2023 (10) TMI 1422 - AT - Customs

100% EOU - remission of duty on capital goods destroyed - only argument put forth by the revenue is that the appellant was bound to take the necessary precautions to ensure the safety of the goods as per the provisions of the N/N. 52/2003 and the goods should have been insured not only for the value but for the duty forgone also - HELD THAT - In the present appeal the fact that the fire accident took place and intimation given to the department is not under dispute. The issue is squarely covered by the judgement of this Tribunal in the case Symphony Services Corp. India Pvt. Ltd. V/s Commissioner of Customs, Bangalore 2009 (1) TMI 692 - CESTAT, BANGALORE where this tribunal has taken a view that 'in terms of Section 68, when there is relinquishment of title to the goods imported before their clearance, no duty can be demanded. In these circumstances, in our view, the impugned order cannot be sustained.' The appellant is eligible for the remission of duty - Appeal allowed.

Summary

Issues involved:
1. Denial of remission of Customs duty on capital goods destroyed in a fire accident.
2. Interpretation of Section 23(1) of the Customs Act, 1962 regarding remission of duty on lost or destroyed goods.
3. Compliance with insurance requirements for duty forgone goods under Customs Circular No. 99/1995.

Issue 1: The Appellate Tribunal considered the denial of remission of Customs duty amounting to Rs. 54,23,432 on capital goods destroyed in a fire accident. The Appellant, a 100% EOU, had not claimed any duty from the insurance company due to the insurance policy not covering the duty payable on the goods. The Respondent issued a show cause notice alleging an omission on the Appellant's part for not insuring the goods as per Customs Circular No. 99/1995. The Appellant argued that once the goods were lost or destroyed, the duty remission was mandatory under Section 23 of the Customs Act, 1962.

Issue 2: The Tribunal analyzed Section 23(1) of the Customs Act, 1962, which allows remission of duty on lost or destroyed imported goods before clearance for home consumption. Citing precedents like Symphony Services Corp. India Pvt. Ltd. and Next Fashion Creators Pvt. Ltd., the Tribunal emphasized that the satisfaction of the Assistant/Deputy Commissioner that the goods were lost precludes the demand for duty. The High Court upheld these views, stating that if goods are rendered useless or destroyed, remission of the entire duty is justified.

Issue 3: The Respondent contended negligence on the Appellant's part for not insuring customs duty as required by Circular No. 99/1995. The Tribunal examined the insurance obligations under Sections 58 and 65 of the Customs Act, emphasizing the need for comprehensive insurance policies covering duty forgone goods. The Respondent referenced the Tibco Software India Pvt. Ltd. case to support the argument that failure to fulfill insurance conditions violates warehousing license terms.

In conclusion, the Tribunal allowed the appeal, granting remission of duty to the Appellant based on the satisfaction of the conditions under Section 23 of the Customs Act, 1962. The decision aligned with previous judgments and upheld the entitlement of the Appellant to remission in cases of goods lost or destroyed. The compliance with insurance requirements was a key aspect, but the primary focus remained on the legal provisions governing duty remission in such circumstances.