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TMI Blog1994 (2) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... encies Tata Tea Ltd. The Customs was not associated in the survey. However, the survey was reported to have been done in the premises of the custodian viz. International Airport Authority of India in the Customs area. They, thereafter, filed refund claim in respect of the goods alleged to have been pilfered based on the survey report. The claim was rejected by the Asstt. Collector on the ground that pilferage has taken place after the out of charge order has been given and the survey also has been conducted not before the out of charge order has been given and not before the officers of the Customs. The matter was taken up in appeal before the Collector of Customs (Appeals) who upheld the order of the Asstt. Collector. The present appeal is, therefore, before us. 3. Dr. Kantawala, does not dispute the fact that the judgment of the Delhi High Court in the case of Sialkot Industrial Corporation reported in 1979 (4) E.L.T. (J 329) was in the context of the provisions of section 23 of the Customs Act prior to the amendments by the Finance Act, 1983. He, however, sought to advance his argument that notwithstanding the amendments carried out in Section 23, the appellants are entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, which have been pilferred and pilferage has been noticed after the out of charge order is given. For appreciating the advocate s argument, it would be necessary to reproduce the Section 13 and Section 23 of the Customs Act prior to the amendments through Finance Act, 1983 : Section 13 : If any imported goods are pilferred after the unloading thereof and before the proper officer has made an order for clearance for home consumption or deposit in warehouse, the importer shall not be liable to pay the duty leviable on goods except where such goods are restored to the importer after pilferage." Section 23 : (1) Where it is shown to the satisfaction of the Assistant Collector of Customs that any imported goods have been lost or destroyed, at any time before clearance for home consumption, the Assistant Collector of Customs shall remit the duty on such goods. (2) The owner of any imported goods may at any time before an order for clearance of the goods for home consumption has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon." While in Section 13, there is no amendment, Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence duty is to be paid. The question is, whether the importers should be saddled with the payment of duty in respect of goods pilferred, while they were on customs account. The legislature has thought it fit to grant remission of duty on pilferred goods, so long as it is established that the pilferage has taken place after the unloading of the goods but before an order for clearance for home consumption or for deposit in the warehouse is given by the proper officer. In other words, legislature has thought it fit to consider remission of duty held in the customs area only for the period required for completion of customs formalities and not beyond that. 9. In the judgment of the Delhi High Court in Sialkot Industrial Corporation, the question considered essentially was, whether Section 23 prior to its amendment could cover the goods pilferred before the clearance from Customs for home consumption, though such pilferrage has occurred after the out of charge is given. In that context, the Delhi High Court observed as below : It is difficult to construe the provision as including all kinds of loss and destruction, but excluding the loss by pilferage. There is no warrant for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or for transhipment. He is not appointed by the Collector as a custodian for custody of the goods, treating the customs area as a warehouse thereafter. If the importers choose to keep the goods in the customs area in the custody of the custodian, they are doing it on their own risk and responsibility. In this case, we observe that even though the examination of the goods took place on 1-2-1989 and duty paid on 29-3-1989, they had not looked into the condition of the goods before payment of duty and sought for customs survey for claiming remission of duty before the out of charge order is given. If the goods had been pilferred after payment of duty and out of charge order is given and they went to take delivery on 3-4-1989 and conducted survey thereafter, that too without association of the Customs Department, no remission could be considered in such a case. Provisions of Section 45, even if read harmoniously with Section 13 of the Customs Act, does not warrant the acceptance of the plea made by the advocate. In the case of Section 23, remission of duty is provided in respect of the goods lost, destroyed or abandoned goods and it is also clearly spelt out that `loss should be due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion given to the statutory provisions applicable, as also the conclusion drawn on the factual position, and not being able to convince myself to agree with and endorse to the said view, on both the counts, I give my separate findings in that regards. 