Customs, Excise and Gold Tribunal - Tamil Nadu
Iti Ltd. vs Cc on 30 July, 2002
Equivalent citations: 2002(84)ECC576
ORDER S.L. Peeran, Member (J)
1. The appellant, a PSU of Govt. of India, is aggrieved with the rejection of their refund claim filed in respect of goods which were pilfered when the same were still within the area of M/s. International Airports Authority of India (IAAI), the custodian of the cargo. There is no dispute regarding pilferage of 480 numbers of IC, on which duty of Rs. 2,32,438 had been paid. They prayed refund of this amount as the goods had not yet been removed from the custodian of goods, namely, IAAI and that there was a mahazar undertaken by the surveyor, who by their report dated 16.2.94 recorded about the pilferage of the item on which the duty had already been paid. Appellants have explained that their company being a Govt. unit, they are permitted to make the payment of duty before the goods are checked and taken in possession as against the procedure of having the goods checked and duty paid. They further contend that in terms of Section 13, my imported goods which are pilfered after unloading thereof and before the Proper Officer has made an order for clearance for home consumption or deposit in the warehouse, the importer shall not be liable to pay duty, leviable on such goods except where such goods are restored to the importer after pilferage. They have also drawn the attention to Section 23 of the Customs Act which also lays down the provision for remission of duty on loss, destroyed, or goods which are abandoned before the clearance for home consumption and in such circumstances, the Asst. Commissioner of Customs shall remit the duty on such goods. It is stated that the goods had not been cleared and the Insurance Survey was conducted in the presence of the officials of the custodian of the cargo i.e. IAAI and the survey was also recorded in the Survey Report of IAAI. M/s. IAAI had informed the Customs Officers about the survey being done. They also contended that they had not received any insurance money on the duty paid but only on the value on the goods which were pilfered. They also contended that the finding recorded by the authorities that they are not eligible for refund as the goods were cleared and survey was conducted thereof and that refund of remission of duty on goods found out after the pass order was given being not admissible is not correct interpretation of law.
They contended that the further finding that no customs officer was associated with the survey and finding of the Ld. Commissioner (Appeals) that refund was hit by mischief of unjust enrichment was also not correct as the insurance company has not reimbursed them the duty paid on the pilfered goods not it was passed on to the insurance company as held by the Commissioner (Appeals). They further contended that as there was no dispute made out with regard to pilferage and duty element having been paid, therefore their claim is clearly sustainable. They further submitted that as there was no incidence of duty which has not been passed on to the insurance company, their claim is justified and refund should be allowed. They have filed all documents like Bill of Entry, documents to show the arrival of the goods, permission made by their clearing & forwarding agent to the AC on 14.2.94 seeking survey of the parcel received by flight and survey report dated 16.2.94 which clearly held that "adhesive tape joining the two flaps was found peeled off. One side was found cut off' and there was a pilferage of the item. They have also produced the letter of Indian Airlines dated 24.3.94 informing them that when the item landed, it was in good condition. They have also relied on the letter of IAAI dated 25.4.94 about the receipt of the item in good condition and also about loss of weight after the package was kept in the warehouse. They have also referred to another letter dated 18.6.94 of IAAI about the FIR lodged with police authorities with regard to loss of contents from one package of the said consignment.
Reference is also made to the standing order No. 54/95 dated 21.12.95 issued by the Commissioner of Customs, New Delhi pertaining to submission of pilfered goods. The said Public Notice clearly lays down that refund is available-after the payment of the duty provided it is shown that the survey was done when the goods was still in the custodian of the customs, after due verification by the AC (Refunds). They have also produced a letter dated 16.1.95 of United India Insurance Co. Ltd. which has made payment only with regard to value of the goods but not duty paid by them. Reference is drawn to the Tribunal's ruling rendered in Tajmahal Hotel v. CC Bombay (T), wherein it has been held that remission of duty is permissible under Section 23(1) of the Customs Act, 1962 where the goods were found to be pilfered even after the order for clearance for home consumption is made while the goods are still within the customs area. They have distinguished the case of Himalaya Granites Ltd v. CCE 2001 (46) RLT 803, wherein the claim for refund was rejected with regard to loss by pilferage in a circumstance where the goods had been kept in a private warehouse which was under the control of the appellant as a licencee. The same was the facts of the case of Golden Hills Estates v. CCE Madras . Strong reference is relied on the judgment of the case of Hindustan Petroleum Corporation Ltd v. CC Bombay wherein it is clearly laid down that remission of duty is available under the said provisions of law, if it is shown that pilferage had taken place before an order for clearance of the goods for home consumption is made but the party could not take the goods and the goods were still the customs authorities.
