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TMI Blog1991 (8) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... account of the defective goods sent by M/s. Magadi Soda Company Ltd. The amount remitted on account of the import made was only US $ 5,35,000 as against the earlier contracted amount of US $ 7,75,000/-. 2. In view of such reduction, the appellant filed a refund application before the Customs Department to the tune of Rs. 9,95,892.65. The Assistant Collector was not satisfied as to the extent of deterioration of the goods before clearance as provided by Section 22 of the Customs Act and rejected the refund application vide order dated 19-7-1982. 3. The appeal preferred against the order dated 19-7-1982 was rejected by the Collector of Customs on 23-12-1982 on the reasoning that the damage was discovered after the goods were out of customs control. The further appeal to the Tribunal was also unsuccessful. The Tribunal by the order dated 26-10-1989 held that the alleged inferior nature of goods was discovered after clearance. 4. This appeal is filed under Section 130E of the Customs Act, 1962 against the order of the Tribunal dated 26-10-1989. 5. The question involved in the present appeal is whether the appellant is entitled to the refund of customs duty on account of the compen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted was to the extent of US $ 2,40,000/-. The appellant claimed that on account of the reduction in the value of the consignment, the appellant is entitled to refund of customs duty proportionately. 8. The Collector of Customs pointed out that "The duty is leviable on the basis of the value of such or like goods at the time of clearance. It has not been proved that the alleged defect on account of which the price has been reduced was present in the goods at the time of clearance. At least some of the defects of the type pointed out, viz., the lumpy character, are such as could develop due to exposure to moisture etc. during the period the goods were out of customs. In any case, the customs were not associated even with the post-clearance examination. Any alleged reduction in value on the basis of a post-clearance agreement between the buyer and the supplier on some alleged grounds which the customs had no chance to verify prior to clearance is fraught with great risks to Revenue." (emphasis supplied) 9. According to the appellant, this reasoning is wrong. The appellant stated that most of the defects were due to non-adherence to specification provided under the contract. The de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The duty is ordinarily chargeable with reference to the tariff value in the case of goods entered for home consumption on the date on which the bill of entry in respect of such goods is presented. 11. Section 22 provides for payment of duty on damaged or deteriorated goods. It reads thus :- "22. Abatement of duty on damaged or deteriorated goods. (1) Where it is shown to the satisfaction of the Assistant Collector of Customs - (a) that any imported goods had been damaged or had deteriorated at any time before or during the unloading of the goods in India; or (b) that any imported goods, other than warehoused goods, had been damaged at any time after the unloading thereof in India but before their examination under Section 17, on account of any accident not due to any wilful act, negligence or default of the importer, his employee or agent; or (c) that any warehoused goods had been damaged at any time before clearance for home consumption on account of any accident not due to any wilful act, negligence or default of the owner, his employee or agent, such goods shall be chargeable to duty in accordance with the provisions of sub-section (2). (2) The duty to be charged on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermine the amount of duty due in cases where duty has not been levied or has been short levied or erroneously refunded after issuing show cause notice, there is a corresponding right on the importer to claim refund of the excess duty levied, it is necessary for the importer to prove to the satisfaction of the proper officer that the goods at the time of the clearance was chargeable to a lesser or lower duty for any one of the reasons contained in Sec. 22 which alone provides for abatement of duty. Any error in the assessment of the value by itself does not enable the importer to claim re-assessment or refund. It has necessarily to be shown that on account of the damaged or deteriorated condition of the imported goods before or during the unloading of the goods in India, the duty to be charged on the goods was proportionate to the value of the damaged or deteriorated goods. The question of redetermining the value of the imported goods can arise only in a case where such damage or deterioration before the clearance is proved to the satisfaction of the proper officer. When there had been no indication of any such condition and the duty has been assessed on the basis of the invoice val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. 16.On the basis of these decisions, the learned counsel for the appellant contended that when the seller has allowed the reduction, the real price of the goods is that which has been accepted by the seller and that the assessment made on a higher value on the basis of the invoice price is in excess and such excess is refundable to the appellant. 17. It is not necessary to elaborate on the principle stated in the decisions on the facts of the present case. 18. It is admitted case of the appellants that the alleged inferior nature of goods was discovered by the appellant after clearance. Until the refund application was made, no requisition appears to have been made to the customs authorities to have the value of the goods re-determined for the purpose of Section 22. The correspondence between the appellants and the sellers and their agents could only reveal that the appellant put forward a claim for compensation on the ground that the goods imported had become lumpy and was also of inferior standard. Ultimately the sellers agreed to reimburse the appellants and pay compensation to the tune of US $ 2,40,000. What appellants have received from the sellers is compensation for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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