Customs, Excise and Gold Tribunal - Mumbai
J.J. Foams Pvt. Ltd. vs Collector Of Customs on 21 June, 1993
Equivalent citations: 1994(50)ECR282(TRI.-MUMBAI)
ORDER P.K. Desai, Member (J)
1. Both the matters arise out of order No. 1516/88-WRB dated 21.10.1988 of this Bench in Appeal No. CD(BOM)726/83 and hence are dealt with and are being disposed of by this common order, whereas C/Misc-55/92-Bom is filed invoking provisions of Section 129-B(2) of the Customs Act, seeking rectification of the order on the ground of error apparent from the facts on record, C/Ref-14/89-Bom seeks reference vide Section 130(1) of the said Act, to the High Court, on the issues as formulated by the applicants, submitting them to be the issues of law, arising out of the same order.
2.1. The applicants imported a consignment of Polyester polyal, TDI 80 and Silicon compound, in 486 drums packed in a container, when the said container was destuffed at Bombay, the drums were found in damaged and leaking condition and loss of goods was suspected and hence, on the request of the importer, survey was made, where 216 kg of polyester polyal and 590 kgs of TDI 80, were found short. Some of the drums were also found rusted and some had dents. In-bond clearance was sought with a request that the goods were to be transferred to Delhi for in-bond warehousing. The same was allowed on the applicants furnishing bond. On arrival of the goods at Delhi, a second survey was made in presence of the local Customs authorities, where shortage of 4299 kg in polyester polyal and of 3527 kg in TDI 80 was noticed. On the matter being reported to the Bombay Customs, a notice of demand for Rs. 2,51,941.20 being the duty on the goods lost, in transit was issued and in reply thereof, a remission of duty vide Section 23 of the Customs Act was claimed. The Assistant Collector adjudicating however held that the loss was on account of negligence and absence of proper care and precaution on the part of the appellants to prevent the same. He therefore, rejected the prayer for remission and confirmed the demand, which order stood confirmed in the appeal before the Collector (Appeals).
2.2. In the appeal before the Tribunal, this Bench held that, though the applicants were eligible to get remission in duty to the extent payable on the losses noticed as per the survey at Bombay, there was no justifiable ground to remit the duty on the goods reportedly lost in transit from Bombay to Delhi. Rejecting the claim to that extent and confirming the demand in relation thereto, this Bench observed that when the consignment was received at Bombay itself, in damaged condition, they could have warehoused the goods at Bombay and could have, with permission from the authorities, taken adequate measures to prevent further loss, destruction or damage to the goods. For this observation, the Bench referred to the provisions of Section 54 of the Customs Act. It was held that instead of that, when the applicants chose to transport the goods to Delhi, in leaking condition, knowing fully well the consequences, they could not claim remission in duty, as the loss or destruction was on account of not taking due care and precautions. The order demanding duty to the extent of the loss that occurred after arrival of the goods at Bombay, was therefore confirmed.
3. Filing the Miscellaneous application, the applicants have pleaded that the order of this Bench suffers from the mistake apparent on the face of record, inasmuch as the evidence of the applicants having taken due care and precaution to arrest the further loss, has been overlooked by the Bench in drawing the conclusion against them on that point. They have pleaded that it is on record that the transporters refused to transport the goods in the condition as the drums were found when destuffed and hence the transportation was delayed by couple of days, indicating that the applicants took such precaution as would render transport thereof safe and without any further leakage or loss. The applicants have also referred to certain observations in the survey report of the survey at Bombay, as also certain observations in the Order-in-Original and Orderin-Appeal, to plead that those observations duly established that due precautions were taken. They have therefore pleaded that when the said evidence has been overlooked by the Bench, powers under Section 129-B(2) of the Customs Act be exercised and mistake be rectified with consequential findings thereof.
