Dated 20th January 2013

CASE SCENARIO: Custom – Duty free shop storing goods in Pvt. bonded warehouse and then bringing goods to shop – Revenue allegation that bond executed for storing goods should be kept valid even after removal of goods till goods are sold – Revenue’s appeal dismissed: CESTAT MUMBAI-

THE respondent has a duty free shop in Dabolim Airport, Goa where they are permitted to stock imported duty free goods for sale to the incoming/outgoing international passengers. They were issued licenses for this purpose and which have been renewed from time to time. Since the respondent could not stock all the goods in the duty free shop they took a private bonded warehouse for the purpose of storage of these goods and these goods were subsequently removed from the private warehouse to the duty free shop from time to time. They executed a bond for keeping the goods in this warehouse and undertook to clear the goods within the prescribed period. There is no dispute of the fact that they have removed the imported goods obtained duty free from the warehouse to the duty free shop within the period specified in the bonds executed by them.

However, the department has a unique and interesting case -it is of the view that the bond executed by the respondent in respect of the goods stored in Chowgule bonded warehouse should be kept valid even after the removal of the goods from the said warehouse till such time the goods are sold from the duty free shops in the airport.

In as much as this was not done by the respondent, a duty demand was confirmed for a sum of Rs.60,88,233/- along with interest thereon and a penalty of Rs.10,000/- was also imposed on the respondent.

The lower appellate authority found this allegation a tad difficult to digest so he allowed the appeal on the ground that since the appellant had cleared the goods from the Chowgule warehouse within the bonded period and the duty free shop in the Customs area is also a bonded warehouse, they are not required to execute a fresh bond for the sale of the goods from the duty free shop.

The Committee was not impressed and resultantly an appeal came to be filed before the CESTAT by the CCE, Goa. The Revenue representative reiterated the stand taken by the department.

The respondent submitted that the requirement of executing bond and maintenance of inventory bond-wise applies only to the private bonded warehouse where the goods are stored; that in respect of the goods kept in the duty free shops maintenance of inventory bond-wise is not required and as per the terms of the licence for the duty free shop, there is no requirement of executing separate bonds for the goods stored and sold and, therefore, the demand is not sustainable in law and the order of lower appellate authority has to be upheld.

The bench observed –

  1. The transactions in the duty free shop are governed by the terms and conditions of the licence issued and as per the terms and conditions of the licence-
    The licensee shall enter the receipts in the stock register to be maintained commodity-wise and separately for (a) goods imported by sea, (b) goods imported by air, (c) goods imported by post, (d) goods transferred from another warehouse, (e) goods transferred from Central Excise bonded factory, in such form as may be prescribed in this behalf by the Assistant Commissioner of Customs, Custom House, Marmagoa.
  2. There is no dispute of the fact that the respondent herein have satisfied with the conditions of the licence. In as much as the appellant has adhered to the terms and conditions of the licence in respect of the duty free shop and they had removed the goods from the private bonded warehouse to the duty free shop within the bonded period for the private bonded warehouse, there is no violation of law committed by the respondent.

In fine, the order of the lower appellate authority was upheld and the Revenue appeal was dismissed.


  1. The licensee can take up a private bonded warehouse to store his/her goods.
  2. The due conditions has to be fulfilled for the said purpose including furnishing a Bond for the same.
  3. The revenue department can not penalize the licensee by asking to furnish additional bonds or by penalizing with fine & penalty till the time the licensee removes the goods within the stipulated time from the warehouse to the duty free shop.

SOURCE: GOVT. OF INDIA, Ministry of Finance


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