Customs Duty Calculation Case: High Court Decision

In a recent legal case, the High Court allowed the writ petition filed by the respondent regarding customs duty calculation. The case involved the importer as the petitioner and the Revenue as the respondent. The Court considered various provisions of the Customs Act, 1962 and the Central Board of Excise & Customs Manual to determine the correct assessment of customs duty. Find out more about this significant ruling in the realm of customs law.


  • The High Court allowed the writ petition filed by the respondent.
  • The valuation of the imported goods for the second auction was reduced to Rs.1,36,83,759/- and further reduced in the third auction to Rs.54,44,650/-.
  • The importer did not clear the imported goods even after the bond period expired on 28 February, 2002.

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  • The issue in the appeal is the calculation of custom duty based on the date of deemed removal of goods from the warehouse as per Section 61 or on the date of sale due to importer’s failure to seek clearance.
  • Appellants argue that the right to recover customs duty trumps the right to recover warehouse charges under Section 150, with the sale conducted under Section 72, not Section 63.
  • Revenue’s contention could result in a duty higher than the sale price, but using the date of sale for duty calculation would make the demand unreasonable.
  • Referring to a 2004 communication, appellants highlight a warning to clear goods or face full duty payment, along with rent, penalties, and interest.
  • The Kesoram case mentioned involves an importer claiming duty levied based on the date goods were intended for home consumption, despite being in a bonded warehouse beyond the permitted period.

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  • The Court considered Section 15(1)(d) of the Act regarding goods improperly removed from a warehouse.
  • Custom duty may be assessed at the date of deemed removal of goods from the warehouse.
  • Custom duty is to be paid from the sale proceeds as per Section 150(2) of the Act.
  • Custom duty is calculated based on the sale price of the goods kept in the warehouse.
  • The Circular by the Central Board of Excise & Customs binds the Revenue in determining custom duty.
  • Section 63 of the Act mandates the payment of rent and warehouse charges by the owner of goods in warehouse.
  • If rent or charges are not paid, the warehouse-keeper can sell the goods with permission.
  • The Circular issued by the Board specifies the method for apportioning sale proceeds of unclaimed goods for custom duty calculation.

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  • The present appeal is disposed of with directions to ascertain the customs duty as per the provisions of the Customs Act, 1962 and Chapter 21 of Central Board of Excise and Customs Manual.
  • Adjust the customs duty as per the priority specified in Section 150(2) of the Customs Act.
  • If the bank guarantee of Rs. 27,47,146/- has been invoked by the appellants, the amount shall be made over to the respondent within three months after adjusting the proceeds of sale.
  • The appeal is disposed of with no order as to costs.


Case Number: C.A. No.-004490-004490 / 2008

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