Skip to content


Government Medical Stores Depot Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1984)(17)ELT425Tri(Mum.)bai
AppellantGovernment Medical Stores Depot
RespondentCollector of Customs
Excerpt:
.....docks when the goods were in the custody of the port trust authorities and before clearance for home consumption was made and under the customs supervision. the assistant collector of customs under whose supervision the survey was held had issued a certificate of examination certifying that the drum is in damaged condition leaking at the bottom and there is room to hold the missing contents, namely, 208 kgs. he further submitted that since the customs authorities were satisfied as to the loss, the assistant collector m.c.d. and the collector (appeals) were not justified in rejecting the refund claim. he also submitted that since the loss had occurred before actual physical clearance for home consumption,' their refund claim squarely fell within the ambit of section 23(1) of the apt......
Judgment:
1. This appeal arises out of and is directed against the Order-in-Appeal No. S/49-782/82 M dated 26-6-82 passed by the Collector of Customs (Appeal) Bombay, by which he confirmed the Order-in-Original bearing No. S/8-10-3628/80 M dated 8-2-82 passed by the Assistant Collector of Customs, M.C.D. by which he rejected the appellants' claim for refund based on shortage.

2. The facts necessary for the disposal of this appeal are not in dispute. The Consignee, M/s. Government Medical Stores Depot, Directorate General of Health Services, Bombay, imported 1 container (15) drums of Abate Technical from USA Ex. S/S. 'EXPORT CHAMPION'.

After the first check the goods were cleared on payment of duty. The appellants cleared 14 out of 15 drums on 4-7-80. Since they found one drum damaged a detailed survey was held on 15-7-80 under Customs supervision and the survey disclosed a shortage of 208 Kgs. The appellants, therefore, claimed refund of proportionate duty before the Assistant Collector of Customs, M.C.D. The Assistant Collector rejected the claim holding that Section 13 of the Customs Act, 1962 was not attracted inasmuch as the out of charge order has "already been passed.

He also held that Section 23 of the Act is also not applicable as the loss cannot be considered as the one falling within the ambit of Section 23. In appeal the Collector (Appeals) held "that the fact of pilferage not having been proved before an order had been passed by a proper officer for clearance".

3. During the hearing of the appeal Shri Paradkar submitted that the survey of the damaged drum was conducted in the Docks when the goods were in the custody of the Port Trust Authorities and before clearance for home consumption was made and under the Customs supervision. The Assistant Collector of Customs under whose supervision the survey was held had issued a certificate of examination certifying that the drum is in damaged condition leaking at the bottom and there is room to hold the missing contents, namely, 208 Kgs. He further submitted that since the Customs authorities were satisfied as to the loss, the Assistant Collector M.C.D. and the Collector (Appeals) were not justified in rejecting the refund claim. He also submitted that since the loss had occurred before actual physical clearance for home consumption,' their refund claim squarely fell within the ambit of Section 23(1) of the Apt. In support of this contention, Shri Paradkar relied upon the decision of the Delhi High Court in the matter of Sialkot Industries Corporation, Meerut v. Union of India-1979 E.L.T. (J 329). He also produced a copy of the order of the Appellate Collector of Customs, Bombay.

Shri J.M. Jain, the learned Departmental Representative contended that the Collector (Appeals) had proceeded on the ground that there was no proof that the pilferage had taken place before an out of charge order was passed, and as such, the appellants' claim for refund is unsustainable under Section 13 of the Act. Shri Jain, further, submitted that unless there is evidence to show that the pilferage had taken place before an out of charge order had been passed, the claim under Section 23 also cannot be admitted. Shri Jain also submitted that Section 23 is attracted only when there is total loss or total destruction and in the present case even according to the appellants there was only a loss of some quantity, and as such, the provisions of Section 23 are not attracted. Shri Jain then submitted that the South Regional Bench of the Tribunal in International Clearing and Shipping Agency Madras v. Collector of Customs''-had taken a view that the decision of the Delhi High Court is not binding on the Tribunal and desired that this Bench should also take a similar view.

4. I have considered the submissions made on both sides. It is not disputed that one of the drums imported was found leaking when it was lying in the Docks and in the Custody of the Bombay Port Trust. Survey was conducted in the presence of the Customs Officer before taking actual delivery of the goods. The survey disclosed a shortage of 208 Kgs. The certificate of examination issued by the Customs did not indicate that there was any pilferage* of the goods. On the other hand the loss was due to a leak in the drum. In the said circumstances and since the claim itself was not under Section 13, the. Assistant Collector as well as the Collector (Appeals) were wholly unjustified in treating the claim as the one falling under Section 13 of the Act. The only other question that remains for consideration is whether the claim is admissible under Section 23(1) of the Act. The quantum of loss is not in dispute. It is also not disputed that this loss had occurred before taking actual delivery from the custody of the Port Trust. This loss was not due to any Wanton or negligent act of the consignee.

