1994 (2) TMI 197 - AT - Customs

Summary

Issues Involved:

1. Entitlement to refund of duty on pilfered goods.
2. Interpretation of Sections 13 and 23 of the Customs Act.
3. Custody and liability for goods in customs area.
4. Burden of proof regarding the timing of pilferage.

Issue-wise Detailed Analysis:

1. Entitlement to Refund of Duty on Pilfered Goods:

The appellants imported ball and roller bearings, and after customs clearance, found that one package was missing and others were tampered with. They sought a refund based on a survey conducted without customs officials. The Assistant Collector and Collector (Appeals) rejected the claim, stating pilferage occurred after the out of charge order was given, and the survey was not conducted before customs officers. The Tribunal had to decide if the appellants were entitled to a refund under these circumstances.

2. Interpretation of Sections 13 and 23 of the Customs Act:

Section 13 provides that if goods are pilfered after unloading but before clearance for home consumption or warehousing, the importer is not liable for duty. Section 23, amended in 1983, allows remission of duty on goods lost or destroyed before clearance for home consumption, excluding loss due to pilferage. The Tribunal had to interpret whether the amendments to Section 23 excluded pilferage from remission and if Section 13 still provided relief for pilfered goods after the out of charge order.

3. Custody and Liability for Goods in Customs Area:

The appellants argued that since the goods were under the custody of the International Airport Authority of India, a custodian approved by the Collector of Customs, they should not be liable for duty on goods not delivered due to pilferage. The Tribunal considered whether the custodian's responsibility extended beyond the out of charge order and if the importer should bear the risk and responsibility for goods left in the customs area post-clearance.

4. Burden of Proof Regarding the Timing of Pilferage:

The Tribunal examined if the burden was on the department to prove that pilferage occurred after the out of charge order. The appellants contended that pilferage could have occurred any time between the customs examination and the date they attempted to take delivery. The Tribunal had to determine if the lack of evidence pinpointing the exact time of pilferage should benefit the importer.

Separate Judgments:

Majority Judgment:

The majority held that the legislative intent was clear: remission of duty for pilfered goods is only applicable until the out of charge order is given. Once this order is issued, the customs department's liability ends, and the importer assumes responsibility. The Tribunal dismissed the appeal, confirming that the appellants were not entitled to a refund under Section 13 after the out of charge order.

Dissenting Judgment:

The dissenting member argued that the benefit of non-payment of duty should extend to the actual clearance of goods, not just the issuance of the out of charge order. The member emphasized that the importer should not be penalized for pilferage that could have occurred while the goods were still under customs custody. The dissenting opinion suggested that the claim for refund should be entertained and examined on its merits.

Final Decision:

In view of the majority opinion, the appeal was dismissed, and the appellants were not granted a refund for the pilfered goods. The Tribunal concluded that the legislative amendments to Section 23 and the interpretation of Section 13 did not support the appellants' claim for remission of duty post the out of charge order.