2014 (6) TMI 264 - AT - Customs

Remission of customs duty under Section 23(1) of the Customs Act - Damage of goods - warehousing of imported bulk drugs - Review of own order - Held that - order of remission of customs duty for an amount of Rs. 41,83,281/- was passed vide Order-in-Original No. 211/Remission/2007-08, dated 31-3-2008 pursuant to an Order-in-Appeal dated 28-11-2007. Both these orders have not been challenged by the department at any point of time and therefore, they have become final. Therefore, the issue of remission of duty granted to the appellant vide order dated 31-3-2008 cannot be re-opened by the Department, that too, after a lapse of 3 years. - The Asstt. Commissioner, after having granted remission, cannot review his own order and direct for recovery of the amount remitted and such an order is bad in law. In case of CCE & Cus. v. Welspun Terri Towels 2001 (11) TMI 200 - CEGAT, MUMBAI it was held that, the insurance covers risk and is governed by separate enactments. We cannot mix up the provisions of the Customs Act with Insurance Act to deny the benefit specifically provided under Customs Act, 1962 - goods were destroyed by rain and floods and became unfit for human consumption and had to be destroyed as per law. Accordingly, the appellant was entitled for remission of duty as the goods were bonded. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against Order-in-Appeal No. YDB/258-259/Th-I/2011
2. Remission of customs duty on imported goods damaged in warehouse
3. Dispute over No Objection Certificate for insurance claim settlement
4. Review of remission order by Asstt. Commissioner after 3 years
5. Appeal against order directing recovery of remitted duty amount
6. Interpretation of Customs Act provisions and Insurance Act benefits

Analysis:
1. The appellant, a company with a private bonded warehouse, sought remission of customs duty on imported goods damaged due to floods. The initial remission request was rejected, but subsequent re-adjudication by the Asstt. Commissioner granted remission of duty amounting to Rs. 41,83,281 under Section 23 of the Customs Act. The department did not appeal this decision, making it final.

2. The appellant, after settling an insurance claim for a portion of the damaged goods, sought a No Objection Certificate for the remaining claim amount. Despite multiple requests and providing necessary information, the Asstt. Commissioner directed the insurance company to credit the remitted duty amount back to the department, which was deducted from the insurance claim settlement.

3. The appellant argued that the remission orders had become final as they were unchallenged by the department. They contended that the Asstt. Commissioner's review of the remission order after 3 years was unlawful and that the benefits under the Customs Act were separate from those under the Insurance Act. Citing relevant tribunal decisions, the appellant sought a refund of the remitted duty amount.

4. The department, represented by the Addl. Commissioner, supported the lower authorities' findings and actions regarding the remission of duty and subsequent recovery from the insurance claim settlement.

5. The Tribunal analyzed the situation and held that the remission orders had attained finality as they were not contested by the department. The destruction of goods due to natural calamities entitled the appellant to remission, and the insurance claim settlement did not overlap with the remission benefits. Referring to previous tribunal decisions, the Tribunal ruled in favor of the appellant, allowing the appeal and ordering the refund of Rs. 41,83,281 received from the insurance company.

6. The Tribunal's decision emphasized the distinct provisions of the Customs Act and the Insurance Act, ensuring that the appellant received the entitled remission benefits without any unjust enrichment concerns. The appeal was allowed, and the amount received from the insurance company was directed to be refunded to the appellant promptly.