Section 23(1) nowhere lays down that the loss or destruction must be total as contended by Shri J.M. Jain. Shri Jain no doubt placed reliance on the decision of the South Regional Bench in the matter of M/s. International Clearing and Shipping Agency. 1 had an occasion to consider the above decision of the South Regional Bench in Appeal No.C.D. (Bom) 22/83, Hindustan Petroleum Corporation Ltd. v. Collector of Customs, Bombay. I had respectfully disagreed with the view taken by the South Regional Bench. In the said case I had observed if the grant of relief under Section 13 is for the reason that the importer had no control over goods, the situation is not different for granting relief under Section 23 (1). Till physical delivery is taken after an order for home consumption is mads, the goods will be under the control of the Customs Authorities, but in the custody of the Port Trust Authorities, and therefore, the importer will have no control over the said goods.

5. In my view it does not stand to reason that the importer should get relief if pilferage of the imported goods take place before an order for clearance for home consumption is made, but he cannot get any relief if the pilferage takes place after an order for clearance for home consumption is made, but before actual physical .delivery of the imported goods are taken by the importer. The essential differences between the situations contemplated under Section 13 and 23 (1) are : (1) Under Section 13 the importer is not made liable to pay the duty leviable on the imported goods which are pilfered after the unloading, but before the proper officer has made an order for clearance for home consumption. But in order to claim remission under Section 23, duty should have been paid by the importer.

(2) Under Section 23(1) the burden is cast on the importer to satisfy the Assistant Collector of Customs that imported goods have been lost or destroyed at any time before physical clearance of the goods for home consumption, but no such burden is cast on the importer under Section 13. This may be because under the scheme of the Act the liability to pay the duty arises after the assessment.

The mode of assessment is provided under Section 17. If the pilferage takes place prior to the assessment, the importer is not made liable to pay the duty payable in respect of pilfered goods.

(3) The claim for payment under Section 23(1) arises after an order for home consumption is made, but before taking actual physical delivery; whereas under Section 13, the importer is not liable to pay duty for the pilfered goods if pilferage had taken place before an order for clearance for home consumption is made. These distinctions between the two sections is clear from the language employed in Section 13 and Sections 23 (1) and 23 (2). Both under Sections 13 and 23 (2) the importer is not made liable to pay duty if the pilferage/abandonment takes place before an order for clearance for home consumption is made. Section 23 (1) on the other hand does not place any such restriction. Under that Section the importer becomes entitled for remission of duty if the goods are lost or destroyed at any time before clearance for home consumption even though there was an order for clearance for home consumption.

It cannot be denied that there will be some interregnum between the order for home consumption and taking physical delivery of the goods from the Port Trust Authorities who are the approved custodian of the goods landed in Port Area. Thus, it is clear that the situations contemplated under Section 23(1) is altogether different from the situation contemplated under Section 13.

6. As I have taken a view different from the view taken by the South Regional Bench in the normal course, I should have made a reference to the President for the constitution of a larger Bench. But then such a reference in my opinion is not required. Firstly, because the meaning of the word 'lost' appearing in Section 23 (1) as interpreted by the Delhi High Court in Sialkot case is based on the decision of the Supreme Court and the decision of the Supreme Court is binding on all Courts and Tribunal under Article 141 of the Constitution. Secondly, in the matter of interpretation of All India Statute the Tribunal is required to follow the decision of the High Court under whose jurisdiction the office of the Tribunal is situated. In the absence of a decision of such a High Court the Tribunal is required to follow the decision of any other High Court. If, however, there are conflicting decisions then the Tribunal is at liberty to follow any one of the decisions. Admittedly, there is no decision of the Bombay High Court relating to the interpretation of Section 23 (I). The only decision that had been brought to my notice is the decision of the Delhi High Court, and therefore, I am required to follow the said decision. The Delhi High Court has clearly laid down that the expression 'lost' or 'destroyed' appearing in Section 23 (1) is not used in any narrow or a particular sense but in a broader sense and includes the loss or destruction caused by whatsoever reason.

7. In the instant case, the documentary evidence produced by the appellants established beyond doubt that the loss took place when the goods were in the custody of the Port Trust Authorities, and before the appellants could take actual physical delivery, and therefore, the appellants became entitled to claim remission.

8. In the above view of the matter I allow this appeal and set aside the orders passed by the Assistant Collector and the Collector (Appeals) and direct the Customs Authorities to grant consequential relief to the appellants within 4 months from the date of the receipt of this order.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //