2014 (6) TMI 417 - AT - Customs

Waiver of pre deposit - Goods destroyed in fire which were in the private bonded warehouse. - Remission of duty - benefit of Notification No. 22/2003-C.E., dated 31-3-2003 and Notification No. 52/2003-Cus., dated 31-3-2003 - Held that - As per the provisions of Customs Manual, the goods are to be fully insured against fire by a comprehensive policy drawn in favour of Commissioner of Customs or Central Excise. In the present case, the applicants have not taken such insurance in favour of Commissioner of Customs/Central Excise. The applicants only insured to the extent of value of goods excluding the duty part. The applicants relied on the decision of the Hon ble High Court of Karnataka in the case of Sami Labs Ltd. 2012 (9) TMI 536 - KARNATAKA HIGH COURT . In this case the provisions of Customs Manual regarding insurance against natural calamities was not brought to the notice of the Hon ble High Court. The applicants were duty bound to insure the goods against natural calamity by comprehensive insurance policy drawn in favour of Commissioner of Customs/Central Excise. In view of this, prima facie, we find that the applicants had not made out a case for total waiver of the dues - Conditional stay granted.

Summary

Issues:
Waiver of Central Excise duty and customs duty, rejection of remission applications, insurance requirements for goods in private warehouses, compliance with Customs Manual provisions.

Analysis:
The applicants sought waiver of Central Excise duty and customs duty, interest, and penalty for capital goods and raw material destroyed in fire. They procured the goods under specific notifications but were unable to use them due to the fire incident. The adjudicating authority rejected their remission applications citing non-fulfillment of usage conditions and execution of a B-17 bond. The applicants argued for remission based on a High Court decision supporting similar cases.

The Revenue contended that the goods in private warehouses must be fully insured as per Customs Manual Chapter 9. They highlighted the lack of insurance coverage for the duty portion of the goods destroyed in fire. The applicants received an insurance claim exceeding Rs. 3 crores, but the insurance did not cover the duty component. The Tribunal noted the requirement for comprehensive insurance against fire in favor of customs authorities, emphasizing the duty to insure goods against natural calamities as well.

Considering the facts and circumstances, the Tribunal found that the applicants did not establish a case for complete waiver of dues due to non-compliance with insurance provisions. However, they directed the applicants to deposit Rs. 20 lakhs within eight weeks. Upon this deposit, pre-deposit of the remaining dues was waived, and recovery stayed during the appeal process. The compliance deadline was set for December 17, 2013, indicating the need for timely action by the applicants to fulfill the Tribunal's order.