2017 (4) TMI 1159 - AT - Customs

Refund claim - excess duty paid ₹ 6,32,175/- on the short quantity of 128.68 MTs - denial on the ground that appellants did not provide any documentary evidence to prove that the cargo weighed less than the declared quantity of 236.5 MTs when the same came into their possession - Held that - this case needs to be remanded back to the original authority with a direction to decide the claim of the appellant afresh after providing an opportunity to produce the evidence in support of their claim and thereafter the original authority after complying with the principles of natural justice will pass a reasoned order - appeal allowed by way of remand.

Summary

Issues:
Refund claim rejection based on shortage in weightage of cargo and liability under Section 45(3) of the Customs Act, 1962.

Analysis:

1. The appellant, M/s. Cochin Port Trust, auctioned and disposed of un-cleared cargo, which was assessed to a duty of &8377; 11,61,874 for 236.5 MTs. However, upon weighing the cargo before handing it over to the bidder, it was found to weigh only 107.82 MTs. The excess paid customs duty of &8377; 6,32,175 for the quantity in excess of 107.82 MTs was refunded by the appellant. The Order-in-Original rejected the refund claim, stating lack of documentary evidence proving the cargo weighed less when it came into their possession. The Commissioner (A) upheld this decision, leading to the present appeal.

2. The appellant argued that the rejection of the refund claim was contrary to the law and binding precedents. They claimed a refund of &8377; 6,32,175 for the short quantity of 128.68 MTs. The duty was paid for 55 bundles of steel bars listed as weighing 236.5 MT, but actual weighbridge checking revealed only 107.82 MTs. The appellant contended that the shortage should not be treated as pilferage while in the custodian's possession. Referring to Section 45(3) of the Customs Act, the appellant argued that the custodian is liable for pilfered goods, but the excess amount paid should not be adjusted against this liability. Citing a Bombay High Court decision, the appellant argued that Port Trusts are not liable to pay customs duty on pilfered goods and that the possession of goods by the Port Trust is governed by the Major Port Trust Act.

3. The learned AR supported the findings of the impugned order, maintaining the rejection of the refund claim.

4. The Tribunal, after considering the submissions and the Bombay High Court judgment, decided to remand the case to the original authority. The appellant was directed to produce evidence in support of their claim, and the original authority was instructed to pass a reasoned order after complying with the principles of natural justice within three months from the date of the order. Consequently, the impugned order was set aside, and the matter was remanded for further proceedings.