COMMISSIONER OF CUSTOMS,CALCUTTA AND ANOTHER v. BIECCO LAWRIE LTD. INSC 121

Introduction The Commissioner of Customs, Calcutta and Another v. Biecco Lawrie Ltd. pertains to a litigation ensuing from the dispute over the rate of customs duty payable on Superior Kerosene Oil, SKO imported by Biecco Lawrie Ltd. and stored in a private warehouse. The question, therefore, is whether the duty rate to be charged is that applicable at the time of importation and clearance for home consumption or at the time of actual removal from the warehouse.

Facts of the Case Import and Initial Clearance: On May 15, 1998, Biecco Lawrie Ltd. imported 5273.156 MT of SKO, which at that time attracted only a countervailing duty of 10% ad valorem. The imported SKO was warehoused in a private warehouse owned by M/s IBP Ltd. under Bill of Entry No. 302(OIL).

Consequential action: On 20.5.1998, M/s Biecco Lawrie filed an ex-bond bill of entry for home consumption for 5140 MT of SKO, along with the payment of full duty of Rs. 35,75,836/-. The proper customs officer permitted the clearance of these goods. On May 28,1998, Biecco Lawrie submitted another ex-bond bill of entry for 133.156 MT, upon payment of Rs. 92,635/- towards duty. This lot was also permitted for home consumption. Storage and Procedural Developments:

Biecco Lawrie addressed a letter to the Assistant Commissioner of Customs for permission to store the already cleared for home consumption SKO in the same warehouse as the product is of a highly inflammable nature. He took registration certificate under Rule 174 of the Central Excise Rules, which entitled him to store SKO in IBP's storage tank for Modvat purposes. Biecco Lawrie already had an existing contract with IBP Ltd. for storing SKO. Change in Duty and dispute: In the Budget for -99, Basic Customs Duty and Special Customs Duty on SKO were imposed at 30% and 2% ad valorem respectively. On June 18, 1998, the customs authority claimed that Biecco Lawrie was liable to pay the enhanced duty on SKO not physically lifted before June 2, 1998. The respondent deposited additional duties under protest. Show-Cause Notice and Tribunal's Decision:

A show-cause notice was issued to Biecco Lawrie to justify the enhanced duty. The Commissioner of Customs confirmed the demand and imposed a penalty. The Tribunal reversed the said decision and held that once the full duty was paid and the goods were cleared for home consumption, any subsequent increase in the rate of duty was not applicable to the goods remaining in the warehouse. Legal Framework and Issues -Relevant Sections:

Section 15(1) of the Customs Act, 1962 provides the date for determining the rate of duty and tariff valuation of imported goods. Section 49 provides warehousing of goods cleared for home consumption subject to certain conditions. Section 68 deals with clearance of warehoused goods for home consumption. Issue: Whether the rate of duty is payable on the basis of the date of bill of entry for home consumption provided under Section 15(1)(a) or on the basis of removal from warehouse under Section 15(1)(b). Whether, if the SKO was paid fully and the goods cleared for home consumption, the warehousing provisions could still apply to such SKO. Judgment Analysis by Supreme Court: The Court held that when the goods are cleared for home consumption and the full duty is paid, they would no longer be "imported goods" within the meaning of Section 2(25) under the Act.

The provisions under Section 15(1)(b), which applied to goods cleared from a warehouse under Section 68, became irrelevant once the goods were cleared for home consumption under Section 49 and stored. Applicable Legal Principle(s):

The Court reiterated the principle from Bharat Surfactants (Private) Ltd. v. Union of India that the relevant date for determining duty is the date of presentation of the bill of entry for home consumption. Subsequent case law – Shah Devchand & Co. v. Union of India, and D.C.M. v. Union of India – has held the test to be the date of filing of the bill of entry for home consumption and not the date of actual removal from the warehouse. Decision:

The Court thus upheld the Tribunal's order confirming that the relevant duty applicable was the one in force at the time of the bill of entry for home consumption, i.e. May 20 and May 28, 1998, and could not be the enhanced rates coming into effect from June 2, 1998. It was clear that once the goods were cleared for home consumption, no further warehousing duty or charges under Section 15(1)(b) could be levied against the same.

Conclusion A two-judge bench of the Supreme Court, dismissing an appeal by the Commissioner of Customs, held that the rate of duty which applied to Biecco Lawrie's SKO was at the time of the bill of entry for home consumption. The Court directed the customs authorities to refund the amount deposited under protest and to decide upon respondent's application for interest on the delayed payment in accordance with law.

Implications Explained: This judgment further reaffirms the fact that once goods are cleared for home consumption on payment of full duty and all relevant duties levied upon them, subsequent changes in the rate of duty do not apply. To avail of this principle, importers have to be careful about correct classification and expeditious clearance. For Customs Authorities: This unmistakably is to issue a strong reiteration of strict adherence to the statutory provisions coupled with the fact that clearance for home consumption concludes the question of duty payment. Procedural adherence to Sections 15 and 49 is therefore very vital. The instant case thus sets an unambiguous precedent for such class of disputes and lays down clarity on the applicability of rates of duty, apart from clearly stating the legal standing of goods cleared for home consumption but stored under section 49.