2013 (8) TMI 509 - AT - Customs

Remission of Duty - Shortage of Goods - Section 23 of the Customs Act, 1962 - Assesse had imported a consignment of Chinese Metallurgical Coke and cleared the goods for re-warehousing on the provisionally assessed warehousing bills of entry for the purpose of manufacture of Charge Chrome in their factory - Section 23 of the Customs Act, 1962 was to be extended also to the assesse in case of Transit loss during the transfer of goods from one warehouse to another - Held that - Revenue had not been able to make out a case for not allowing the remission in case of the genuine loss occurred due to natural causes in the process of warehousing/re-warehousing of the goods relying upon IOC vs. Collector of Customs, Bombay 1985 (5) TMI 62 - CEGAT, NEW DELHI and Bharat Petroleum Corporation Ltd. vs. Collector of Customs, Bombay 1983 (7) TMI 195 - CEGAT, BOMBAY . The Deputy Commissioner dropped the demand on the ground that loss was only to the extent of 1.13%, the goods were highly susceptible to moisture variation and therefore, the shortage was genuine - there was no allegation of theft, pilferage or clandestine removal - He accordingly granted remission of duty on lost, destroyed or abandoned goods under Section 23(1) of the Customs Act, 1962 the shortage was genuine and did not occur due to negligence, such losses occurred due to natural causes like the nature of the goods being susceptible to moisture, weigh-bridge difference and handling loss due to loading and unloading of the materials at both ends - There was no warrant of demand of duty from them - the Appeal of the Revenue was dismissed and the Order passed by the Commissioner (Appeals) is upheld Decided against revenue.

Summary

Issues:
1. Appeal against rejection of Department's Appeal under Section 129D(4) of the Customs Act, 1962.
2. Dispute regarding duty recovery due to shortage of goods during re-warehousing.
3. Interpretation of Section 23 of the Customs Act, 1962 for remission of duty on lost or destroyed goods.
4. Consideration of natural causes for the shortage of goods and absence of theft or pilferage allegations.

Analysis:

1. The appeal was filed by the Revenue against the rejection of their appeal by the Commissioner (Appeals) under Section 129D(4) of the Customs Act, 1962. The dispute arose from the shortage of goods during re-warehousing, leading to a demand for duty recovery from the Appellant.

2. The Appellant had imported a consignment of Chinese Metallurgical Coke and re-warehoused it for manufacturing Charge Chrome. A shortage of 108.830 MT was discovered during re-warehousing, prompting the Revenue to seek duty recovery under Section 142 read with Section 67 of the Customs Act, 1962. The Deputy Commissioner initially dropped the demand citing genuine reasons for the loss, leading to the Revenue's appeal.

3. The Revenue contended that Section 23 of the Customs Act, 1962, which allows remission of duty on lost or destroyed goods, did not apply in this case as the goods were not cleared for home consumption. They argued that Section 67 regulated goods' movement between warehouses without provision for remission. However, the Respondent cited precedents where remission was granted for genuine losses before clearance for home consumption.

4. The Tribunal analyzed the issue and referred to a Larger Bench decision that upheld remission under Section 23 for goods lost in transit during warehousing. They noted that the shortage was genuine, caused by natural factors, and not due to negligence or malpractice. The absence of theft or pilferage allegations further supported the decision to dismiss the Revenue's appeal and uphold the remission of duty.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the lower authorities' decision to allow remission of duty on the genuine loss of goods during re-warehousing. The judgment emphasized the application of Section 23 of the Customs Act, 1962, and the absence of evidence supporting the Revenue's demand for duty recovery.