Holding

The Supreme Court held that the importer, having surrendered title and having its re‑export plea rejected up to the Supreme Court, could not be granted permission to re‑export; the circulars were inapplicable and the High Court order was not a consent order.

Summary

Shakti LPG Ltd. imported steel plates in 1996 and warehoused them under the Customs Act, 1962. The initial one‑year warehousing period was repeatedly extended until January 2001, after which the importer surrendered the goods in December 2004. When an auction was scheduled for September 2005, the importer sought to stop the auction and obtain permission to re‑export the goods; the Bombay High Court later issued an order that was described as being by consent, allowing re‑export. The Union of India appealed, arguing that the statutory limit under s.61(1)(b) had expired, that the surrender of title could not be withdrawn, that the earlier re‑export pleas had been rejected up to the Supreme Court, and that the circulars of 2002 and 2003 could not override the statute. The Supreme Court held that the appellant could not be permitted to re‑export the goods, that the circulars were inapplicable, and that the High Court order was not a consent order, thereby allowing the Union's appeals.

Issues considered

Whether a re‑export request can be entertained after the maximum warehousing period under s.61(1)(b) of the Customs Act has expired and the importer has surrendered title.
Whether the circulars dated 29 July 2002 and 14 January 2003 can override the statutory limitation on warehousing and permit re‑export.
Whether the Bombay High Court order dated 8 August 2006 was a consent order requiring the Union's assent.
Whether a surrender of title to bonded goods can be withdrawn and affect the right to re‑export.

Legislation cited

Customs Act, 1962s. 46, s. 47, s. 48, s. 61(1)(b), s. 69(1), s. 72(1), s. 72(2)

Subjects

Customs Actwarehousingre‑exportauctionsurrender of goodscircularsconsent orderSection 61Section 69Section 72bonded goods

Judgment

j
[2008] 2 S.C.R. 1101

.. r UNION OF INDIA & ORS . A
II.
SHAKTI LPG LTD. & ANR
(Civil Appeal No. 1356 of 2008 etc.)
[FEBRUARY 18, 2008]
B
[TARUN CHATTERJEE AND HARJIT SINGH BEDI, JJ.] .

Customs Act, 1962 - s.61(1)(b) - Warehousing of goods
-After various extensions of the maximum period of'
warehousing and surrender of the goods by the party, goods . c
decided to be put on auction -Request by the party to stop the
auction with request to re-export the goods -Denied by
Department - Litigation seeking re-export rejected upto '
Supreme Court - Re-auction held - Writ petition seeking re- ,
export allowed by High Court -By further order High Court 0
clarifying that the order permitting re-export was passed with ·
consent - On appeal, held: Party having surrendered its title .
in the goods and plea to re-export having been rejected upto
Supreme Court in previous litigations, cannot be granted
permission -Even by virtue of Circulars, party not entitled to ' E
permission for re-export as in the facts of the case, Circulars
not applicable - The order of High Court was not passed with
consent of the parties - Circulars dated 29.7.2002 and
14.1.2003.
The goods imported by respondent No.1 had been F
warehoused initially for a period of one year i.e. maximum
period. The period was further extended from time to time
on the request of the respondent upto 31.1.2001.
Thereafter extention was not sought and the respondent
intimated the department that it was surrendering the 'G
goods. Department fixed the auction on 28.9.2005. On
the same day, respondent requested the Department to
stop the auction with a request for permission to re-export
the goods. Subsequent to order of the High Court, the
1101 H
1102 SUPREME COURT REPORTS (2008] 2 S.C.R.

