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Best and Cromption Engineering Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu
Decided On
Reported in(1986)(7)LC69Tri(Chennai)
AppellantBest and Cromption Engineering
RespondentCollector of Customs
Excerpt:
.....in the docks found the packages in a damaged condition and suspected shortage. they requested the customs department for a survey and obtained an "open and inspection" order from the 'scrutinising; appraiser of the concerned assessment group in the custom house. this order was shown to the proper officer who had issued the "out of charge order" earlier, with a request to cancel the same to enable them to hold a survey for the shortages. the proper officer cancelled his signature in the bill of entry and attested the same. when the applicant requested the assistant collector, docks, for examination of the packages by their letter dated 27-10-1980, the assistant collector refused permission. the lloyds surveyors independently confirmed the shortages, vide their survey report (annexure.....
Judgment:
1. The applicants imported 1000 M.T. of Nickel by the vessel S.S.Nedalloyd Weser which arrived at Madras Port in December, 1979. There was some dispute in respect of the import of goods under the Open General Licence. The Deputy Collector of Customs, who confiscated the goods in adjudication proceedings allowed the applicants to clear them on payment of a fine of Rs. 25,000/-. The applicants paid the fine and duty levied on the entire consignment on 7-10-1980. After payment of duty, the applicants obtained the "out of charge" order on the Bill of Entry (Annexure B) from the Proper Officer (Deputy Office Superintendent, Accounts Department) under Section 47 of the Customs Act, 1962 in respect of the goods already examined in the Docks.

2. Subsequently, the Applicants on an inspection of the consignment in the Docks found the packages in a damaged condition and suspected shortage. They requested the Customs Department for a survey and obtained an "Open and Inspection" order from the 'scrutinising; Appraiser of the concerned Assessment Group in the Custom House. This order was shown to the proper officer who had issued the "out of charge order" earlier, with a request to cancel the same to enable them to hold a survey for the shortages. The proper officer cancelled his signature in the Bill of Entry and attested the same. When the Applicant requested the Assistant Collector, Docks, for examination of the packages by their letter dated 27-10-1980, the Assistant Collector refused permission. The Lloyds Surveyors independently confirmed the shortages, vide their Survey Report (Annexure C).

3. The Applicants filed a claim under Section 13 of the Customs Act, 1962 for refund of the excess duty paid on the shortages as found by the Surveyors. Section 13 of the Customs Act, 1962, as it stood at the relevant time, read as follows :- 13 Duty on pilfered goods. If any imported goods are pilfered 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.

4. By his order No. S/25/8223/80-Ap. dated 4-9-1981 the Asstt.

Collector of Customs, rejected the refund claim of the Applicants as inadmissible on the ground that according to the records of the Customs Department shortages were not brought to their notice before the order for clearance of the goods was issued. An appeal against this order was filed before the Appellate Collector of Customs, Madras. It was argued before the Appellate Collector that as there was a long delay in the finalisation of the licensing aspect, the "out of charge" order was mechanically given and only subsequently the clearing agent found that there was shortage and then it was brought to the notice of the Deputy Office Superintendent (Accounts) who cancelled the "Out of Customs Charge" Order. It was contended that the applicants were entitled to refund either under Section 13 or under Section 23 of the Customs Act.

The Collector of Customs (Appeals), by her order No. C3/2292/81 dated 13-5-1983 dismissed the appeal relying on the provisions of Section 13 of the Customs Act '62 (which provide that for a claim under that section shortages should be brought to the notice of the proper officer" before an order for clearance for home consumption is given.

5. An appeal filed by the Applicants under Section 129(1) of the Customs Act before the Tribunal was dismissed by its order No. CD(MAS) 86/84 relying on its earlier detailed order No. 83/84 dated 27-10-1984 (Annexure A).

6. The applicants have filed an application under Section 130(1) of the Customs Act '62 seeking to refer the following questions said to be of law and arising from the order of the Tribunal :- (i) Whether Section 13(1) will apply to the facts of the case in view of the cancellation of the out of Customs charge order by the Department? (ii) Whether it was open to the Department to contend that the cancellation of the out of Customs charge order was not valid? (iii) Whether refund could not be granted to the applicant in any event under Section 23(1) of the Customs Act? (iv) Whether Tribunal was correct in holding that the judgment of the Delhi High Court in the Sialkot Industrial Corporation Vs. Union of India was not binding on the Tribunal, Madras? 7. Taking up, question (iii) first, it has been pointed' out in Paragraph 8 of our order that Section 23(1) of the Act would not cover a case of pilferage but one in which goods are absolutely lost. Further as pointed out in Paragraph 11 of our order the applicants having declared to the Assistant Collector (Docks) in their letter dated 27-10-1980 that they believed there was severe pilferage of contents, they cannot urge before the higher appellate authorities that the shortage was not due to pilferage. In these circumstances, this question will not arise from the facts of the case and the order of the Tribunal.

8. As regards question (iv), this has been dealt with in detail in Paragraph 10 of the order. Though this is a question of law, the limitation to the binding nature of such decisions is a settled one; hence no question of law arises from our order. We have also given in Paragraphs 8 and 9 of our order the detailed jurisdiction for our disagreement with the judgment in the Sialkot Industrial Corporation case. As regards Question No. 1 and 2, a reply to any one question will cover both questions. As the issue contested in this case is mainly about the validity of the cancellation of the out of charge order, the following question is referred to the Honourable High Court of Judicature, Madras, under Section 130(1) of the Customs Act, 1962.

Whether in the facts and circumstances of the case, the cancellation of the "out of customs charge" order given under Section 47 of the Customs Act '62 can be considered to be not a valid one as held by the Department."


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