P I Industries Limited Vs Principal Commissioner of Customs (CESTAT Ahmedabad)
In the case of P I Industries Limited vs Principal Commissioner of Customs (CESTAT Ahmedabad), the appeal revolves around the demand for customs duty on goods destroyed in a fire accident at the appellant’s unit located in a Special Economic Zone (SEZ). Here’s a detailed summary of the case:
P I Industries Limited, engaged in the manufacture of agro chemicals within an SEZ, experienced a fire accident on 05.06.2018, resulting in the destruction of various raw materials, packing materials, and semi-finished goods, both indigenous and imported. The appellant promptly notified the SEZ authorities about the fire and undertook stock verification, estimating the loss at Rs. 7,95,76,996/- despite the total stock value being initially reported as Rs. 16,54,77,557/-.
Following the fire, a show cause notice was issued on 06.06.2020 demanding customs duty on the entire pre-fire stock value, ignoring the lower assessed loss value. The Principal Commissioner confirmed this demand on 03.03.2021, leading the appellant to appeal before the CESTAT.
The appellant’s counsel argued that no customs duty should be levied under SEZ Rules, specifically Rule 22(2), which requires proper accounting of goods but allows for remission under Section 23 of the Customs Act for goods lost or destroyed before clearance for home consumption. They cited precedents such as ONGC Petro Additions Ltd and Satguru Polyfab Pvt. Ltd, which supported remission of duty in similar contexts, emphasizing that SEZ units should be treated as foreign territory until goods are cleared for domestic use.