A proposal of re-export was considered and denied. by the
authority concerned.
A writ petition seeking. re-export of the goods was
dismissed by High Court. The plea was rejected upto
Supreme Court. An appeal against the order of authority
8 rejecting re-export before CESTAT was withdrawn by the
respondent. Department initiated proceedings for re-
auction. Respondent again sought permission for re-
export. The auction took place. Respondent filed writ
petition, which was disposed of by accepting the
C undertaking of the respondent for re-export the goods.
Respondent thereafter sought clarification of the High
Court as to whether it was an order with consent, wherein
High Court observed that though the order did not
specifically say so, but the understanding was that it was
D in fact so. Hence the present appeals against both the
orders of High Court.
Respondent relying on the Circulars dated 14.1.2003
and 29. 7.2002 contended that maximum period of
warehousing could be extended and that re-export of
E goods could be allowed even if decision has been takeh
to put the goods on auction after expiry of maximum
period.
Allowing the appeals, the Court
F HELD: 1.1 The present case would fall within the
scope of Section 61(1)(b) of Customs Act, 1962. The facts
show that the goods imported by the respondent had been
warehoused initially for a period of one year i.e. the
maximum permissible period but which had nevertheless
G been extended time and again on the request of the
respondent whereafter no application for extension had
been made. It is also clear that the respondent had
intimated that he was surrenderi·ng the goods as the
purpose for which they had been imported could not be
H implemented. Merelv because the respondent thereafter

~1·
J
UNION OF INDIA & ORS. v. SHAKTI LPG LTD. & ANR. 1103

- t withdrew the offer of surrender would not make any A
difference to its cause. [Para 7] [1110-A, B, C]
1.2 The Circular dated 29th July 2002 is, however1 a
general circular advising the Chief Commissioner to be
liberal in granting extension under section 61 of the Act.
Circular dated 14th January 2003 states that the request B
for re-export of th.e goods could be allowed even if the
maximum period of warehousing had expired a~d
demand notices had been issued and even if it had been
decided to put the goods to auction. But it is clear from
the record that this Circular would not be applicable in c
the present case as the application for extension of time
had been made on 22nd /28th September 2005 when tJle
auction was to be held on 29th September, 2005 but h ad
1

been stalled on account of the efforts of the respondent
and that the respondent cannot be permitted to take D
-,.- advantage of its own wrong and to say that though the
auction could not be finalized due to its stalling efforts
yet it was entitled to fall back on the circular and to argue
that the first auction had not been held on 25th September
2005 but on 14th July 2006. The respondent having E
surrendered its title in the goods, it was not open to it to
contend that this surrender had been withdrawn
subsequently. [Paras 8 and 9] [1111-A, B, C, D; 1112-E, F,! G;
1113-A] .
Commissioner of Customs, Calcutta and Ors. v. Indian F
Oil Corporation Ltd. and Anr. (2004) 3 sec· 488- .
distinguished
1.3 The respondents' plea for re-export had been
rejected upto the Supreme Court in culmination of the
C?
proceedings before High Court in which all issues had
been raised, and thus no interference is called for on this
score as well. [Para 10] [1113-B]
2. Notwithstanding the clarification given by the High
Court on 14th February, 2007, no consent can be se~n on I-
1104 SUPREME COURT REPORTS [2008) 2 S.C.R.

A the part of the Union of India or its counsel. [Para - 11]
[1113-C, D]
CIVILAPPELLATE JURISDICTION: Civil Appeal No.1356
of 2008.
B From the Judgment and final Order dated 9/8/2006 of the
High Court of Judicature at Bombay in W.P. No. 4655/2006.
WITH
Civil Appeal No. 1357 of 2008.
c Gaurav Agrawal and B.Krishna Prasad for the Appellants.
Sunil Kumar, Awanish Sinha, Anita Kanungo and Himanshu
Shekhar for the Respondents.
The Judgment of the Court ~as delivered by
D
HARJIT SINGH BEDI, J. 1. Leave granted. •-+
2. The facts have been taken from SLP© No. 15278/2006.
3. These appeals filed by the Union of India arise out of
the following facts : On 6.3.1. 996 the respondent Shakti LPG
E
Ltd. imported 1714.5 MT of boiler steel plates worth Rs. 4.79
crores claiming that the said goods would be utilized for the
extension of their storage terminal at Kakinada. As the said
import could be entitled to a concessional rate of duty on the .
production of the appropriate certificates which were then not
F available with the importer, the goods were warehoused in one ).--