4. Pleading that if by chance, this Bench is not convinced on the issue of rectification, then, the findings as given, and particularly placing of reliance on the provisions of Section 64 of the Customs Act, gives rise to several legal issues, it is pleaded that hence, the matter be referred, vide Section 130(1) of the Customs Act, to the High Court for appropriate interpretation of the statutory provisions, and consequential right of the party to claim remission. The questions, alleged to be the issues of law arising out of the order of this Bench are:
(i) Is it incumbent on the Importer for claiming remission of duty on goods lost in transit before clearance for home consumption as per provisions of Section 23 of the Customs Act, 1962, to take action as permitted under Section 64 of the said Act?
(ii) And if not, is it not sufficient for the importer to prove that adequate steps were taken to prevent any loss during transit, before the goods were loaded on transport vehicles before the transit took place?
(iii) And when it has been so proved, was the decision that because steps were not taken as permitted under Section 64 of the Customs Act, the loss found in transit could not be condoned and the duty on the goods so lost, could not be remitted, correct in law?
(iv) And if the said decision was not correct in law, is not this decision liable to be set aside, and the said Appeal to the said Tribunal allowed?
5.1. Advancing submissions on both the applications, Mr. V.N. Deshpande, the Ld. Advocate for the applicants, has argued that the Bench ought to have considered the fact that transporters did not accept the goods in the damaged condition, and hence two days time was taken, and has pleaded that none would take any risk knowingly, to loose the valuable material imported, and there could be no intention to do so just with a view to avoid payment of duty. In his submission, the consequential financial loss to the party is much more than the duty amount. He has also pleaded that the damage and leakage noticed at Delhi, was from the drums other than those found leaking when surveyed at Bombay, indicating that those damaged drums were duly plugged to arrest any further leakage, and as such, the loss cannot be attributed to any human failure on the part of the applicants. In his submission, this aspect, which stands established by the evidence on record, ought to be examined, and when that has not been examined and is overlooked by the Bench in deciding the appeal, the order called for rectification.
5.2. Arguing on the application for reference to the High Court, the Ld. Advocate has submitted that, the prayer be considered if application for rectification is to be rejected, and has pleaded that the main issue of law that arises out of the impugned order is "whether the provision of Section 64 could stand in the way of claiming remission of duty on the goods lost or destroyed during in bond transport of the goods from one warehouse to another, which always is being done under the Customs supervision and effective control.
6.1. Mr. K.M. Mondal, the Ld. SDR, however, has opposed both the prayers and has submitted that, there does not exist any evidence on record which could justify calling out the matter over again for the purpose of rectification. He has pleaded that what has been submitted in relation thereto, is purely of an argumentative nature and not pointing out any cogent evidence on record, which has been overlooked.
6.2. As for the prayer for reference of issues to the High Court, the Ld. SDR, has submitted that the issues as framed challenge the finding of fact and no interpretation of any statutory provision is contemplated and as such, none of the questions as formulated or in any other form on the point sought to be agitated, need be referred.
7. Examining first the application seeking rectification, Section 129-B(2) does not contemplate review of the order. What it provides for is rectification of mistake apparent from the record. Confining to the point at issue here, for seeking rectification on the ground of overlooking of certain evidence, the applicants ought to establish that clear and positive evidence existed on record to show that due care and precautions were taken. However, going through the submissions made in the said application, what the applicants plead is that from the circumstances, which according to them, existed on record, conclusion ought to have been drawn that due precautions were taken. The plea that survey at Delhi indicates leakage from drums other than those found leaking at Bombay, also cannot be taken as an evidence, to establish the plea raised by the applicants, particularly when, the evidence of survey at Bombay also indicates that some of the drums were dented and many were rusted. If the drums already partially damaged are removed in the same condition and suffer further damage, that could, on the contrary, lead to indicate lack of care and precaution, which the appellants had an opportunity to take. The observations in the order-in-original and the order-in -appeal as referred to by the Ld. Advocate for the applicants, on the contrary lead to show that proper precautions to arrest further damage were not taken. Thus the submission that the Bench has overlooked the evidence available on record and has drawn conclusion de hors to that, cannot be accepted. The applicants cannot claim review of the conclusion drawn under the guise of rectification The prayer therefore cannot be considered and therefore stands rejected 8.1. Considering then, the prayer for reference to the High Court, on the questions formulated by them and the issues raised by them, the issue here is not the one of eligibility to claim remission of duty vide Section 23 of the Customs Act, on account of loss or destruction during transport in bond goods from one warehouse to another as permissible vide Section 67 of the Act, where the loss or destruction is on account of the circumstances beyond the control of the importer and has occurred in spite of taking all reasonable precaution; what has been decided by this Bench, in the impugned order is non eligibility to claim remission because the loss or destruction is on account of the applicants' failure to take reasonable precautions. If the issue involved was only with regard to the eligibility without any qualifying circumstances which are held as existing in this matter, possibly some different view than the one taken might, have appeared probable. However, when that is not the issue here, the same is not required to be, and has not been, examined from that angle. Even the applicants do not seem to be specifically raising the same in the questions as formulated by them.
