Customs, Excise and Gold Tribunal - Bangalore
Next Fashion Creators Pvt. Ltd. vs The Commissioner Of Customs on 23 June, 2006
Equivalent citations: 2006(111)ECC369, 2006ECR369(TRI.-BANGALORE)
ORDER T.K. Jayaraman, Member (T)
1. This appeal has been filed against the OIO 32/2005 dated 12.12.2005 passed by the Commissioner of Customs, Bangalore.
2. The appellants are a 100% EOU. They imported various duty free materials. Due to fire accident on 07.04.2004 in the stores of the appellant unit, the entire raw materials had been burnt along with certain documents. The duty foregone on the goods destroyed by fire was Rs. 48,21,830/-. The Superintendent of Customs directed the appellant to pay the said duty amount. The appellants filed an application on 06.09.2004 with the Deputy Commissioner of Customs, Bangalore, claiming remission of duty amounting to Rs. 48,21,830/- under Section 23 of the Customs Act, 1962 in respect of the goods destroyed in the fire accident. Investigations revealed that the value of the goods destroyed in the fire accident as claimed in the Insurance claim was Rs. 4,20,78,539/-. However, the value of the goods furnished to the Customs Department was Rs. 90,09,012/-. Thus, there was huge variation between the insurance figures and what has been stated before the Customs. The total value of the raw materials and accessories destroyed in the fire works out to Rs. 1,89,66,096/-. The duty on the above goods comes to Rs. 90,48,067/-The appellants, during the course of investigation, paid this amount to the Department on various dates. The issue came up before the Commissioner for the question of remission of duty under Section 23 of the Customs Act. In the impugned order, the Commissioner confirmed the demand of duty of Rs. 90,48,067/- in respect of the raw materials/accessories, obtained duty free in terms of the provisions of Section 72(1)(d) of the Customs Act, 1962 read with Notification No. 53/1997-Cus read with Notification No. 52/2003-Cus dated 31.03.2003. The amounts already paid were appropriated towards the above levies.
2. As regards remission of duty under Section 23, the Commissioner, relying on the decision of the Tribunal in the case of Pasupathi Overseas Pvt. Ltd. v. CC, Madras , held that Section 23 would not be applicable in case of failure to account for warehoused goods, and duty has to be paid in terms of Section 72. He has also observed that Section 23 will have no relevance for the goods imported and cleared under the EOU Scheme vide Notification No. 52/2003-Cus. The appellants challenge the impugned order strongly.
3. Shri Arvind P. Datar, the learned Senior Advocate and Smt. Rukmani Menon, the learned Advocate appeared for the appellants and Shri Ganesh Havanur, the learned SDR for the Revenue.
4. The learned Advocates urged the following points:
(i) The Commissioner has stated that the appellant had not taken due precaution for safe keeping of the bonded goods as contemplated under Section 64 of the Customs Act, 1962. The appellant has not been negligent. This is established by the Insurance Company paying the amount claimed. There is no finding of any negligence by any authority.
(ii) The Commissioner has stated that Section 23 will not apply to warehoused goods.
The above finding is not correct because a plain reading of Section 23 indicates that it is squarely applicable to the facts of the present case. The Section permits remission of duty if the following conditions are satisfied:
a. Imported goods should have been lost or destroyed otherwise than by pilferage;
b. The loss should be before clearance for home consumption.
c. There is no other requirement as far as Section 23(1) is concerned. In fact, there is no mention of due-precaution being taken with respect to the warehoused goods. The section is applicable irrespective of the nature of exemption claimed.
(iii) The following case-laws were relied on to show that Section 23 is applicable to warehoused goods.
a. Mount Shivalik Breweries Ltd. v. Union of India b. Bharat Petroleum Corporation Ltd. v. CC, Bombay C. Jindal Vijayanagar Steel Ltd. v. The Commissioner of Customs, Mangalore Final Order No. 2046/2005 dated 28.11.2005
(iii) The Commissioner has stated that the appellant had not satisfied the conditions of the Customs Notification 53/97-Cus read with Notification No. 52/2003 dated 31.03.2003.
These Notifications have no application in the context of the claim for remission. Similarly, Section 72 has also no bearing. Section 72 cannot be invoked for remission as held by this Tribunal in Jindal Vijayanagar Steel Ltd. v. The Commissioner of Customs (cited supra).
(iv) The Commissioner has denied the remission on the basis of Pasupathi Overseas Pvt. Ltd. case (cited supra). In the Pasupathi Overseas case, the Apex Court rejected the remission claim as the claim was based on very vague grounds. The claimant stated that the goods had been either pilfered, lost due to spillage or any other kind of loss. Therefore, the Supreme Court upheld the rejection of the claim by the Department. This case is not remotely connected with the present case. In the present case, remission claim has been made on specific grounds, viz. fire accident.
(v) The Commissioner has made reference to the discrepancy between the insurance claim and the amount claimed for the purpose of remission. But the enhanced claim made to the insurance company is not a ground to reject the claim for remission. Assuming that there is discrepancy for insurance claim, it will be of no consequence for claiming remission in view of CCE & C, Surat-II v. Welspun Terri Towels 2002 (149) ELT 593(Tri.-Mumbai).
5. The learned SDR reiterated the order of the lower authority.
6. We have gone through the records of the case carefully. The issue to be decided is whether the appellant is entitled to the remission of duty paid on the imported goods, which were lost in fire, under Section 23 of the Customs Act, 1962. Section 23(1) of the Customs Act deals with Remission of duty on lost and destroyed goods. Section 23(1) is reproduced below:
Section 23. Remission of duty on lost, destroyed or abandoned goods. - (1) [Without prejudice to the provisions of Section 13, 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.
A perusal of Section 23(1) reveals that in order to claim remission of duty, the important condition is that it should be shown to the satisfaction of the Assistant Commissioner or the Deputy Commissioner that the imported goods have been lost or destroyed at any time, before clearance for home consumption. If the loss is because of pilferage, remission would not be applicable. In the instant case, the goods have been warehoused. Goods which are warehoused undoubtedly have not been cleared for home consumption. In the jindal Vijayanagar case, we have held that remission of duty is applicable to warehoused goods. The other case-laws relied on by the learned Advocates are also relevant. Revenue has not shown that the goods have been destroyed because of pilferage. The fact of the fire accident is not under dispute. Therefore, all the conditions for claiming remission under Section 23(1) have been fulfilled. The appellants are entitled for the entire duty paid on the goods. The Pasupathi case, relied on by the Adjudicating Authority, is not at all relevant here. Moreover, the non-fulfillment of conditions of the Notifications mentioned by the Commissioner is also not relevant in the case of remission of duty. The discrepancy between the value shown in the insurance claim and what was informed to the Customs cannot be a valid ground for rejection of the claim for remission in the light of Section 23 of the Customs Act, 1962 and also the decision of the Tribunal in the CCE v. Welspun Terri Towels case cited supra. In fine, we allow the appeal with consequential relief.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)