Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs M/S C.J. Shah on 14 June, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT:
II
Appeal No.C/558/2009 (Application No.C/ORS/542/10, C/S/1909/09)
Arising out of: OIO No.KDL/COMMR/12/0910, dt.31.08.09
Passed by: Commissioner of Customs, Kandla
For approval and signature:
Honble Mrs. Archana Wadhwa, Member (Judicial)
Honble Mr. B.S.V. Murthy, Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the Yes
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
M/s C.J. Shah.
Respondent:
CC Kandla Represented by:
Shri J. C. Patel, Adv. for the Assessee; Shri R. Nagar, SDR for the Revenue.
CORAM:
MRS. ARCHANA WADHWA, MEMBER (JUDICIAL) MR. B.S.V. MURTHY, MEMBER (TECHNICAL) Date of Hearing/Decision:14.06.10 ORDER No. /WZB/AHD/2010 Per: Mrs. Archana Wadhwa:
After dispensing with the condition of pre-deposit of duty of Rs.31,36,308/- (out of which Rs.4,10,964/- stand recovered by Customs from insurance company) and penalty of Rs.25,000/-, we proceed to decide the appeal itself, inasmuch as we find that the disputed issue is covered by the precedent decisions of the Tribunal.
2. As per facts on record, during the period July 2007 to January 2008, the appellants imported 4 consignments of Methanol and filed 5 Bills of Entry for warehousing the same. After obtaining permission, the goods were deposited in Customs bonded warehouse and varying quantities were being cleared by them from the said warehouse from time to time. On 06.02.08, 632.229 MTs of Methanol was lying in the Customs bonded ware house, when a fire broke down and the said quantity was destroyed. Out of the said quantity, 533.752 MTs was non-duty paid. Dispute in the present appeal relates to the duty in respect of the said quantity of Methanol. The Commissioner has confirmed the said demand on the destroyed goods vide its impugned order by rejecting the appellants claim that they are entitled to remission of the same in terms of provisions of Section 23(1) of Customs Act, 1962. However, the Commissioner has not disputed and in fact, accepted the factum of fire and subsequent destruction of the goods. For better appreciation, we reproduce the provisions of Section 23 of the Customs Act, 1962.
Section 23. Remission of duty on lost, destroyed or abandoned goods. (1) Without prejudice to the provisions of Section 23, where it is shown to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs that any imported goods have been lost (otherwise than as a result of pilferage) or destroyed, at any time before clearance for home consumption, the Assistant Commissioner of Customs or Deputy Commissioner of Customs shall remit the duty on such goods.
3. As is seen from the above, where any imported goods are lost or destroyed at any time before clearance for home consumption, they earn remission of the duty. The Commissioner has held against the appellant on the ground that they have entered into a bond with the Customs at the time of depositing the goods in warehouse and as per the condition of bond, they are required to discharge the duty. There is no condition in the bond that the same would be automatically discharged in the event of fire and the insurer will be set free from the premises and conditions of these warehousing bond executed by them at the time of depositing the goods in warehouse. He has also observed that the appellant has not taken sufficient insurance policies from the insurance company so as to cover the duty element to the full extent. He also relied upon the Tribunals decision in case of M/s Pasupathi Overseas Pvt. Ltd. Vs. CC Madras 1996 (88) ELT 795 (Tribunal) and distinguished others decisions allowing remission of duty in case of destruction of warehoused goods by observing as under:
4.5 I have also gone through the decisions relied upon by the noticee. The decision of Honble Tribunal in case of Jindal Vijayanagar Steel Ltd. Vs. Commissioner of Customs, Mangalore 2006 (201) ELT 18 (Tri-Bang.) is distinguishable on facts inasmuch as it does not answer the question as to whether an importer who has executed a bond under Section 59 for properly accounting of the goods which are warehoused is exonerated of his responsibility imposed by Section 72(d) in the event of fire destroying such goods, in the affirmative. The decision in case of Mount Shivalik Breweries Ltd. Vs. UoI 2003 (157) ELT 9 (Del.) is also on a different footing and cannot be pressed in service in the facts and circumstances of this case. Similarly, the decision of Honble Tribunal in case of Pasupathi Overseas Pvt. Ltd. Vs. CC Madras 1996 (88) ELT 795 (Tribunal) was not before Honble Tribunal for consideration when it decided the case of Winsome Yarn Ltd. Vs. CCE Chandigarh 2001 (134) ELT 686 (Tri-Del). In result, I follow the decision in case of Pasupathi Overseas Pvt. Ltd. supra and confirm the demand for duty along with penalties, rent, interest and other charges payable in respect of goods under consideration.
4. As against above, it is the assessees contention that in terms of provisions of Section 23 where Revenue authorities are satisfied that imported goods have been destroyed, remission has to be granted. The plain language used in Section 23 contained no condition or attachment to it. Inasmuch as the Commissioner is not doubting the destruction of the goods in fire and in fact has admitted the same, the provisions of Section 23 would be applicable simplicitter. Reference by the adjudicating authority to execution of bonds is relevant only in terms of provisions of Section 72 of the Customs Act, 1962 where the importer is under legal obligation to duty amount for the warehoused goods to the satisfaction of the proper officer. Learned advocate has relied upon the various decisions of the Tribunal as also of Court.
5. We find that Honble High Court of Gujarat in the case of Mount Shivalik Breweries Ltd. Vs. UoI 2003 (157) ELT 9 (Del.) has held that the destruction of the imported goods in fire after order for clearance for home consumption stand passed but before actual clearance from bonded warehouse, would invite remission of duty in terms of sub-section 1 of Section 23 of Customs Act, 1962. The only pre-requisite is that the importer has to discharge onus that the goods were actually lost or destroyed before physical clearance. Similarly, we note that the Tribunal in case of Jindal Vijayanagar Steel Ltd. Vs. Commissioner of Customs, Mangalore 2006 (201) ELT 18 (Tri-Bang.) has held that in case of destruction of the goods in ware house, remission of duty is admissible in terms of Section 23 of the Customs Act, 1962. We also considered the decision of Pasupathi Overseas Pvt. Ltd. relied upon by the Commissioner and it was pointed out that the facts in that case have not been properly brought out. Similarly, in case of CC Bangalore Vs. Maini Granites Ltd. 2005 (187) ELT 55 (Tri-Bang), it was again held that the goods properly accounted for in the ware house but damaged due to accident while removing to the domestic area, would be covered under Section 23 of the Act and not under Section 72. The Tribunal also distinguished the ruling rendered in case of Pasupathi Overseas. Further, in case of Winsome Yarn Ltd. Vs. CCE Chandigarh 2001 (134) ELT 686 (Tri-Del), the destruction of the goods kept in the bonded ware house was held to be covered by Section 23 of the Customs Act. In the case of Next Fashions Creators Pvt. Ltd. Vs. CC Bangalore 2006 (206) ELT 105 (Tri-Bang.), the fact of discrepancies between the value shown in the insurance claim and what was informed to Customs, cannot be held to be valid ground for rejection of claim for remission of duty in terms of Section 23. There are number of cases to the same effect and we are proposing not to multiply the same.
6. By applying the ratio of above decision to the facts of the instant case, we find that denial for remission of duty by Commissioner is not justified. We, accordingly, set aside the impugned order and allow the appeal with consequential relief to the appellant.
(Pronounced in Court)
(B.S.V. Murthy) (Archana Wadhwa)
Member (Technical) Member (Judicial)
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