2. We have heard Shri R. Krishnamurthy, Finance Manager for the appellant - PSU and Ld. SDR.
3. On a careful consideration of the submissions made by both sides, we are of the considered opinion that in this particular case, there is no dispute made by the revenue regarding the pilferage of the items when the goods were still lying in damaged condition at the Air Cargo Complex. The Air Cargo Complex was within the jurisdiction of IAAI who have been appointed as warehouse keeper for the air parcels. The clearing & forwarding agent addressed a letter dated 14.2.92 to the AC, Air Cargo Complex seeking permission for carrying out the survey on imported parcel which were lying in damaged condition at the Air Cargo Complex. The Asst. Commissioner, Air Cargo Complex, Madras-27 has clearly permitted the same by writing "permitted and initialed on 14.2." Copies were also furnished to the Air India, M/s. IMI, Robinson Air Service and the survey on the disputed consignment was carried out by the surveyor and the survey report clearly opined that the package had been tampered and the goods had been found missing. A complaint by FIR was also lodged by the appellants by letter dated 18.6.94. The ground for dismissal -refund is that the goods were cleared and the survey was conducted thereafter and-' refund of remission of duty on goods found out after the pass order was given is not admissible; and that no customs officer was associated with the survey. The AC cannot take this plea of the Custom Officers not being associated with the survey for the reason that when the clearing & forwarding agent by his letter dated 14.2.94 sought permission for survey of the parcel, the Asst. Commissioner of Customs, Air Cargo Complex clearly permitted them to carry out the survey and the materials on record i.e. his survey report, letters of IAAI clearly establish about the loss of the article. The question which has arisen for consideration whether duty is required to be refunded or not. The Commissioner (Appeals) took the view that the incidence of duty was passed on to the insurance company is erroneous for the reason that insurance company has not discharged the duty element but has only discharged the value of the goods being CIF value of lost goods as arrived at in the worked out by their certificate dated 15.7.96. On a perusal of the certificate and the working out therein, it is clear that the duty element has not been refunded. Therefore, the refund is not hit by the provisions of unjust enrichment.
The Sections 13 & 23 of the Customs Act has been fully analysed in the case of Hindustan Petrochemicals Ltd. (supra) and also in the case of Taj Mahal Hotel (supra). It has been clearly held that so long as the goods are still in the custody of customs warehouse, the refund is admissible. In the case of Taj Mahal Hotel, a similar situation arose inasmuch as that the survey was done after the 'out of charge' order was given. However the cartons were very much in the warehouse and had not been cleared for home consumption. The Tribunal clearly held that AG's view that remission cannot be granted under Section 23 of the Customs Act on account of survey having been done after the out-of-charge order had been made is not sustainable. The findings recorded in paras 2 & 3 of the above judgment are reproduced herein below:
2. The facts of the case are that the appellants imported two cartons of Shower Safely Treads in the month of June 1983. Because of certain dispute in the rate of duty, the goods were bonded in the CWC Warehouse on 5.10.1983. Thereafter the dispute was carried upto the level of Collector (Appeals), when it was finally decided by the Collector (Appeals) on 16.4.1985 and the appellants decided on debonding the goods. However, due to heavy rains in the month of June 1985, the CWC Warehouse was affected and the goods bonded there were also affected. The appellants received a letter dated 5.7.1985 from CWC for surveying the goods deposited by them in the Warehouse. The survey was done by the Insurance Company of C.W.C. on 12.10.1985. Thereafter the appellant's Customs House Agent wrote a letter to the Assistant Collector (Docks) on 17.8.1985 requesting for survey by the Customs before payment of duty for ascertaining the extent of damage to the goods. However, this request for survey is reported to have been refused by citing a Customs Circular. On 22.8.1985 the appellants' Customs House Agents again wrote to the Assistant Collector (Docks) to depute an officer for survey pointing out that the Circular is applicable only in respect of the case, where out of charge order has been given and in this case the position is not so and they have not paid the duty. Since the Customs House Agents were not getting any response, they requested for instructions for payment of duty, from the appellants and duty was paid on 5.9.1985 on both the cartons. Accordingly one carton was cleared out of two cartons, on 9.9.1985. However, with regard to the other carton on a joint survey by the Customs and the Lloyds, the appellants noticed that the carton was a total loss to them, because it could not be used for the purpose it was imported. Hence they did not choose to clear the said carton. They sought for remission of duty in respect of the one carton, which has not been cleared by them and which was a total loss to them. However, the Asstt. Collector refused to grant the remission and refund of duty on the ground that the survey was done after the out of charge order and hence no refund is admissible under Section 23 of the Customs Act. The Collector (Appeals) also confirmed the aforesaid order but took the view that there is an abandoning of the carton after the out of charge order is given. Hence in terms of the provisions of Section 23 (2) of the Customs Act, liability to pay duty cannot be extinguished and hence no refund is admissible to them, since the abandoning has been done after the out of charge order is given. Hence the present appeal before the Tribunal.
