2012 (10) TMI 9 - HC - Customs

Remission of duty under Section 23 of the Customs Act - 100% export oriented unit - imported various duty free materials - Due to the fire accident on 7-4-2004 in the stores of the assessee s unit, the entire raw materials had been burnt alongwith certain documents - assessee claiming remission of duty under Section 23 of the Customs Act, 1962 Held that - It is nobody s case that there was any pilferage of these goods. Under these circumstances, when the claim of remission is made under Section 23 of the Act, legal requirements to be fulfilled by the assessee to claim remission stands fully satisfied - Commissioner was wholly in error in denying the said benefit - Remission of duty allowed

Summary

Issues: Revenue challenging remission of customs duty granted by Tribunal due to fire accident destroying imported goods. Discrepancy in figures provided to Insurance and Customs. Commissioner rejecting remission claim under Section 23 of Customs Act. Tribunal allowing remission and revenue appealing.

Analysis:
1. Remission of Customs Duty: The appeal by the revenue challenges the Tribunal's decision allowing remission of customs duty claimed by the assessee due to a fire accident destroying imported goods. The assessee, a 100% export-oriented unit, imported duty-free materials which were destroyed in a fire accident. The duty foregone on the goods lost in the fire was substantial. The Commissioner initially directed the assessee to pay the duty amount, but the assessee applied for remission under Section 23 of the Customs Act, citing the loss due to the fire accident. The Tribunal, after examining the facts and Section 23 of the Act, found that all conditions for claiming remission were met as there was no evidence of pilferage, and the fire accident was undisputed. Hence, the Tribunal granted the remission, leading to the revenue's appeal.

2. Discrepancy in Figures: The revenue contended that discrepancies in figures provided by the assessee to the Insurance and Customs, coupled with the admission of discrepancies by the Managing Director during investigation, justified the Commissioner's decision to confirm the duty demand. However, the Tribunal disagreed, emphasizing that the legal requirements for remission under Section 23 were fulfilled by the assessee, and factors like discrepancies in figures and lack of care for the goods were irrelevant for considering remission. The Tribunal's decision was based on a correct interpretation of the legal provisions.

3. Commissioner's Rejection of Remission: The Commissioner rejected the remission claim citing reasons like inapplicability to EOU under a notification, lack of care for imported goods, and discrepancies in figures. However, the High Court found these reasons to be extraneous to the consideration of remission under Section 23. The Court held that the Commissioner erred in denying the remission based on these grounds and that the Tribunal's decision to set aside the Commissioner's order and grant relief to the assessee was legally sound.

In conclusion, the High Court dismissed the revenue's appeal, upholding the Tribunal's decision to grant remission of duty to the assessee based on the fulfillment of legal requirements under Section 23 of the Customs Act, despite the discrepancies in figures and other extraneous factors considered by the Commissioner.