that may arise in the importation and storage of goods. It showcases the importance of a thorough analysis of the facts and circumstances surrounding such disputes to ensure a fair and just resolution.

REFERENCES:

1.https://www.supremecourtcases.com/bisco-limited-v-commissioner-of-customs-and-central-excise/

2.https://indiankanoon.org/doc/192574491/

3.SCC Online

This Article is written by Smita Mandal, a student of Campus Law Centre, University of Delhi; Intern at Legal Vidhiya.

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