of the bonded godowns of the Central Warehousing Corporation
on 30th May 1996 for an initial period of one year. The respondent
thereafter applied for the extension of the warehousing period
which was allowed by the Commissioner, Customs on 5th
·G September 1997 upto 31st March 1998. A security deposit of
about Rs.10, 00,0001- and an advance customs duty of about
Rs.98, 00,000/- were deposited with the department on 31st
March 1998 but the goods were still not cleared. From 1998 till
31st January 2001, several ndtices were sent to the respondent
'Y to clear the goods or to pay the duty and during this period the
UNION OF INDIA & ORS. v. SHAKTI LPG LTD. & ANR. 1105
.. t [HARJIT SINGH BEDI, J.]
warehousing period was extended six times with the last A
extension expiring 'on 31st January 2001. As the respondent
sought no further extension thereafter, the aforesaid period came
to an end. Several notices were thereafter issued to the
respondent under Section 72(1) of the Customs Act, 1962
(hereinafter called the "Act") raising a demand of duty etc. As B
no reply was forthcoming, a notice under section 72(2) of the
Act was issued to the respondent on 3rd December 2001 for
sale of the goods by auction so as to recover the outstanding
dues. Interestingly, however, the respondent vide his letter dated
31st December 2004 also surrendered the goods with the result
that it ceased to have any claim over them. The auction of the
q
goods was duly advertised and it was actually held on the 2ath
of September 2005 and on the same day the respondent made
a request for permission to re-export the goods under section
,,.. . 69(1) of the Act and for the cancellation of the auction sale. The
D
respondent also filed Writ Petition No. 6907 of 2005 before the
Bombay High Court for permission to re-export the goods. This
petition was disposed of by the Bombay High Court on 19th
October 2005 directing the Commissioner to dispose of the
respondent's application for re-export of the goods by a
reasoned order after hearing the petitioner. The personal hearing E
was given to the respondent on 29th November 2005 wherein it
was proposed to export the goods to a unit operating in the
special economic zone (SEZ) Pithampur in Madhya Pradesh.
The Chief Commissioner by his order dated 3rd January 2006
rejected the request of the respondent to clear the goods for F
export to the SEZ without payment of the duty on the plea that
such an export was not envisaged as it was within the country.
This order was challenged by the respondent in Writ Petition
No.60 of 2006 before the Bombay High Court once again
)-
praying that it be permitted to export the goods outside India. G
Th is petition was dismissed as being devoid of merit vi de order
dated 13th January 2006 and a Special Leave Petition against
the said order was dismissed by this Court on 3rd February 2006.
Undeterred the respondent then moved an application before
the Bombay High Court seeking a review of the order dated H
A_-···

1106 SUPREME COURT REPORTS [2008] 2 S.C.R.
~ -
A 13th January 2006. This application too was dismissed on the
22nd February 2006. The respondent then approached the
Customs, Excise and Service Tax Appellate Tribunal (CESTAT)
by way of an appeal challenging the order of the Chief
Commissioner dated 3rd January 2006. This appeal too was
B dismissed as withdrawn on the request of the respondent. The T
department thereupon initiated proceedings for the re-auction
of the goods on which the respondent submitted a letter dated·
8th June 2006 for permission to re-export the goods to the UAE
though without any supporting documents. The re-auction was
c held on 14th July 2006 and the petitioner received a bid of
Rs.3.78 crores which was sufficient to meet only a part of the
demand. On 18th July 2006 the respondent filed yet another Writ
Petition No. 4655 of 2006 before the. Bombay High Court for a
direction to re-export the goods. This Writ Petition came up for
D
hearing before the High Court on 26th July 2006 and the High
Court directed the department to file a statement as to the
.-+
expenses that had been incurred by it till date. The department
thereupon filed a detailed affidavit in the Bombay High Court
pointing out the repeated defaults on the part of the respondent
and that the protracted proceedings in one forum or the other
E had resulted in a revenue loss of Rs.8.55 crores. This Writ
Petition was disposed of by the order dated gth August 2006 by
accepting the undertaking of the respondent to re-export the
goods by 14th September 2006 without calling upon the
)-
respondent to pay any duty. This order has been impugned in
F the present Special Leave Petition. The respondent thereafter
moved an application in CWP No. 4655 of 2006 before the
Bombay High Court seeking a clarification that the order passed
on gth August 2006 was with consent of both parties. The
Division Bench in its order dated 14th February 2007 observed
-~
G that though the order dated gth August 2006 did not specifically
say that it was an order by consent but the understanding was
that it was in fact so. This order has been impugned by the Union
of India in the conn.ected Special Leave Petition No. 18978/
2007 on the ground that no consent had even been given by it
H at the time when the order dated gth August 2006 had been
- I_

