1984 (3) TMI 393 - AT - Customs

Summary

Issues Involved:
1. Entitlement to refund under Section 23(1) of the Customs Act, 1962.
2. Applicability of Section 13 versus Section 23(1) of the Customs Act, 1962.
3. Interpretation of the term "lost" under Section 23(1) of the Customs Act, 1962.
4. Impact of legislative amendments on the interpretation of Section 23(1).

Issue-wise Detailed Analysis:

1. Entitlement to Refund under Section 23(1) of the Customs Act, 1962:
The appellants sought a refund of Rs. 32,084 for five undelivered pallets. The Assistant Collector of Customs and the Collector (Appeals) rejected the refund claim on the grounds that the appellants failed to establish that the goods were lost or destroyed within the meaning of Section 23 of the Customs Act. The authorities held that the claim should be considered under Section 13, which pertains to pilfered goods before the 'Out of Charge' order. The Tribunal, however, found that the appellants had sufficiently demonstrated that the goods were stolen while in the custody of the Port Trust Authorities, thereby entitling them to a refund under Section 23(1).

2. Applicability of Section 13 versus Section 23(1) of the Customs Act, 1962:
Section 13 exempts the importer from paying duty on pilfered goods if pilferage occurs after unloading but before the 'Out of Charge' order. In contrast, Section 23(1) allows for remission of duty if goods are lost or destroyed before physical clearance for home consumption. The Tribunal noted that Section 13 applies before the assessment of duty, while Section 23(1) applies post-assessment but before physical clearance. The Tribunal concluded that the facts of the case fell under Section 23(1) as the pilferage occurred after the 'Out of Charge' order but before physical clearance.

3. Interpretation of the Term "Lost" under Section 23(1) of the Customs Act, 1962:
The Tribunal examined whether the term "lost" in Section 23(1) includes pilferage or theft. The Tribunal referred to the Delhi High Court's interpretation in the Sialkot Industrial Corporation case, which held that "lost" includes any loss to the owner, whether due to destruction, pilferage, theft, or any other reason. The Tribunal disagreed with the South Regional Bench's narrower interpretation that would render Section 13 redundant if "lost" under Section 23(1) included pilferage. The Tribunal upheld the broader interpretation, aligning with the Delhi High Court's view.

4. Impact of Legislative Amendments on the Interpretation of Section 23(1):
The Tribunal noted that Section 23(1) was amended by the Finance Bill, 1983, to explicitly exclude goods pilfered before their clearance for home consumption. The amendment clarified that prior to its enactment, Section 23(1) did not exclude pilfered goods from its purview. This legislative change supported the Tribunal's conclusion that the appellants were entitled to a refund under the pre-amended Section 23(1).

Conclusion:
The Tribunal allowed the appeal, directing the Customs Authorities to grant the appellants the consequential relief within four months. The Tribunal's decision was based on the broader interpretation of "lost" under Section 23(1) and the legislative context, affirming the appellants' entitlement to a refund for the stolen goods.