12. Undisputed factual position, relevant for the purpose of deciding the issues involved here, is that the appellants imported Ball and Roller Bearings packed in several cartons but received as a single consignment, and filed Bill of Entry for home consumption on 24-1-1989. The Customs examination under first check procedure was done on 1-2-1989, where all the cartons were reportedly opened and were found in order. As the consignment was received as Air Cargo, the same was placed under the custody of the International Air Port Authority of India, the custodian appointed vide Section 45 of the Customs Act. The appellants paid the requisite customs duty on 29-3-1989, and consequently order for clearance for home consumption, contemplated under Section 47 of the Customs Act was passed on 31-3-1989. When, however, the appellants approached the custodian for taking delivery of the consignment, on 3-4-1989 the consignment was found in to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order was passed, then the provisions of Section 13, should and do stand attracted. The criteria for applicability of Section 13, therefore, is the time of the incident and not when the incident came to light. 14. In the facts before us, the Bill of Entry has been filed on 24-1-1989, customs examination is carried out on 1-2-1989, customs duty was paid on 29-3-1989 and order for clearance was passed on 31-3-1989 and when on 3-4-1989, the appellants went to take delivery, the pilferage was noticed. It is undisputed that on 1-2-1989 when Customs examination was carried out, the goods were in order. With no evidence of any further examination of the consignment, available on record, the rational inference could be that the pilferage may have taken place any time between 1-2-1989 to 3-4-1989. The major span thus, falls within the period when the consignment was within the custody of the customs authority, and possibility cannot be ruled out that the pilferage took place during the said period. In any case, there is no evidence to show that the pilferage did not take place during that period, and must have taken place only within the span of three days i.e. 31-3-1989 and 3-4-1989. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 of the Act, therefore, cannot be sustained and has to be set aside, and direction has to be given to be Assistant Collector to entertain the claim for refund on merits and grant appropriate refund of duty. 17. With the finding based on the factual position as above, given on the assumption but without admission, that the interpretation given by the authorities below to the provisions of Section 13 is correct, the issue as to the scope and ambit of the provisions of the said section, more or less, becomes academic. However, when specific issue to that effect is raised and emphasised, I deem it desirable to give my finding also on the same. 18. One of the fundamentals of the Taxation Law is that, duty if not chargeable shall not be charged or collected and if so collected, shall be repaid or refunded, though under various Tax legislation, different procedure or different limit for claiming/granting such refunds may exist. 19. Amongst some other provisions, the Customs Act, provides for non charging of duty, if the goods are pilferred or lost or destroyed, and relevant provisions therefore, are found in Sections 13 and 23 of the Customs Act. The provisions of Sec. 13 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of pilferage, is sought to be withdrawn. 21. It may be re-iterated that both Sections 13 and 23 are based on the principle, that the importer should not be saddled with the liability to pay the duty if the goods could not be delivered or do not go in the hands of the importer, without any fault on his part, and as such, the provisions of Section 13, have to be read keeping in view the basic intention on which the provisions are made. 22. Before examining the same, it is relevant to consider certain other salient features of the Customs Act, in relation to the imported goods. The said law provides that for the licit import of goods, the same have to be brought at the Customs Air Port or Customs Port, as defined in Sections 2(10) and 2(12) respectively and have to be unloaded in the Customs erea, as defined under Section 2(11) of the Act. The goods so unloaded remain in the Customs area till they are cleared for home consumption or warehoused. Chapter VII of the Customs Act, 1962, provides for clearance of the imported goods and Section 45, which falls within the said Chapter, reads thus : 45. Restrictions on custody and removal of imported goods : (1) Save as otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s available till the clearance, if the goods are lost or destroyed, and as per the judicial pronouncement referred to above (Re : Sialkot Industries Corpn.) the said benefit was also available, for pilferred goods, till the Section came to be amended. The precise purpose of the amendment in Section 23 being not available, as neither there is any mention in the Finance Act, 1983 nor anything in relation thereto, is found from the speech of the Finance Minister, two exigencies, under the circumstances, could be envisaged, (1) such benefit was intended to be withdrawn for pilferage after the order of clearance but before the actual clearance, or (2) Sec. 13 took care of the cases of pilferage and hence duplication was to be removed. There does not appear to be any rational and probable intention to isolate the cases of pilferage, and discriminate against, vis-a-vis, loss or destruction on other counts. When ex facie Section 13 provides for non charging of duty on the goods pilferred before the order for home consumption is passed, it cannot be held that the legislature did not intend to give any benefit in cases of pilferage, and in that case, it does not stand to any reason that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the goods are pilferred while under customs custody. By a logical conclusion, therefore, it can be held that the wordings used in Section 13 have to be given a liberal construction and the phrase before the proper officer has made an order for clearance for home consumption or deposit in a warehouse has to be cons- trued as meaning that passing of the order includes the due implementation thereof and reading accordingly, the case of pilferage till the execution of the order for clearance has to be taken as covered under the provisions of Section 13. 