3. After hearing both the sides and also perusing the documents through which I was taken, I observe that even before the payment of duty on 9.9.1985, the appellants through their C.H.A. requested for a survey by Customs by their letter dated 17.8.1985, followed by another letter dated 22.8.1985. However, the survey was not done and it was refused, as is evident from the letters. Hence the extent of damage, which ought to have been determined in terms of Section 22 of the Customs Act has not been done because of the refusal of the authorities to carry out the survey on the reported damage to the goods. Hence the appellants had chosen to pay duty so that the goods could be cleared. However, when a joint survey by Lloyds and the Customs was done, the Lloyds report clearly indicated that the goods contained in one carton are totally damaged and they are a total loss to them. The Assistant Collector also has confirmed that the goods are affected by damp condition as is evident from his certificate issued on the basis of examination done on 30.10.1985. It is to be noted that when the survey was done, even though out of charge order was given, the carton was very much in the Warehouse and has not been cleared for home consumption. In the light of the aforesaid factual position, as is evident from the documents, throughout which, I was taken, I am unable to agree with the Assistant Collector's contention that under Section 23 of the Customs Act remission cannot be granted because the survey has been done after the out of charge order has been made. Under Section 23(1) of the Customs Act, what is contemplated is that the goods should be lost or destroyed otherwise than by way of pilferage before clearance for home consumption. There is a distinction between an order for clearance for home consumption and the clearance for home consumption. Hence even after the order for clearance for home consumption has been made, if the goods are yet to be cleared for home consumption from the Customs area, the benefit of Section 23(1) of the Customs Act will be available. But then Shri Jain, the Ld. JDR points out that for applying Section 23(1) of the Customs Act, the goods should be totally destroyed or should have .been lost. In this case, the carton is very much there and it is only found to be damaged. The argument is no doubt attractive on the face of it, but when the consignment as a whole, was found to be useless for the purpose for which it is imported, it amounts to a total loss to the importer and in that view the goods are lost to them. Moreover, even if the Customs had carried out the survey with regard to one carton uncleared as per their earlier request before payment of duty, this position would have been noticed and the value of the damaged goods would have been ascertained as nil in which case duty payable would also be nil. In any case, since it has not been done, ! would not like to base my order on a presumption. All the same, since the goods are totally lost to the appellants because of the damage, the benefit of Section 23(1) of the Customs Act, would be available to them.
4. We also notice that in the case of Himalaya Granites Ltd. v CCE Chennai 2001 (46) RLT 803, this Bench has held that rejection of refund claim is justified for the reason that the goods were within the custody of the appellant. This was the facts even in the judgment rendered in the case of Golden Hills Estates v. CCE Madras . by Hon'ble High Court of Madras. Both these judgments are distinguishable on facts.
5. We notice that in the case of Hindustan Petroleum Corporation Ltd. (supra), the Bench clearly held that remission of duty is admissible on pilfered goods even after the order for clearance for home consumption had been made before the actual delivery Is taken by the importer. Therefore, in view of the ratio of these two judgments and also in view of the public notice issued by the Commissioner of Customs, New Delhi in Standing Order No. 54/94 dated 21.5.95, the appellant's claim is sustainable and the same is required to be allowed. The impugned order is set aside and appellant's claim for refund is allowed with consequential relief.