Customs Commissioner Cannot Reassess Duty On Warehoused Imports Cleared From Refineries Beyond His Jurisdiction: Gujarat High Court

Justices Bhargav D. Karia and Justice Pranav Trivedi agreed with the Tribunal that a proper officer having the administrative jurisdiction over the respective refineries where the goods were removed under section 67 of the Customs Act, 1962, only could have assumed the jurisdiction for reassessment and not the Commissioner, Jamnagar, who can only be considered as proper officer till the goods were permitted to be warehoused on provisional assessment.

In this case, the assessee/respondent imported petroleum products like Crude Oil during the years 1997-98 and 1998-99 at Vadinar Port, Gujarat.

The assessee filed IntoBond Bills of Entry with Customs House Vadinar, Jamnagar for warehousing the imported goods at their private licensed warehouse tanks.

The assessee, subsequently, in order to transport the warehoused goods without payment of duty through pipeline to their refineries at Mathura, Koyali and Panipat, executed a bond under Sec.67 of the Customs Act, and thereafter, filed Ex-Bond Bills of Entry on payment of duty assessed by the proper officer at the respective refineries within whose jurisdiction the respective refinery is situated.

Accordingly, the provisional assessment made at Vadinar Port was finalized by the respective Customs Authorities and differential duty recovered/refund sanction was made under Sec.1 r/w. Sec.17(4) of the Customs Act.

The Commissioner of Customs having jurisdiction over Vadinar Port passed an Order-in-Original confirming the differential duties of varying amounts along with the interest and penalty.

Being aggrieved, the assessee preferred an appeal before the Tribunal. The Tribunal quashed and set aside the order passed by the Commissioner.

The counsel for the revenue argued that, as per the provisions of the Customs Act, only the Commissioner at Vadinar would have the jurisdiction to reassess the Bill of Entries filed by the assessee.

The counsel for the assessee submitted that as per the provision of section 67, the assessee obtained the permission to remove the goods to its various refineries for further processing, which was permitted by the proper officer i.e. Vadinar Port and accordingly, the goods in question were transferred to the refineries situated at Koyali, Mathura and Panipat.

The bench noted that the assessee imported the goods at Vadinar Port which was, thereafter, transferred to its private warehouse on filing of Into-Bond Bill of Entries. The respondent, thereafter, removed the goods under section 67 to its respective refinery after filing the Ex-bond Bill of entries. On such basis, the goods were finally assessed.

The bench opined that the Tribunal was justified in referring to the case of M/s.Ferro Alloys Corporation Ltd., reported in 1995(77) ELT 302 (T) to hold that the Commissioner at Jamnagar having jurisdiction over Vadinar Port could not have issued the show-cause notice and carried out the reassessment proceedings and pass the Order-in-Original or levy of varying differential duties.

The bench agreed with the decision of the Tribunal in M/s Ferro Alloys (supra) that the jurisdiction to raise demand of duty on exempted goods found to be not utilized as per the terms of exemption by importers can be done only by the officer having jurisdiction over the warehouse.

In view of the above, the bench dismissed the appeal.

Case Title: Commissioner of Customs (Preventive) v. Indian Oil Corporation Limited

Case Number: R/TAX APPEAL NO. 1417 of 2008

Counsel for Appellant/Department: CB Gupta

Counsel for Respondent/Assessee: Hardik P Modh

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Citation : 2025 LiveLaw (Guj) 179