27. As indicated above, however, the discussion and the finding are more of academic importance here, and even going by whatever interpretation, considering factual position, there being no evidence on record to prove that pilferage took place after 31-3-1989, the benefit has to go to the importer and the importer is entitled to get the refund as is legally permissible. 28. The appeal is under the circumstances allowed, the appellant s right to claim refund is upheld. The orders of the authorities below are set aside and the Asstt. Collector is directed to grant the permissible refund after scrutiny of the claim. Sd/- (P.K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r; or (iii) whether the wordings in Section 13 of the Customs Act can be interpretted as extending the benefit, till the out of charge order is acted upon and release taken from the Customs area." 30. Since my both the learned brothers have reiterated the facts in their order and as such I need not reproduce the same. Shri Nitin Kantawala, the learned Advocate has appeared on behalf of the appellants. He had drawn the attention to Sections 13 and 23 of the Customs Act, 1962. He argued that ball and roller bearings were imported at air cargo Bombay and the bill of entry was filed on 24-1-1989. The customs authorities have examined the goods on 1-2-1989 and the customs duty was paid on 29-3-1989 and out of charge order was given on 31-3-1989. On 3-4-1989, the appellants had gone for taking delivery of the imported goods and the appellants found that one package was missing before delivery. On 4th April, 1989 a survey was carried out in the presence of the International Airport Authorities. Shri Kantawala referred to provisions of Section 45 of the Customs Act, 1962 which relates to the restrictions on custoday and removal of imported goods and the Section provides that all import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (Judicial) has held that pilferage has taken place during the period. He referred to Member (Technical) s observations and referred to a judgment in the case of Ashok Dhawan v. Union of India, reported in 1990 (47) E.L.T. 218 (Del.). He laid special emphasis on Para Nos. 59, 60 61. He referred to a judgment in the case of Buckau Wolf India Ltd. v. Collector of Customs, Bombay reported in 1994 (69) E.L.T. 423 (Tri.) = 1992 (42) ECR 571 (Tribunal) where the Tribunal has held that the undisputed factual position is that non-availability of the goods with the custodian was made known to the Department before the out of charge order was given. In fact, it is reported to have been noticed, even before the examination of the goods. The duty has been paid under second appraisement procedure, before examination. The Tribunal had held that so long as the conditions laid down under Section 13 or Section 23 of the Customs Act are satisfied and there are evidences to show non-delivery of the goods to the appellants, it has to be construed as a loss in the custody of the custodian and duty remission is to be given. Accordingly, we order that on the appellants furnishing an undertaking tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has referred to Section 45 of the Customs Act, 1962 which relates to the restrictions on custody and removal of imported goods. Shri Mondal argued that there are two types of appraisements. In the first appraisement procedure, goods are examined first and then assessment is made and duty is paid. Under the second appraisement, goods are assessed first and then examination of goods takes place. He argued that customs authorities are having control over the customs area and customs are the custodian of the goods when the goods are with the customs. Shri K.M. Mondal argued that in the instant case, custodian is the International Airport Authority of India. He referred to Section 57 and argued that at any warehousing station, the Assistant Collector of Customs may appoint public warehouses wherein dutiable goods may be deposited. He referred to Sections 45, 46 47 of the Customs Act, 1962. He argued that Section 45 relates to the restrictions on custody and removal of imported goods. Section 46 deals with entry of goods on importation and he argued that Section 47 deals with the clearance of goods for home consumption. He argued that once the clearance of the goods have been ordered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition, Section 13 and Section 23 of the Customs Act, 1962 are reproduced below :- Section 13. Duty on pilfered goods. - If any imported goods are pilferred after the unloading thereof and before the proper officer has made an order for clearance for home consumption or deposit in a warehouse, the importer shall not be liable to pay the duty leviable on such goods except where such goods are restored to the importer after pilferage. Section 23. Remission of duty on lost, destroyed or abandoned goods. - (1) (Without prejudice to the provisions of Section 13, where it is shown) to the satisfaction of the Assistant Collector of Customs that any imported goods have been lost (Otherwise than as a result of pilferage) or destroyed, at any time before clearance for home consumption, the Assistant Collector of Customs shall remit the duty on such goods. (2) The owner of any imported goods may at any time before an order for clearance of the goods for home consumption has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon." A perusal of Section 13 shows that it provides for grant of relief at a stage before an order for clear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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