1990 (1) TMI 189 - AT - Customs

Summary

Issues:
- Appeal against denial of abatement from duty due to damage to imported goods.
- Interpretation of Section 22 of the Customs Act, 1962 regarding damaged goods.
- Compliance with procedural requirements for claiming abatement of duty.
- Pre-clearance reporting of damage to customs authorities.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi concerned the denial of abatement from duty to the appellants due to damage suffered by imported goods. The appellants had imported Hollow Drill Steels which were found heavily corroded upon arrival, leading to a claim for refund based on the damage. The Customs authorities had rejected the refund claim on the grounds that the damage was not reported before the goods were cleared. The main issue revolved around the interpretation of Section 22 of the Customs Act, 1962, which deals with damaged goods and the procedure for claiming abatement of duty.

The appellants contended that they had indeed reported the damage to the Customs authorities before clearance, as evidenced by a certificate of examination dated prior to the payment of duty. They had also conducted a Marine survey with Customs present, highlighting the damage to the goods. The appellants argued that they were entitled to abatement of duty under Section 22 of the Customs Act, 1962, as the goods were no longer fit for their intended purpose due to the damage incurred during transit.

On the other hand, the department maintained that the damage was not reported before clearance, and thus, no abatement of duty should be granted. However, upon careful consideration, the Tribunal found in favor of the appellants. The Tribunal noted that the appellants had indeed reported the damage to the Customs authorities before payment of duty and clearance of the goods. The certificate of examination and the Survey report supported the appellants' claim of damage, indicating substantial compliance with the provisions of Section 22.

In support of its decision, the Tribunal referenced a previous case where a similar situation had arisen, emphasizing the obligation of Customs to assess damaged goods at a reduced value and charge duty accordingly once damage is reported. The Tribunal concluded that the appellants had fulfilled the requirements of Section 22 by reporting the damage before clearance, and therefore, were entitled to a re-appraisement of the goods and a consequential refund. The appeal was allowed in favor of the appellants, highlighting the importance of complying with procedural requirements for claiming abatement of duty on damaged goods under the Customs Act, 1962.