Customs, Excise and Gold Tribunal - Delhi
Panchmahal Steel Limited vs Collector Of Customs on 18 November, 1991
Equivalent citations: 1992(59)ELT459(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. This is an appeal preferred against the Order-in-Appeal No. 160/83/Abd., dated 11-11-1983 passed by the Collector of Customs (Appeals), Bombay.
2. The facts of the case, in brief, are that the appellants imported Ferrous Melting scrap for use in electric furnace at their factory. The said F. melting scraps for use in electric furnace is classifiable under the Customs Tariff Heading 73.03/05, and the rate of duty is nil for import duty as well as the auxiliary duty, vide Notification No. 151/Cus., dated 15-7-1977 and No. 107/79 dated 10-5-1979 respectively subject to the condition that such imported scrap is in Tact used in the Electric Arc furnace and the proper officer is satisfied to that extent. In this case as per terms and conditions of the notifications, prior to the clearance of the goods the party filed a bond with the Assistant Collector undertaking to produce an end-use certificate in respect of the cleared melting scrap and to pay basic as well as auxiliary duty on quantity not proved to the satisfaction of the Assistant Collector to have used in electric arc furnace. It was charged that in respect of the Bill of Entry No. F. 50 dated 20-9-1979 the quantity made out of customs was 650 M.T. but the end-use certificate was produced for 612.885 M.T. and, accordingly, the demand was raised for deficit quantity of 37.115 M.T. It was contended by the party that they had received only 612.885 M.T. scraps and every part of it had been utilised by them in their electric arc furnace for manufacture of Steel ingots that they had already produced end-use certificate issued by the Iron & Steel Controller, Bombay which testifies the receipt of entire quantity of 612.885 M.T. and its consumption. The draft survey report cannot be taken as basis since draft survey was carried out in the stream during heavy swell and this was confirmed by the Surveyors that it was not possible for them to ascertain the exact quantity discharged from the vessel. In the absence of weighment facility in the port actual weight arrived on actual physical verification and use in plant should be preferred as against draft survey report. These contentions were negatived by the Assistant Collector holding that it is established that the quantity landed at Bedi Port as per the draft survey report is the basic document and, accordingly, relying on draft survey report he confirmed the demand in respect of 37.115 M.T. of scrap. This view was upheld by the Collector (Appeals). Hence, this appeal.
3. At the out-set Shri S.K. Roy, learned S.D.R. appearing for the Revenue pointed out that this issue is settled in favour of the Department in the very appellants' case as per Order No. C/119 to 124/91-B.2 dated 26-4-1991 reported in 1991 (56) E.L.T. 778 (Tri.), and following the ratio of the said decision this appeal is liable to be dismissed.
4. Shri Willingdon X'ian appearing for the party submitted that though the conclusion was not in favour of the party but the ratio/observations made in the said decision are more favourable and relevant to decide the issue in the present case and, accordingly, he drew our attention to para 11 of the said order which reads as under:-
"11. As seen from the statutory provision in Section 23 of the Customs Act, for remission of duty on any goods lost or destroyed, it is imperative that the loss or destruction should be established to the satisfaction of the Asstt. Collector, prior to the clearance of the goods for home consumption. However, having regard to the lack of facilities for weighment of bulk consignments in certain ports or the difficulties experienced by the trade in arranging the weighment of goods under Customs supervision, in several cases the appellate authorities have held that weighment reports prepared by recognised firms of surveyors prior to the clearance of the goods and in exceptional circumstances by weighment on private weighbridges shortly after clearance can be accepted as proof of the actual quantity of goods cleared for the purpose of granting remission on the shortages under Section 23."
He contended that since weighment facilities were not available in the port, the weight based on draft survey report being approximate, the quantity certified on the basis of actual weighment by independent firms of Surveyors or Govt. Agencies should be accepted as the imported quantity for the purpose of the end-use bond. He said that since the evidence adduced by the appellants relating to actual quantity received by them was not considered by the authorities below, he requested that the matter may be remanded with a direction to examine the issue afresh with reference to evidence in the light of the aforesaid Order Nos. 119 to 124/91-B.2 of the Tribunal.
5. Arguing for the Department, Shri Roy contended that there is no provision for claiming remission of duty on any goods lost or destroyed when once the goods were cleared. It is imperative that the loss or destruction should be established prior to clearance of the goods for home consumption as envisaged under Section 23 of the Customs Act. It was argued that no allowance on account of factors, such as losses during unloading or draft survey weight being approximate could be made to determine actual weighment in a Survey by a recognised agency. He argued that since no survey Was carried out by any approved agency either in the port or immediately after clearance of the goods, subsequent evidence adduced by the appellants cannot be taken into consideration to determine the actual imported quantity.
