Settlement of Disputes Cannot be Considered as Ground for Denial of Renewal of License u/s 58(3) of Customs Act: CESTAT [Read Order]

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the settlement of disputes cannot be considered as a ground for denial of renewal of a license under section 58(3) of the Customs Act, 1962. 

Flemingo DFS Pvt. Ltd, the appellant assessee which runs a chain of Duty-Free Shops, was issued a Private Bonded Warehouse license and situated within the premises of Chennai Sea Port. The license was periodically renewed by the assessee and was also permitted to operate Duty-Free Shop adjacent to the licensed Private Bonded warehouse which was also inside the Sea Port premises. 

The duty-free shop was engaged in the sale of goods like liquor and cigarettes and the assessee had requested the renewal of the license and the Commissioner of Customs denied the request for renewal and also ordered for cancellation of the license. 

C. Manishankar, the counsel for the assessee contended that the rejection of the request for renewal of license and consequent cancellation of license was without any basis. 

Further submitted that the allegations raised in the Show Cause Notice issued by the department proposing to deny the renewal of the license and proposing to cancel the same had already been narrated in the earlier dispute and asserted that all such incidents have been decided in favour of the assessee by the settlement commission. 

Harendra Singh Pal, the counsel for the department contended that the assessee had admitted duty liability before the Settlement Commission which would prove that the appellant has evaded Customs duty and that the allegations raised regarding Goa and Vishakhapatnam are serious offenses. 

In both earlier incidents, the original authority had upheld the demands on the ground that the assessee had violated the Regulation and evaded Customs duty and was not a single stray act of evasion of Customs duty, thus the assessee was not entitled to get the license renewed. 

The Bench observed that the immunity granted against prosecution under the Customs Act will include, the above proceedings initiated under Section 58(3) of the Customs Act also which had culminated in the order revoking the license issued to the assessee and the settlement of the dispute cannot be a ground for not renewing/revoking the license. 

The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) held that the department cannot deny the request for renewing the license and the order for cancellation of the license cannot survive while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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