UNION OF INDIA & ORS. v. SHAKTI LPG LTD. & ANR. 1107
[HARJIT SINGH BEDI, J.]

made by the High Court. A
4. Mr. Gaurav Agrawal, the learned counsel for the
appellants has raised several arguments before us during the
course of hearing. He has pointed out that the Act itself did not
visualize the extension of the bond period beyond one year as
per Section 61 (1)(b) of the Act and that the repeated extensions B
given to the respondent were, therefore, not authorized by law.
He has pleaded that once the maximum period of the bond had
expired, the goods vested in the Union of India under Section
72 and the importers were divested of all rights therein. He has,
in addition, pointed out that vide letter dated 31st December c
2004 the respondent had in fact surrendered all rights in the
goods. He has also submitted that the High Court was not
justified in interfering in the present litigation in favour of the
respondent as all the legal and factual issues raised by the '

--.. A
respondent in the series of the earlier litigation it had initiated, D
had been decided against it. In this connection, the learned
counsel has placed primary reliance on the order of the Chief
Commissioner dated 3rd January 2006. It has finally been
pleaded that the respondent was not entitled to claim any relief,
either in law or in equity as its conduct had been absolutely E
undesirable.
5. Mr. Sunil Kumar, the learned senior counsel for the
respondent No.1 has, however, argued that the main order
~ impugned in SLP No.15278/2006 was indeed a consent order
and it had been so clarified by the High Court itself and as such F
the question of any interference therein was to be ruled out. He
has in this situation placed reliance on the judgment of this Court
in Roop Kumar vs. Mohan Thedani (2003) 6 SCC 595. It has
also been urged by the learned counsel that several circulars
~ had been issued by the department of Customs itself under c3
section 151-A of the Act which authorized the Commissioner or
the Chief Commissioner to extend the bonding period fixed by
section 61 and as these circulars were of binding force, as held
by this Court in Commissioner of Customs, Calcutta & Ors. V.
Indian Oil Corpn. Ltd. & Anr. (2004) 3 SCC 488, the primary H
1108 SUPREME COURT REPORTS [2008] 2 S.C.R.

A argument raised by the learned appellant's counsel with regard
to the maximum period of warehousing, had no substance. It
has also pointed out that the surrender document dated 31st
December 2004 had been withdrawn by the respondent vide
letter dated 21st September 2005 on the plea that it wanted to
B clear the goods and that an application for this purpose had
also been made under section 69 of the Act. In answer to Mr.
Agrawal's plea it has been submitted that it was not open to the
Union of India to contend that a circular issued by one of its
officers was contrary to the Statute in the light of the judgment in
C the case of Cbmmissioner of Customs, Calcutta (supra).
6. We have heard the learned counsel for the parties and
have gone through the record very carefully. The matter would
turn· on an examination of the various provisions of the Act.
Section 46 of the Act deals with entry of goods on importation
D and warehousing of the goods in certain circumstances. Section
47 deals with clearance of goods for home consumption. Section
48 postulates that in case any goods imported into India are
not cleared for home consumption or warehoused within thirty
days from the date of unloading, they may be sold by the proper
officer. Sections 61 and 72 in so far as relevant for our purpose
are reproduced below:
"Sec.61. Period for which goods may remain warehoused.
- (1) Any warehoused goods may be left in the warehouse
in which they are deposited or in any warehouse to which
they may be removed,-
(a) in the case o~ capital goods intended for use in any
hundred per cent export oriented undertaking, till the
expiry of five years;
(aa) in the case of goods other than capital goods
intended for use in any hundred per cent, export-
oriented undertaking, till the expiry of three years;
and
(b) in the case of any other goods, till the expiry of one
year,
UNION OF INDIA & ORS. v. SHAKTI LPG LTD. & ANR. 1109.
[HARJIT SINGH BEDI, J.]

