ONGC Petro Additions Limited Vs C.C.-Ahmedabad (CESTAT Ahmedabad)
Introduction: The CESTAT Ahmedabad recently delivered a crucial verdict in the case of ONGC Petro Additions Limited versus C.C.-Ahmedabad. The dispute revolved around the denial of remission of customs duty for imported raw material destroyed in a fire incident at ONGC Petro’s SEZ unit. The impugned order rejected the application, citing reasons related to SEZ Act provisions and alleged negligence by the appellant.
Detailed Analysis:
1. SEZ Act vs. Customs Act: The appellant contended that Section 23 of the Customs Act is applicable despite the SEZ Act’s overriding effect, as the remission sought pertains to customs duty. The analysis emphasizes that customs duty, governed by the Customs Act, should be subject to remission under Section 23.
2. Negligence Allegations: The appellant argued that the fire incident occurred suddenly and beyond their control, as supported by the survey report. The analysis discredits the Commissioner’s claim of negligence, highlighting the thorough survey conducted for insurance purposes, which absolved the appellant of any wrongdoing.
3. Insurance and Customs Duty: The analysis addresses the contention that insurance only covered the principle value, excluding customs duty. Case precedents are cited to support the appellant’s position that duty remission applies even if insurance covers only the value of goods. The judgment emphasizes that duty remission under Section 23 is valid for SEZ units.
4. Customs Act Applicability: The order refutes the Commissioner’s argument that Section 23 does not apply to SEZ units, emphasizing that customs duty assessment falls under the Customs Act. It underscores that provisions of other acts inconsistent with the SEZ Act are overridden, but Section 23 aligns with the SEZ Act.
5. Insurance Claim and Lack of Inspection: The analysis highlights the insurance company’s approval of the claim as evidence that the fire was beyond the appellant’s control. It criticizes the absence of a customs department inspection to support the Commissioner’s claim of negligence, further strengthening the appellant’s case.
Conclusion: The CESTAT Ahmedabad, after careful consideration, overturned the impugned order, allowing ONGC Petro’s appeal for duty remission. The judgment, pronounced on December 11, 2023, emphasized the absence of negligence, the applicability of Section 23, and the insurance claim as evidence, providing a robust foundation for granting remission of customs duty in the aftermath of the fire incident at the SEZ unit.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
This appeal is directed against impugned order-in-original dated 03.09.2021 whereby the Adjudicating Authority namely Commissioner has rejected the application for remission of duty in respect of imported raw- material destroyed in fire, in the appellant’s SEZ unit. The Commissioner while rejecting the application given the following reasons:
I. The Customs provision of Section 23 in respect of remission of Customs duty is not applicable to the SEZ unit, as the SEZ unit is governed by SEZ Act, which overrides all other Acts.
II. The appellant have not taken proper precaution to avoid the fire incident.
III. The appellant, while taking the insurance policy have not covered the Customs duty but only Principle value of the goods is Thus, the appellant have not taken care about the customs duty, which is public money.
Being aggrieved by the Order-In-Original, the appellant filed the present appeal.
2. Sujit Ghose, Learned Counsel with Shri. Shubh Dixit, and Shri. Ajinkya Tiwari, Learned Advocates appearing on the behalf of the appellant submits that Section 23 of the Customs Act, is clearly applicable in the present case for the reason that as regard the overriding effect of SEZ Act, it only applies to the provision of other Act, which are not in consistent with the provision of other Act. In the present case the appellant has sought for remission of Customs Duty. As regard the levy of Customs Duty the Customs Act is applicable. Therefore, for remission of duty also provision for remission provided under Section 23 shall apply. Which is not inconsistence with the provision of SEZ Act.
2.1 As regard, the contention of the learned Commissioner that the appellant have not taken precaution to avoid the fire incident. It is his submission that from the survey report, it is clear that the fire incidence has taken place all of a sudden and beyond the control of the insured. Therefore, the thorough survey conducted for the purpose of insurance clearly established that there is no carelessness or any negligence on the part of the appellant, due to which the fire incident could not be avoided.
2.2 He also submits that as regard the insured value i.e. without the including of customs duty the insurance is done only on the basis of invoice value and the element of customs duty does not Therefore, the insurance company will not insure any amount which is not the part of the value of the goods. Therefore, the appellant have rightly insured the only value of the goods. For this reason the remission cannot be denied. In support, he placed reliance on the following judgments:-
