Order date – 02 November 2022

 Facts –

• The Respondent, M/s Modest Infrastructure Ltd is engaged in the activities of Ship Building and repairing. The respondent has been granted licence for Public Bonded Warehouse (PBW for short) in terms of the provisions of Section 58 of the Customs Act, 1962.
• The responded had been importing duty free raw materials like steel plates, ship spares/components, etc. and the same were warehoused and stored in the bonded premises.
• During a search conducted on 04.03.2010, it was observed that duty free raw materials involving customs duty were removed to other premises named as Warehouse - 2 without permission of the concerned Central Excise Officer and without cover of statutory documents. The said goods were placed under seizure and a show-cause notice were issued on 31.08.2010
• The commissioner ordered unconditional release of goods and dropped demand duty partly. Also not imposed penalty on Directors 
• Aggrieved, Revenue has filed an appeal.

Issue – 

• Whether the duty free material found during the search of the premise of the respondent at Warehouse- 2 can be considered as lying outside the bonded warehouse and registered premises of the respondent, consequently liable for payment of custom duty as proposed in the show cause notice ?

Order – 

• The Tribunal observed that the letter of the Jurisdictional officers itself make it clear that Warehouse –2 situated on the additional land of 17415 Sq. Mtrs stands included in the PBW of respondent w.e.f. 03.07.2009 under Section 58 of the Customs Act, 1962 and therefore the duty free imported raw materials found therein on 04.03.2010 during the search by the DRI officers were within the PBW and cannot be said to have been found outside the PBW. Accordingly, demand on these goods is not sustainable.
• It is also finds that application for granting permission was submitted by the respondent and it has rejected on the ground that it does not have any request for extension of the PBW and no mention of PBW was made. The respondent submitted revised ground plan showing entire ship yard with a request for approval and granting necessary permission. Thus permission was indeed granted for the additional land even though the specific sections were not specifically mentioned therein.
• The Tribunal also observed from the letter of the Assistant Commissioner of Central Excise, City Division, Bhavnagar issued to Respondent. letter of licence issuing authority also clearly state that Warehouse-2 situated on the additional land of 17,415 sq. mtr. stands included in the PWB of respondent with effect from 06.02.2009 under Section 58 of the Customs Act 1962. Since the disputed goods were found within the registered and bonded PBW on the date of search, Ld. Commissioner correctly dropped the demand.
• Appeal filed by Department dismissed.