10.2. It is virtually an admitted position that the drums, when they were landed at Bombay, were either leaking or were dented or were rusted. This fact was known to all and survey was actually conducted. The importers are permit -ted to warehouse the goods without payment of duty, and provisions therefor are made in Chapter IX of the Customs Act. Section 67 in that Chapter permits transfer of such goods from one warehouse to another irrespective of whether both the warehouses are at the same station or another. However, for such transfer, the importer is required to comply with such conditions as may be laid for due arrival of the goods at the destination, and as such whenever such a transfer is being undertaken, bond is got executed. Though theoretically the in -bond goods transferred from one warehouse to another remains in custody and control of the Customs authorities, the duty is cast upon the importer undertaking transfer, to see that the goods are duly protected and all due care and precautions within their power, are taken to see their safe arrival at the other ware -house and if there is a loss or destruction during the transport, which could be attributed to the act or omission of the part of the importers, then for such loss they may not become eligible for any duty remission vide Section 23 of the Act. This is what, is actually decided by this Bench in its impugned order. Reference to the provisions of Section 64 of the Customs Act, is just to substantiate the ground that there exist provisions, which enable the appellant to have an access to the goods stored in a bonded warehouse.
10.3. Under the circumstances, question No. 1 as formulated becomes misconceived, as it is not the crux of the finding of this Bench that for claiming remission under Section 23 of the Act, action as permitted under Section 64 should be taken. What has been held is that while undertaking transfer as permissible vide Section 67, they were supposed to take all reasonable care and precaution against in-transit loss or destruction, and based on the facts available on record, it is held that no such care and precautions were taken, and the loss was on account of the failure to do so, on the part of the importer and therefore remission vide Section 23 was not available to them. The said question therefore does not call for any reference to the High Court 10.4. Question No. 2 which is related to Question No. 1 is however based on the issue of appreciation of the evidence on the factual aspect, and as such also, cannot fall within the scope of Section 130(1) of the Act. Even otherwise, answer to this could be found in the reasonings adopted while rejecting the application for rectification.
10.5. Question No. 3 is rather hypothetical and has mixed up several points. It may be reiterated that it is held as not proved that a due precaution were taken. Reference to Section 64 was only for the purpose of showing that importer had an access to the goods though in Bonded warehouse and there could be no question of condonation of the lapse. Further, issue of condonation of the lapse was never before the Tri -bunal, as lapse itself was not admitted. In those circumstances, it becomes difficult to understand as to what point the applicants desire this Bench to refer to the High Court vide this question Clear and precise question of law has to be carved out when a reference to the High Court is sought. From any angle however no issue of law arising out of the order of the Bench is made out in the said question.
10.6. Question No. 4 is a formal one, indicating what ought to be the consequences on the order of this Bench, if the same is found erroneous on issue of law. The question being consequential, to the other three, and when first three questions are held as not referable to the High Court, the question does not survive for being referred to the High Court.
11.7. Under the circumstances, none of the questions formulated need be referred vide Section 130(1) to the High Court. The application for reference there -fore stands rejected.
12. Thus, both C/Misc-55/92-Bom and C/Ref/14/89 are rejected.