1. M/s. Indian Oil Corporation have filed Revision Application dated 13-7-81 against Order-in-Appeal No. S/49-44/80 Oil dated 30-12-1980/24-1-1981 passed by the Appellate Collector of Customs, Bombay, which has been transferred to this Tribunal and is being considered as an appeal.
On 4-1-80 the appellants were granted permission by the Assistant Collector of Customs to transfer 200.00 metric tonnes of Bright Stock Product which had already been warehoused from IOBL Storage Tank No.S-3 at Trombay to HPC(VMU) Storage Tank No. 215 located at Hay Bunder Installation, Sewree, by road through tank lorries. During the course of transfer operations one of their tank lorries loaded with 9.301 MTs.
of the goods met with an accident. As a result of this unavoidable accident the tank plate got ruptured and the entire product of 9.801 MTs. was spilled over the road. The appellants have stated that they reported this matter to the Central Excise Officials supervising the receipt of bonded cargo at Hay Bunder, Sewree. Simultaneously they informed the police station and the fire brigade. The police drew up a panchnama record of the accident and recorded the statements of the driver and the cleaner of the vehicle in the presence of eye witness-Watchman of Hindusthan Lever Factory. There was, therefore, a shortage of about 9.901 MTs. during the course of bond to bond transfer. The duty on this shortage amounted to Rs. 48,972.18 was paid on 8-2-80. The appellants' claim for refund of duty was rejected on the ground that there was no provision under the Customs Act to grant refund of duty on losses during bond to bond transfers and that the appellants had given an undertaking to pay the duty on all transfer losses before permission to transfer the product was given by the Assistant Collector of Customs. The Appellate Collector of Customs, Bombay, rejected the appeal on the ground that the provisions of Sec.
23(1) of the Customs Act could not be applied to this case, since the appellants had not produced any evidence to show that the loss was due to natural causes that no notification was issued for complying with the provisions of Sec. 70 of the Customs Act, 1962 to the imported gasoline to be taken delivery of from one bonded warehouse to another warehouse. In the present appeal the appellants have no doubt admitted that the permission from bond to bond transfer was given to on the condition that the appellants will pay duty on transfer losses. They have, however, referred to the Supreme Court decision in the matter of Dunlop India Union v. Union of India, A.I.R. 1977 S.C. 957 to state that the appellants are not estopped from making an application for refund even though they had given an undertaking to bear the transfer losses. The assessee's right to claim refund on proper interpretation of law cannot be whittled down merely because the appellants had given an undertaking to bear the transfer losses. Such an undertaking would not cover a case where the goods had been lost due to unavoidable accident. Shri K. R. Venkatraman, appearing on behalf of the appellants has further stated under the provisions of Sec. 23(1) of the Customs Act, right to claim refund cannot be taken away on account of the undertaking which was given for effecting bond to bond transfer. He has also referred to the provisions of Sec. 122 of Sea Customs Act, (Act VIII) of 1878 which provided for refund in respect of goods lost or destroyed in a warehouse before the clearance for home consumption.
Sec. 23(1) of the Customs Act is wider in its ambit and scope than the reported Section 122 of the Sea Customs Act. It enjoins the Asstt.