6. We have carefully considered the arguments advanced on both sides and perused the records. The short point arises for our consideration in this case is whether weight mentioned in bond based on out-turn reports recorded prior to the clearance of the goods could be taken as the imported quantity for the purpose of the discharge of the end-use condition under Notifications No. 151/Cus., dated 15-7-1977 and No. 107/79 dated 10-5-1979 or quantity certified by the Regional Iron & Steel Controller, Bombay as actually received in the importers' factory would be relevant for this purpose.
7. The case of the appellants is that the weight recorded in the out-turn report in this case was only a rough estimate of the weight of the imported melting scrap, since it was based on the draft survey weight and that too was being approximate and not on actual weighment. For these reasons and on the ground that there was no facility for weighment in Jamnagar Port, it has been claimed that the quantity certified by the Regional Iron & Steel Controller to have been actually received in the factory should be the quantity for the purpose of end-use condition.
8. During the course of the arguments, we were informed that determination of weight by draft surveyor in respect of commodities shipped in bulk is well established practice in International Trade and even though there can be some margin of error in the determination of weight by this method, it need not always be to the disadvantage of the buyer. However, it cannot be denied that there always exists the possibility of some handling losses occurring during unloading of goods.
9. Section 23 of the Customs Act, 1962 provides for remission of duty on goods which are lost or destroyed. However, such remission is possible under the law only if it is shown to the satisfaction of the proper officer that the imported goods were lost or destroyed at the time prior to their clearance for home consumption. However, having regard-to the lack of facilities for weighment of bulk consignments in certain ports or the difficulties experienced by the trade in arranging the weighment of goods under Customs supervision, in several cases as referred to by the appellants' counsel, the Tribunal has held that weighment reports prepared by recognised firms of surveyors prior to the clearance of the goods and in exceptional circumstances by weighment on private weighbridges shortly after clearance can be accepted as proof of actual quantity of goods declared for the purpose of granting remission on the shortages under Section 23.
10. In the present case, the goods were imported by the appellants on 5-8-1979 and concerned Bill of Entry F. 50 was filed for clearance of the said goods on 20-9-1979. In the meanwhile bond was executed to produce the acceptable evidence within six months from Iron & Steel Control Authorities with regard to the use of ferrous melting scrap in electric arc furnace. From the records we find that the certificate was not filed within 6 months but was sent by the Iron & Steel Control Authorities only on 27-5-1981. Since the certificate speaks the quantity of 612.885 M.T. as against the declared quantity of 650 M.T. the difference arisen which resulted in demand. The certificate which was issued several months after the importation of the goods did not contain information either in regard to the date on which the goods were received in the factory or the mechanism adopted for determination of the weight. The appellants emphasised mostly on the draft survey report as it took place during heavy swell and the quantity taken out of Customs charge was on approximate basis. We find that first survey was taken in the sea and the second survey was also taken in the sea. The quantity was made out of Customs charge was accepted by the party and same was done in their presence. We do not find any objection to the quantity at the material time or at the earliest. The observations made by the Assistant Collector in his order that "in the present case the first survey has been conducted by M/s. Errison & Richards (Gujarat) and the subsequent survey has been conducted by M/s. Metcalf & Hodkinson (P) Ltd. The second survey report is dated 3-12-1979 which formed the basis for the amendment of the I.G.M. quantity second time. The second survey issued an addendum to the survey report dated 3-12-1979 as late as on 14-8-1980 stating quantity should be taken as approximate. The said fact has been incorporated in the original survey to the effect that the survey is conducted in the heavy swell. It is, therefore, not understood as to what was the purpose of issuing the addendum as late as on 14-8-1980 i.e. after a period of about nine months when all procedures of receipt delivery were completed, is also relevant. We find that in respect of the goods in question there is no evidence of any survey having been carried out by any recognised agency or firm of surveyors either in the port or shortly after clearance to determine the actual weight of goods cleared by the appellants. Under these circumstances, we do not find any justification in remanding the matter to the lower authorities to consider the issue with reference to the certificate issued by the Regional Iron & Steel Controller and other evidences, as urged by the appellants' counsel.
11. In the view we have taken, the appeal filed by the party is hereby dismissed.