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TMI Blog1985 (5) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... of as if it were an appeal filed before the Tribunal. 3. The West Regional Bench, Bombay heard the appeal on 20-1-1984 but it did not pass final orders on the appeal. For the reasons set out in its order dated 20-1-1984, the Bench directed that the case be placed before the President for constituting a Larger Bench to hear and dispose of the case. In due course, the present Bench of five Members was set up by the President to hear the appeal. 4. The facts of the case, briefly stated, are that M/s. Indian Oil Corporation Ltd., Gandhi-Dham, Kutch (hereinafter referred to as the appellants) were moving petroleum products in bond from their Gandhi-Dham installations to their Shakur Basti installations. It appears that permission for such in-bond removals was granted by the Assistant Collector, Kandla, on the condition that no wastage or evaporation allowance shall be claimed by the appellants in respect of such movements and that duty shall be paid on such transit losses. Accordingly, duty amounting to Rs. 80,596.70p was demanded by the Assistant Collector from the appellants by three separate communications, one dated 3-2-1977 for Rs. 7,797.95p in respect of superior kerosene oil, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c and comprehensive sense and not in a narrow sense. It postulates loss or destruction caused by whatsoever reason, whether theft, fire or accident including pilferage. Shri Ranganathan stated that, as far as he knew, there was no contrary decision. In terms of the said decision, the appellants were entitled to relief from payment of duty in respect of the transit losses. Shri Ranganathan further submitted that subsequent to the hearing of the appeal by the West Regional Bench on 20-1-1984, three decisions favourable to the assessee have been passed by the Tribunal. The first was by the West Regional Bench in Appeal No. CD(T)(Bom) 134/81 disposed of by Order dated 22-2-1984 which followed the Delhi High Court decision in the Sialkot Industrial Corporation case. The second was again the order of the West Regional Bench in CD(Bom) Appeal No. 95/1983 in Government Medical Stores Depot v. Collector of Customs, Bombay - 1984 (17) E.L.T. 425. The third was order dated 11-1-1985 passed by the West Regional Bench in Indian Oil Corporation v. Collector of Customs, Bombay, Appeal No. CD(T) (Bom) 41/1977. Shri Ranganathan submitted that the "loss" referred to in Section 23 of the Act was wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to be unreasonable and against public policy. 8. We have considered the submissions made by both sides. In the instant case, certain petroleum products were removed from the appellants' warehouse at Gandhi-Dham to their warehouse at Shakur Basti. Removals were effected in terms of Section 67 of the Customs Act which provides that- "The owner of any warehoused goods may, with the permission of the proper officer, remove them from one warehouse to another, without payment of duty, subject to such conditions as may be prescribed for the due arrival of the warehoused goods at the warehouse to which removal is permitted." In exercise of the powers conferred by Section 157 of the Customs Act, the Central Board of Revenue (as it then was) has prescribed the "Warehoused Goods (Removal) Regulations, 1963". The condition stipulated for transport of warehoused goods to another town is contained in Regulation No. 3 which reads thus : "Where the goods are to be removed from one warehouse to another in a different town, the proper officer may require the person requesting removal to execute a bond in a sum equal to the amount of import duty leviable on such goods and in such form and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch goods for home consumption has been made by the proper officer. (See Section 68). There is nothing in Section 23(1) to suggest that its application is limited to instances of direct clearance of goods for home consumption or that they do not extend to instances of clearances of warehoused goods for home consumption. In this connection, it is useful to refer to the note on Clause 23 of the Customs Bill, 1962 (Bill No. 56 of 1962) which reads thus : "Clause 23.-Sub-clause (1) replaces existing Section 122. Under the existing section remission of duty is permissible only if goods are lost or destroyed by unavoidable accident or delay. Under the revised provision remission of duty may be allowed in all cases where goods are lost or destroyed whatever may be the reason. Since cases of total loss or destruction cause considerable hardship, a generous approach is being made. Further, the new provision will specifically permit remission of duty not only in respect of warehoused goods as at present but also in respect of other goods which are cleared direct for home consumption. Importers will welcome this relief. Sub-clause (2) replaces the last para of existing Section 100 and lays d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the clause is intended to apply also to warehoused goods. 12. Shri Raghavan Iyer pointed out that if such a broad view is taken, Section 70 would becomes virtually redundant. Section 70 provides for remission of duty on warehoused goods found to be deficient in quantity on account of natural loss. The provision applies to such warehoused goods as the Central Government, having regard to the volatility of the goods and the manner of their storage may, by notification in the official gazette, specify. A plain reading would indicate that in so far as deficiencies found in storage of volatile warehoused goods are concerned, Section 70 would govern remission of duty. This is not, however, the same thing as saying that Section 23(1) has no application to warehoused goods. 13. The Delhi High Court in the Sialkot case - 1977 E.L.T. J-239- has clearly laid down that the expression "lost or destroyed" in Section 23 is used in the generic and comprehensive sense and not in a narrow sense. It postulates loss or destruction caused by whatsoever reason whether theft, fire or accident, including pilferage. The decision was given in respect of the petitioners' claim for remission of duty on g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontents of a package which, on survey held after the order for clearance for home consumption was made but before physical clearance of the goods from the Port Trust premises, was found empty. The claim was rejected by the lower authorities on the ground that Section 13 did not apply. The Bench in its order held that the object behind Section 23 would appropriately refer to cases of complete loss or destruction and not mere deprivation by way of theft or pilferage. Since this aspect did not seem to have been brought to the notice of the Delhi High Court in the Sialkot Industrial Corporation case, the Bench construed Sections 13 and 23 and held that if the view adopted by Delhi High Court was taken, Section 13 would become redundant. The harmonious way to read Sections 13 and 23, said the Bench, would be by restricting Section 23 to situations other than pilferage and referring to Section 13 where there is a specific provision in cases of pilferage. The Bench held that in a situation where the goods are not available at the time of delivery and the non-delivery is not due to physical destruction or loss, but due to theft, pilferage and the like, the provisions of Section 13 should p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been lost", the brackets and words "(otherwise than as a result of pilferage)" shall be inserted." The amended provision reads thus : "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." The note on Clause 48 of the Finance Bill, 1983 read as follows : "Clause 48 seeks to amend Section 23 of the Customs Act, 1962, to exclude from its purview goods pilfered before their clearance for home consumption." It is thus clear that only with the amendment effected by the Finance Bill, 1983, Section 23(1) of the Act excluded from its purview, goods pilfered before their clearance for home consumption, the implication being that in respect of pilferage of imported goods, Section 13 alone, and not Section 23, is applicable. It would be reasonable to infer that, prior to the amendment, Section 23(1) did not exclude from its purview goods pilfered before their clearance for home consumption as in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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