after the date on which the proper officer has made an A
order under section 60 permitting the deposit of the goods in a
warehouse:
Provided that -
(i) B
(A)
(B)
(ii) in the case of any goods referred to in clause (b), if
they are likely to deteriorate, the aforesaid period of C
one year may be reduced by the [Commissioner of
Customs] to such shorter period as he may deem fit:
Sec. 72.Goods improperly removed from warehouse, etc.
- (1) In any of the following cases, that is to say, - D
.
~ (a) xxx: xxx xxx xxx
(b} Where any warehoused goods have not been
removed from a warehouse at the expiration of the
period during which such goods are permitted under
E
section 61 to remain in a warehouse;
(c) xxx xxx xxx xxx
"(d) xxx xxx xxx xxx
the proper officer may demand, and the owner of such F
goods shall forthwith pay, the full amount of duty chargeable
on account of such goods together with all penalties, rent,
interest and other charges payable in respect of such
goods.
(2) If any owner fails to pay any amount demanded under G
sub-section(1 ), the proper officer may, without prejudice
to any other remedy, cause to be detained and sold, after
notice to the owner (any t.ransfer of the goods
notwithstanding) such sufficjent portion of his goods, if
any in the warehouse, as the said officer may select." H
1110 SUPREME COURT REPORTS [2008] 2 S.C.R.

A 7. Concededly the present case would fall within the scope ~
of Section 61 ( 1)(b). The facts show that the goods imported by
the respondent had been warehoused on 30th of May 1996
initially for a period of one year i.e. the maximum permissible
period but which had nevertheless been extended time and
B again on the request of the respondent upto 31st January 2001
whereafter no application for extension had been made. It is
also clear to us from the letter dated 31st December 2004 that r
the respondent had intimated that he was surrendering the goods
as the purpose for which they had been imported could not be
c implemented. We are of the opinion that merely because the
respondent thereafter withdrew the offer of surrender would not
make any difference to its cause. Mr. Su nil Kumar, the learned
senior counsel has, however, submitted that though the Statute
did indeed fix the maximum period of warehousing to be of one
year, yet the various circulars issued by the Board under section
0
151 (A) of the Act had made a clear departure from the aforesaid
provisions. He has in particular placed reliance on circulars· -.r
dated 14th January 2003 and 29th July 2002 which dealt with
the special grant of the warehousing period by the Chief
Commissioner under Section 61. The circular dated 14th January'
E 2003 is pre-faced by referring to the circular dated 29th July
2002 and the remarks that clarifications had been sought
whether goods imported and bonded in a warehouse could be
permitted to be cleared for export under section 69 of the Act
even though demand notices under section 72 had been
F issued upon expiry of the initial or the extended period of,._
warehousing.
The circular then goes on to read:
"The matter has been examined in the Board. It has been
G decided that in case an Importer makes a request to permit
re-export of the goods under Section 69 of the Customs-.
Act, 1962, such a request may be allowed even if the
permitted period for bonding has expired and demand
notice has been issued, or it has been decided to put the
H goods under auction. Before permitting re-export in each
I
~.
UNION OF INDIA & ORS. v. SHAKTI LPG LTD. & ANR. 1111
[HARJIT SINGH BEDI, J.]

r such case, however, it will be necessary to extend the
period of warehousing under Section 61 of the Customs
A

Act to enable the Importer to export the goods within the
permitted period of warehousing."
9. The circular dated 29th July 2002 is, however, a general
circular advising the Chief Commissioner to be liberal in granting B
I

extension under section 61 of the Act. Relying on theaforequoted
'r
paragraph of the Circular of 14th January 2003, Mr. Su nil Kumar
has argued that the maximum period visualized under section
61 of the Act could, therefore, have been exceeded. Mr. Gaurav
Agrawal has raised a larger issue - whether the circulars c
-I ' aforesaid could authorize a deviation from the Statute itself but
in the light of the peculiar facts of the case we are not called
upon to answer this question. We note from the perusal of the
circular dated 14th January 2003 that the request for re-export
of the goods could be allowed even if the maximum period of D
. warehousing had expired and demand notices had been issued
~
. and even if it had been decided to put the goods to auction.
This circular obviously would not apply to a situation where the
goods had already been put to auction. It is clear from the record
that the first auction of the goods had been fixed on the 29th E
September 2005. However, vide letter dated 22nd September
2005 the respondent had requested the department to stop the