Collector of Customs to remit the duty when it is shown to his satisfaction that any imported goods have been lost or destroyed at any time before clearance for home consumption. In the instant case, 9.801 MTs. of Bright Stock Product had been lost (from the warehouse and not) before clearance for home consumption. The appellants contend that they had produced all the necessary documentary evidence regarding loss of the goods to the proper (concerned) authorities like Fire Brigade, Municipal and Police Authorities (in addition to the statements made by the driver and the cleaner duly corroborated by an eye witness). The Assistant Collector of Customs has charged duty on 9.901 MTs. although the balance unaccounted quantity of 0.100 MTs. which was removed from tank and loaded in a number of tank lorries had been lost during the course of transfer of the total quantity of 194.974 MTs. This unaccounted quantity of 0.100 MTs. is incidental and inevitable and works out to 0.005% of the total quantity which is negligible and could be ignored as a loss likely to occur during transfer. Shri Venkatraman referred to and relied upon the judgment of the High Court of Delhi in the Civil Writ No. 647 of 1968. 1979 ELT (J329) in the matter of Sialkot Industrial Corporation, Meerut, v. Union of India and Anr.. The Hon'ble Delhi High Court has ruled that the expression 'lost or destroyed' in Sec. 23 of the Customs Act, 1962 is used in generic and comprehensive sense and not in a narrow sense. This would cover losses by whatsoever reason, whether theft, fire, accident, pilferage. In the present case, the shortage has occurred as a result of spill over of the contents of the tank on the road and this would constitute 'loss' within the meaning of Sec. 23 of the Customs Act, 1962. Shri Venkatraman also referred in this connection to the decision of the Bombay Regional Bench in the matter of Bharat Petroleum Corporation v.Collector of Customs, Bombay, in CD. (T) (BOM) Appeal No. 76/1980 wherein it has been ruled that the provisions of Sec. 23 would cover losses on account of natural causes in the warehoused goods. This Bench has further ruled that the undertaking for payment of duty on transferred losses would not disentitle them to claim remission of duty on shortages which are not due to any negligence on the part of the appellants and were beyond their control. Shri Venkatraman, however, conceded that another Bench consisting of Shri C.T.A. Pillai and Shri S. Kalyanam have taken a different view and have referred this matter to the President of the Tribunal vide their order dated 20-1-84 in Appeal C.D. (T) (BOM) No. 46/78 for constitution of the Larger Bench (in the matter of Indian Oil Corporation v. Collector of Customs) following their decision in the Madras Revisional Bench in the matter of Bharat Electronics Ltd. v. Collector of Customs, Madras, reported per 1983 E.L.T. page 653.
3. Shri J.M. Jain, S.D.R. argued that the appellants had given unconditional undertaking to bear all transfer losses and the permission to effect bond to bond transfer under Sec. 67 of the Customs Act, 1962 was given only on the basis of this condition. In view of this, the appellants cannot be allowed to go back on their own undertaking and claim refund in respect of losses which have occurred on account of accident while effecting bond to bond transfer.
4. We have given careful consideration to the submissions made by both the parties. The goods in this case had been warehoused under the provisions of Customs Act, 1962 and were subject to the control of the Customs Authorities. These were permitted to be removed from one warehouse to another under the provisions of Section 67 of the Act, subject to the conditions prescribed in this behalf by the Assistant Collector. Section 67 provides for the owner of any warehoused goods, with the permission of the Customs authorities to remove the goods 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. The conditions referred to in this Section are in respect of 'due arrival' of the warehoused goods allowed to be removed, from one warehouse to another.
These, inter alia, would include taking of all reasonable precautions to ensure safety of the warehoused goods while in transit. In our view, these conditions do not envisage absolute responsibility for all losses whether preventable or otherwise. In the present case, the appellants were allowed to remove the goods in question from one storage tank to another on the condition that they shall bear all transfer losses.
These, in our view, refer to all such losses as can be prevented and not those which are on account of natural causes or due to unavoidable accidents beyond the control of the appellants and those which cannot be prevented despite all reasonable precautions taken in this behalf.
The Respondents have not raised any plea to say that the accident which caused the loss of the goods in the present case was on account of collusion, negligence of the appellants or their employees. On the other hand, the appellants have stated that the loss occurred on account of the accident which could not be prevented by them despite of all reasonable precautions. Accordingly, following the judgment of the Delhi High Court in the matter of Sialkot Industrial Corporation (1979 E.L.T. J 329) supra we hold that the appellants are entitled to get relief in respect of the goods which were lost or destroyed before their clearance for home consumption. The Order of the Appellate Collector is therefore set aside and the appeal allowed. The appellants be granted consequential relief within four months from the communication of this order.