MTI Materials Pvt. Ltd. Vs Commissioner of Customs (CESTAT Delhi)
Conclusion: Appointment of the custodian was mainly for the purpose of getting the customs formalities completed. Hence, his responsibilities also continued only to the stage when out of charge order for clearance either for home consumption or for depositing in a warehouse was passed by the proper officer. Refund application was rightly rejected as neither duty exemption under Section 13 of Customs Act nor the remission of duty under Section 23 of Customs Act was available to assessee.
Held: Assessee-company had filed claims of refund for the custom duty paid on pilfered goods imported at New Delhi Port. The refund claims were initially rejected on the ground that goods were pilfered after the order of clearance by the Customs Officer. The said order was challenged. The Appellate Authority of the Department, however, restored the refund application with a direction to pass a speaking order about the applicability of Section 27. The refund claim was again rejected again on the same ground that the pilferage was noticed after the out-of-charge order for clearance for home consumption was already given by the Customs Officer in terms of Section 47 of the Customs Act. The said order was challenged before the CIT (Appeals) who had rejected the appeal. Still being aggrieved assessee-company was before this Tribunal. It was held that the out of charge order i.e. order for clearance for home consumption was given on 18 May, 2011. Pilferage was noticed after the joint survey which was conducted on 23 May, 2011 i.e. after the said OOC was passed. It will not Section 23 which deals only with the permanent loss or damage to the goods that too before OOC but section 13 as shall be applicable which deals only with respect to goods pilfered but only if pilferage is noticed prior OOC. None was the fact of the present case. Neither duty exemption under Section 13 of Customs Act nor the remission of duty under Section 23 of Customs Act was available to assessee. The question of refund of duty paid did not arise. The appointment of the custodian was mainly for the purpose of getting the customs formalities completed. Hence, his responsibilities also continued only to the stage when out of charge order for clearance either for home consumption or for depositing in a warehouse was passed by the proper officer. Custodians were not supposed to take custody of goods treating the entire custom area as a warehouse. If the importers still choose to keep the goods in the customs area, it was possible only at the importers’ own risk. Hence the provisions of Section 45 when read with sections 47, 13, and 23 harmoniously, make it abundantly clear that there was no infirmity in the order while rejecting the refund of duty as was already paid by assessee for the pilfered goods.
FULL TEXT OF THE CESTAT DELHI ORDER
The appellant in the present case had filed two different claims of refund for Rs.11,94,413/- and Rs.5,10,365/- for the identical issues of custom duty paid on pilfered goods imported at ICD Tuglakabad, New Delhi Port. The refund claims were initially rejected vide order dated 07.02.2012 on the ground that goods were pilfered after the order of clearance by the Custom Officer. The said order was challenged. The Appellate Authority of the Department, however, restored the refund application with a direction to pass a speaking order about applicability of Section 27 of the Act. The refund claim was again rejected vide order No.631/2016 dated 11.05.2016 again on the same ground that the pilferage was noticed after the out of charge order for clearance for home consumption was already given by the Custom Officer in terms of Section 47 of the Customs Act. The said order was challenged before Commissioner (Appeals) who vide the order bearing No. 12/2019-20 dated 08.04.2019 has rejected the appeal. Still being aggrieved the appellant is before this Tribunal.
2. I have heard Shri Ravinder Pal Jindal, learned Advocate for the Appellant and Shri Ravi Kapoor, learned Authorized Representative for the Respondent.
