2017 (3) TMI 451 - AT - Customs

Remission of duty - section 23 of CA, 1962 - denial on the ground that firstly, the appellants has not used the goods for the intended purpose and secondly as they had not fulfilled the export obligation stipulated in the notification - re-warehoused goods in the bonded premises got burnt and were completely destroyed in a major fire accident - Held that - It is pertinent to mention that Section 23 does not state that remission of duty can be allowed only if duty is paid - Section 13 deals with situation of remission of duty when goods are lost by pilferage. Section 23 deals with remission of duty when goods are lost otherwise than as a result of pilferage. The Oxford dictionary meaning of remission is cancellation of a debt, charge or penalty . The word used in Section 23 is remission and not refund . Neither does Section 13 nor Section 23 state that in order to claim remission the duty has to be first paid by the assessee. The goods when imported under notification will get duty exemption only upon fulfilling the conditions. Therefore, even though exempted at the time of import, a demand can be raised when the conditions are violated. In the instant case, department has raised the duty demand for the reason that appellant did not fulfill the conditions of the notification. Then the question arises, under the circumstances, whether appellant has to pay the duty or can be granted remission of duty. Section 23 when read as a whole (i.e., with both subsections and the proviso) it is clear that there is no pre-condition to pay the duty before claiming remission. It would be meaningless to call upon the assessee who has lost the goods imported, to pay the duty and then request for remission of the same. The Section would then be of no purpose. The Law makers in their innate wisdom has used the word remission and not refund, adjustment or rebate. The rejection of remission of duty ₹ 21,52,512/- is unjustified - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Remission of duty on capital goods destroyed in a fire accident.
2. Applicability of Section 23 of the Customs Act, 1962.
3. Non-fulfillment of export obligations under the notification.
4. Jurisdiction and powers of the adjudicating authority.
5. Relevance of previous judgments and case laws.

Detailed Analysis:

1. Remission of Duty on Capital Goods Destroyed in a Fire Accident:
The appellants, engaged in R&D activities for Bio-Technology and Pharmaceutical products, procured capital goods without payment of duty under Notification No. 52/2003-Cus and 22/2003. These goods were destroyed in a fire accident on 04.12.2008. The appellants informed the department and applied for remission of duty on the destroyed goods. The department issued a Show Cause Notice demanding duty of ?22,12,129/- and alleging non-usage of goods for the intended purpose and non-fulfillment of export obligations. The original authority dropped the proceedings, but the Commissioner (Appeals) confirmed the demand. The Tribunal remanded the matter, and the Commissioner (Appeals) again confirmed the demand, leading to the present appeal.

2. Applicability of Section 23 of the Customs Act, 1962:
The appellants argued that Section 23 of the Customs Act, 1962, which deals with remission of duty on lost or destroyed goods before clearance for home consumption, should apply. The goods were in a bonded warehouse and destroyed before clearance. The Commissioner (Appeals) denied remission, citing the Antarctica Limited case, arguing that remission under Section 23 requires prior payment of duty. However, the Tribunal noted that Section 23 does not mandate prior payment of duty for claiming remission. The relevant provision states that remission can be granted if the goods are destroyed before clearance for home consumption.

3. Non-fulfillment of Export Obligations under the Notification:
The Commissioner (Appeals) rejected the remission request, stating that the appellants did not use the goods for the intended purpose and failed to fulfill export obligations. The appellants contended that they had fulfilled export obligations of ?16 crores before the fire accident, and the destruction of goods made it impossible to fulfill further obligations. The Tribunal agreed that the law does not compel the doing of impossibilities (Lex non cogit ad impossibilia) and that the performance of obligations rendered impossible by circumstances beyond control should be excused.

4. Jurisdiction and Powers of the Adjudicating Authority:
The Commissioner (Appeals) questioned the jurisdiction of the Additional Commissioner, who adjudicated the matter. The original authority observed that the Additional Commissioner was empowered to adjudicate cases involving revenue more than ?20,00,000/- and up to ?50,00,000/-. The Tribunal found that the adjudication by the Additional Commissioner was within his powers and jurisdiction as per the provisions of the Customs Act, 1962.

5. Relevance of Previous Judgments and Case Laws:
The appellants relied on the judgments in M/s. Sami Labs Ltd. and Symphony Services Corporation India Pvt. Ltd., which supported remission of duty for goods destroyed by fire. The Commissioner (Appeals) refrained from applying these judgments, citing an appeal pending before the High Court. The Tribunal noted that the appeal was disposed of, confirming the Tribunal's decision, making the judgment in Sami Labs Ltd. final. The Tribunal distinguished the Antarctica Limited case, noting that it involved different facts and was not applicable to the present case.

Conclusion:
The Tribunal held that the rejection of remission of duty ?21,52,512/- was unjustified and set aside the impugned order to that extent, without disturbing the confirmation of duty ?59,614/- on indigenously procured goods. The appeal was partly allowed with consequential reliefs.

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