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Issues Involved: Refund of duty, Section 22 of the Customs Act, Section 23 of the Customs Act, Assessment of damaged goods, Determination of value, Customs control.
Detailed Analysis: 1. Refund of Duty: The appellants' claim for a refund of duty paid on two dumpers imported in S.K.D. condition was rejected by the Assistant Collector of Customs, Refunds Madras. The rejection was based on the observation that the claimant had not followed the provisions of Section 22 of the Act for abatement of duty on damaged goods. Additionally, there was no noting of shortage after the survey, hence the claim could not be accepted under Section 13 of the Act. The Collector of Customs (Appeals), Madras upheld this order on substantially the same grounds. 2. Section 22 of the Customs Act: The advocate for the appellants argued that under Section 22(1) of the Act, abatement of duty on damaged goods is mandatory if it is shown to the satisfaction of the Assistant Collector that any imported goods had been damaged after unloading but before their examination under Section 17. The appellants contended that it is not expressly laid down in the Act that the ascertainment of the value of the goods should be prior to their clearance from customs control or while the goods were in the custody of customs. 3. Section 23 of the Customs Act: Alternatively, the counsel argued that under Section 23, when goods have been destroyed before their clearance for home consumption, the Assistant Collector shall remit the duty on such goods. The appellants claimed that the two dumpers were so badly damaged that they should be considered as "destroyed" for purposes of this Section. 4. Department's Resistance: The Departmental Representative resisted both pleas. He pointed out that according to Section 22(3), the damage should be in respect of any imported goods. Section 2(25) defines 'imported goods' as goods brought into India from a place outside India but does not include goods cleared for home consumption. Since the claim for damages was made after the goods had been cleared from Port Trust custody for home consumption, they could not be treated as 'imported goods' for the purpose of Section 22(3). Additionally, he argued that Section 23 would not be applicable as it would render Section 22 superfluous. 5. Facts and Survey Reports: The appellant-company had imported two dumpers in S.K.D. condition from the U.S.A., which were landed on 16th and 17th April 1981, assessed under the 'prior entry system' on 16-4-1981, and the assessed duty was paid. The goods were removed from the Port Trust premises and transported to the appellant's factory at Kolar Gold Fields, Karnataka. An insurance survey conducted later described the damage as extensive, including "Dents, deep cuts, twisting, shearing, crushing, bending and breakage," and the cause as "falls or blows received whilst in transit." The Insurance Survey Report and the Inspection Committee of the Management noted that some items could be considered for re-utilization after repair, but this was not feasible due to the lack of facilities. 6. Constructive Total Loss: The insurance surveyors treated the damaged equipment as a "constructive total loss" due to practical difficulties in repairing the damaged goods. The Insurance Company settled the claim for the damaged goods as a 'constructive total loss' after prolonged discussions. 7. Section 23 Analysis: The Tribunal found that the goods could not be treated as destroyed for the purpose of Section 23, as they were finally seen miles away from the place of import after a journey involving transit by trucks and a lapse of considerable time. The insurance surveyors did not accept that the goods were a total loss but thought they could be repaired economically. Therefore, the claim in terms of Section 23 was rejected. 8. Section 22 Analysis: The Tribunal examined the provisions of the Customs Act, 1962, regarding the importation and clearance of goods through Customs. It was noted that the assessment of imported goods, including damaged goods, must be completed before they are removed from customs control. Section 22(3) supports this view, providing two methods for determining the value of damaged goods: ascertainment by the proper officer or sale by public auction or tender. This indicates that the goods must be under the control of the proper officer at the time of ascertainment of value. Additionally, Section 149 suggests that the value of the goods is to be determined before clearance, and any amendment to the value must be based on contemporaneous evidence existing at the time of clearance. 9. Conclusion: The Tribunal found that the plea of the advocate for the appellant that the valuation of the damaged goods could be done any time and not necessarily before their clearance from Customs control was not well-founded. The appeal was dismissed. 10. Shortage: No particular pleas were urged regarding shortage. The appeal was dismissed in its entirety.
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