•
---\

auction and to allow it to clear the goods on payment of all
charges and promised to file the various documents in one day
but did not do so and on the contrary once again vide letter F
'"-.{ . dated 29th September 2005 moved another application for re-
export of the goods. The auction of 29th September 2005 was
also challenged by the respondent in CWP No.6907/2005. This
petition was dismissed on 19th October 2005 with a direction
that the application for re-export filed by the respondent be
G
disposed of by the Chief Commissioner by a reasoned order.
~ As already mentioned above, the Chief Commissioner vide his
order dated 3rd January 2006 rejected the prayer of the petitioner
for re-import of the goods as being legally untenable and
observing thus :
Hi
)~
1112 SUPREME COURT REPORTS [2008) 2 S.C.R.

A "From the peculiar facts and circumstances of the case
as detailed above, it is clear that the Importer have no ~
intention, whatsoever to clear the goods. Their sole aim
throughout there almost a 'decade' long period has been
to 'stall' the disposal of these un-cleared time-expired
B bonded goods. It is also surprising to note that they have
been taking self-contradictory grounds to hamper the
disposal of the goods. Once, they surrender their title to ...,-
the goods, then they come up with a proposal to clear the
same on payment of duty + interest leviable thereon and
c again they plead that they want to re-export the goods to
a SEZ Unit in Pitampur. All these prevaricating and ever ;

shifting stands taken by them have resulted in non-disposal ~
of the time-expired bondeq goods and non-realization of
valuable government revenue. These documented facts
·also clearly indicate that the petitioner Importers have not
D
come with clean hands an their sole objective has been
merely to stop the disposal of valuable goods and a huge
~
amount of Revenue involved in it."
9. The Chief Commissioner finally concluded that there
E was no merit in the request of the petitioner dated 2ath
September 2005 to allow him any further extension of the
warehousing period for re-export of the goods. This order was ,
challenged by the respondent in CWP No. 60 of 2006 which ""!"'"
too was dismissed and the Special leave Petition filed
F thereafter was also dismissed. It is therefore clear from the
record that the circular dated 14th January 2003 would not be y
applicable in the present case as the application for extension
of time had been made on 22nd /28th September 2005 when
the auction was to be held on 2ath September, 2005 but had
been stalled 'On account of the efforts of the respondent and that
G
the respondent cannot be permitted to take advantage of its
own wrong and to say that though the auction could not be ~
finalized due to its stalling efforts yet it was entitled to fall back
on the circular and to argue that the first auction had not been
held on 2ath Sept_ember 2005 but on 14th July 2006. We are
H
_J UNION OF INDIA & ORS. v. SHAKTI LPG LTD. & ANR. 1113
[HARJIT SINGH BEDI, J.]

-
-.
}:
also of the opinion that the respondent having surrendered its
title in the goods vide letter dated 31st December 2004 it was
not open to it to contend that this surrender had been withdrawn
subsequently. In the light of the present circumstances the
observations made in Commissioner of Customs, Calcutta
(supra) can have no applicability.
A

B
I

10. We also note that as the respondents' plea for re-export
had been rejected upto the Supreme Court on 3rd February 2006
'1 in culmination of the proceedings in CWP No.60 of 2006 in
which all issues had been .raised, no interference is called for
on this score as well. c
11. We have also considered the case of the respondent
--+ r' with regard to the consensual nature of the order of the High
Court dated gth August, 2006. Notwithstanding the clarification
given by the High Court on 14th February, 2007, we can see no
D
consent on the part of the Union of India or its counsel.
12. We accordingly allow both appeals without any order
' ~ as to costs. ,
K.K.T. Appeals allowed.
E

/

' -(