2014 (7) TMI 966 - AT - Customs

Warehoused goods - deterioration/damage to the cargo - Abatement of duty on damaged or deteriorated goods u/s 22(1)(c) - Held that - abatement is admissible subject to the satisfaction of the Assistant Commissioner/Deputy Commissioner that the damage has not occurred in the accident due to any willful act, negligence of default of the owner or his employee or agent. Delay in clearances of cargo cannot be held against the appellant as a willful act to invite damages when the custodian and the Customs also have the powers to auction the cargo if not cleared within the warehousing period. - Since other appeals are pending before the first appellate authority, matter remanded back for decision as per the provisions of law - Decided in favor of assessee.

Summary

Issues:
- Whether abatement in value under Section 22 (1) (c) of Customs Act, 1962 is admissible to the appellant or not.

Analysis:
The appeal was filed against OIA No. 226/2011/cus/Commr(A)/KDL, where the first appellate authority remanded the case back to the adjudicating authority. The appellant argued that the observations made were beyond the scope of Section 22(1)(c) of the Customs Act, 1962, as they had taken necessary precautions to prevent damage to the imported cargo. On the other hand, the Revenue contended that the appellant deliberately kept the goods in the warehouse due to commercial reasons, leading to deterioration. The issue revolved around whether abatement under Section 22 (1) (c) was applicable. The provisions state that abatement is permissible if damage is not due to willful acts, negligence, or default of the owner or their representatives.

The Tribunal noted that delay in clearing the cargo should not be considered a willful act inviting damages, especially when the custodian and Customs have the authority to auction goods if not cleared within the warehousing period. Therefore, the matter was remanded back to the first appellate authority to decide the issue in accordance with the provisions of Section 22(1)(c) of the Customs Act, 1962. The appeal was allowed, and the case was remanded for a fresh decision by linking it with another pending appeal on the same issue before the first appellate authority.

In conclusion, the judgment focused on interpreting and applying the provisions of Section 22(1)(c) of the Customs Act, 1962 to determine the admissibility of abatement in value for damaged goods. The decision emphasized the importance of ensuring that damage was not a result of willful acts or negligence by the owner or their representatives, highlighting the need for a thorough examination of the circumstances surrounding the deterioration of the imported cargo stored in the warehouse.