2014 (6) TMI 302 - AT - Customs

Duty demand from the port custodian for shortage of goods - appellant contended that argued that the provisions of Section 45 (3) are applicable only when the goods after being unloaded in a Customs Area have been pilfered - Whether the custodian M/s Gujarat Adani Port Ltd is liable to pay duty with respect to the shortage of 457.588 MT of Crude Petroleum Oil detected when against the quantity of 5221MT shown in the Import General Manifest a quantity of 4722.040 MT was received in on shore tank from vessel M T Argoat - Held that - In view of the provision of Section 45 (3) duty can be demanded from the custodian of the goods if after importation and unloading, the imported goods are pilfered - adjudicating authority has held that the goods were unloaded in the Customs area. However, adjudicating authority is silent about the fact whether 100% of the manifested goods were received in the on shore tank and also whether the goods were pilfered after unloading in the Customs area. Pilferage of the imported goods takes place while the goods were in the custody of the custodian which has to be established by Revenue by way of an FIR and a police report. None of above twin requirement has been brought on record. In the present proceedings, a shore outturn report was jointly prepared by the surveyor, terminal operator, in the presence of Customs officers and the custodian on 30.04.004. A protest was also lodged by the appellant within half an hour of the discharge of cargo on 27.04.2004. Based on the facts and circumstances available on record, it cannot be said that the entire quantity of the imported goods as shown in the Import General Manifest was received by the custodian. Further, as per the procedures prescribed by the Revenue under Circular No.96/2002-Cus, dt.27.12.2002 also even duty has to be demanded from the importer for the quantity of liquid cargo received in shore tanks and not on the basis of ullage Survey report. In the absence of any establishing report of pilferage of imported goods, when the goods were under the custody of the appellant, no duty liability can be upheld against the present appellant. - Decided in favour of appellant.

Summary

Issues involved:
- Liability of custodian to pay duty for shortage of imported goods
- Interpretation of Section 45(3) of the Customs Act, 1962
- Requirement to establish pilferage of goods for duty liability on custodian

Analysis:
1. Liability of custodian to pay duty for shortage of imported goods:
The appeal was filed by M/s Gujarat Adani Port Ltd against an Order-in-Original passed by the Commissioner of Customs regarding the shortage of 457.548 M.T. of Crude Petroleum Oil. The appellant argued that there was no pilferage of goods while in their custody, and the duty should be demanded based on the actual quantity discharged into the shore tank. The appellant cited relevant case laws to support their argument.

2. Interpretation of Section 45(3) of the Customs Act, 1962:
The issue revolved around the application of Section 45(3) of the Customs Act, 1962, which states that if imported goods are pilfered after unloading in a customs area while in the custody of a person, that person shall be liable to pay duty on such goods. The adjudicating authority confirmed duty invoking this provision, but the appellant contested that pilferage was not proven, and the entire quantity of goods was not received by them.

3. Requirement to establish pilferage of goods for duty liability on custodian:
The judgment highlighted the necessity to establish pilferage of imported goods while in the custody of the custodian for duty liability to be upheld. The absence of proof of pilferage and the discrepancies in the quantity received by the custodian led to the allowance of the appeal. The judgment emphasized the importance of following prescribed procedures and the lack of evidence of pilferage to hold the custodian liable for duty payment.

The judgment concluded that the appeal filed by the appellant was allowed based on the lack of evidence establishing pilferage of imported goods while in the custody of the custodian, as required by law. The decision was made in consideration of the facts presented and the relevant legal provisions, ultimately leading to the allowance of the appeal.