2023 (12) TMI 530 - AT - Customs

Rejection of application for remission of duty in respect of imported raw-material destroyed in fire, in the appellant s SEZ unit - Application of Section 23 for remission of duty in the SEZ unit - customs duty along with the value of the goods not insured - HELD THAT - It is found that there is no dispute that the fire incident has taken place in the appellant s factory located in SEZ units. As per survey report, it is clear that there is no negligence on the part of the appellant as the fire broken out suddenly beyond the control of the appellant. Therefore, the allegation that the appellant have not taken the proper precaution to avoid fire incident is absolutely baseless and imaginary. Moreover, it is the appellant who has to be most careful about their goods as it is not only the duty but the huge stake of value of the goods is involved. Therefore, it cannot be imagined that the appellant was careless and negligent due to which fire incidence has taken place. It is found that once after carrying out thorough inspection and survey, the insurance company has satisfactorily granted the insurance claim that itself is evidence to establish that the fire incidence was beyond the control of the appellant. Therefore, the ground that the appellant was negligent in the matter of fire incident cannot be accepted. Application of Section 23 for remission of duty in the SEZ unit - HELD THAT - In the present case the grant of remission in respect of customs duty in terms of Section 23 does not contradict any of the provision of the SEZ Act. Therefore, the contention of the Adjudicating Authority about non-applicability of the Section 23 of the Customs Act, is not sustainable. Appellant have not insured the customs duty along with the value of the goods - HELD THAT - It is obvious that only the value of the goods is liable to be insured, which is appearing in the invoices. If the invoice contain any taxes or duties, obviously the gross value inclusive of all these elements shall be taken for the purpose of insurance. However, in the case of SEZ, when the goods are imported and entered into SEZ, the value of goods remain the only principle value and since no duty was payable, question of inclusion of duty does not arise. However, this cannot be the reason for denying the remission of duty - appellant has made out very strong case of remission of customs duty in respect of the destroyed goods in fire. The impugned order set aside - appeal allowed.

Summary

Issues:
The issues involved in the judgment are:
1. Applicability of Customs provision of Section 23 in SEZ unit for remission of duty.
2. Allegation of lack of proper precaution to avoid fire incident.
3. Insurance coverage of Customs duty along with the value of goods.

Issue 1: Applicability of Customs provision of Section 23 in SEZ unit for remission of duty:
The appellant appealed against the rejection of remission of duty for imported raw-material destroyed in fire in the SEZ unit. The Commissioner contended that SEZ Act overrides all other Acts, hence Section 23 of the Customs Act is not applicable. However, the appellant argued that since the Customs Act governs the levy of Customs Duty, Section 23 for remission should apply, as it is not inconsistent with the SEZ Act. The Tribunal agreed, emphasizing that the grant of remission under Section 23 does not contradict any provision of the SEZ Act.

Issue 2: Allegation of lack of proper precaution to avoid fire incident:
The Commissioner alleged that the appellant did not take proper precautions to prevent the fire incident. However, the appellant's counsel provided evidence from a survey report showing that the fire was sudden and beyond their control. The Tribunal found no negligence on the appellant's part, especially as the insurance claim was granted after a thorough survey, indicating the fire was unavoidable. The Tribunal dismissed the Commissioner's contention of negligence.

Issue 3: Insurance coverage of Customs duty along with the value of goods:
The Commissioner argued that the appellant did not insure Customs duty along with the value of goods, only insuring the goods' value. The Tribunal clarified that in the case of SEZ units, where no duty is payable upon import, only the value of goods mentioned in the invoice needs to be insured. The Tribunal cited judgments supporting the remission of Customs duty in SEZ units under Section 23 of the Customs Act. Consequently, the Tribunal set aside the impugned order and allowed the appeal for remission of Customs duty in relation to the destroyed goods in the fire.