No responsibility of Custodian after passing of order of clearance

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.

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