3. It is submitted on behalf of the appellant that the shortage was detected at the time of joint survey conducted before the Customs and other related authorities such as, Shipping-line, CHA, Surveyor and Party Insurance Surveyor on 23.05.2011. It is impressed upon that the presence of all these authorities is sufficient to hold that the pilferage took place before the actual clearance of goods for home consumption. The refund claim filed in terms of Section 23 of the Customs Act cannot be rejected on the ground that the out of charge order has already been issued and that the pilferage has been noticed after the said order. It is also mentioned that the pilferage was noticed by the importer on 18.05.2011 itself i.e. on the day when out of charge order was passed. This fact sufficiently indicates the greater possibility of pilferage to have taken place before the out of charge was given. Learned Counsel has relied upon the decision of Hindustan Petroleum Corporation vs. Collector of Customs reported in 1984 (18) ELT 358 (Tri.-Mum.) wherein it was held that claim for payment under Section 23 (1) arises even after an order of home consumption is made provided the actual physical delivery has not been taken. It is impressed upon that till the physical delivery is taken after the order for home consumptions the goods continued to be under the control of Customs Authorities i.e. in the custody of Port Trust Authorities upon which the importer has no control. Accordingly, in alternative, learned Counsel has prayed for applicability of section 45 (3) to the effect that liability if any, in the present case may be for the custodian of the goods i.e. CONCOR and the appellant has wrongly been held liable for the payment of the duty for which the impugned refund claim has been filed. Emphasis has been laid on the decision in the case of ITI Ltd.vs.CC, Chennai reported in 2002 (149) ELT 991 (Tri.-Chennai). With these submissions, order under challenge is prayed to be set aside and appeal is prayed to be allowed.
4. While rebutting these submissions learned D.R. has mentioned that the remission of duty in terms of section 23 of Customs Act, 1962 is permissible only for the goods lost or destroyed but for the pilfered goods the remission is prohibited by the Legislature. For such goods Section 13 only shall be applicable. But only in a situation where the goods are noticed to be pilfered prior the out charge order is issued by the proper Custom Officer. Since in the present case, the said OOC (out of charge order) was already issued prior the appellant noticed pilferation, the adjudicating authorities have rightly rejected the claim. While laying emphasis upon the decision in the case of Bharat Electronics Ltd. vs. Collector of Customs reported in 1983 (E.C.R.) 401 (Tri.-Chennai) and on the decision of Zenith Bearing Enterprises vs. Collector of Customs reported in 1995 (75) ELT 801 (Tri.-Mumbai), learned D.R. has prayed for the dismissal of the impugned appeal.
5. After hearing the rival contentions and perusing the record of the appeal and also going through the decisions relied upon by the respective parties, I observe and hold as follows:-
Apparently and admittedly, the importer filed two Bills of Entries bearing No.3510981 and 3514989 both dated 16.05.2011 for clearance of Tin Ingots imported by him. The bills were assessed on the same day itself. Appellant deposited the requisite duty on 18.05.2011 (17.05.2011 being a holiday). On 18.05.2011 itself the goods were given out of charge from Customs without inspecting the container and without subjecting the goods to any examination. It was only at the time of loading i.e. 19.05.2011 that the appellant found that the container was not at the proper place as per the location assigned to it by CONCOR. It is on 20th May, 2011 that appellant applied for joint survey of his container to the Shipping line as well to the CONCOR. Pursuant whereto a joint survey was conducted on 23.05.2011 noticing the shortage in the goods on account of pilferation. With these admitted facts that the appellant had filed his refund seeking remission of the duty already paid by him in terms of section 23 of the Customs Act, 1962. Section 23 reads as follows:-
“Section 23 : Remission of duty on lost, destroyed or abandoned goods –
(1) Without prejudice to the provisions of Section 13, where is shown to the satisfaction of the Assistant Collector 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 Collector of Customs shall remit the duty on such goods.
(2) The owner of any imported goods may at any time before an order for clearance of the goods for home consumption has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon.”
5.1 The bare perusal makes it clear that the remission of duty is permissible for shortage on account of any loss or damage other than pilferation. I observe that for pilfered goods only section in the Customs Act, 1962 is Section 13 which reads as follows:-
“Section 13
If any imported goods are pilfered after the unloading thereof and before the proper officer has made an order for clearance for home consumption or deposit in warehouse, the importer shall not be liable to pay the duty leviable on goods except where such goods are restored to the importer after pilferage.”
6. Two important admitted facts are relevant for present adjudication:-
(1) There is no other reason for the loss or damage of the impugned goods other than pilferage.
(2) That the shortage was noticed after the out of charge was given by the appropriate officer.
6.1 The appellants sole contention is that the noticed pilferage in the given facts and circumstances was the pilferage which had occurred prior the out of charge was given, accordingly, benefit of remission of duty be given to the appellant. For the purpose the above two said provisions need to be discussed and distinguished:-
