HINDUSTAN FERTILIZER CORPN LTD Vs. COLLECTOR OF CUSTOMS
LAWS(CE)-1991-8-2
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on August 12,1991

Appellant
VERSUS
Respondents

JUDGEMENT

T.P. Nambiar, Member (J) - (1.) THIS is an appeal filed by the appellant against the orders passed by the Collector of Customs & Central Excise (Appeals) in Order No. Cal. Cus-2113/89 dated 4-12-1989 in terms of which the claim of the appellants were rejected by him holding that the refund is not admissible in view of the fact that the condition in the Public Notice No. 276/64 was not followed by the appellants. The appellants, who are a Government of India Undertaking, imported a consignment of spare parts for Ammonia Pumps in three packages bearing Nos. 1/3, 2/3 and 3/3 from M/s. F. Peroni & Co., Mileno, Italy against their Invoice No. 218 dated 13-4-1981. The spares imported were assessed to duty on their individual merits on the entire consignment against Bill of Entry No. DI-1267 dated 29-8-1981. At the time of appraisement one of the three packages was found broken and a request was made to the Shed Appraiser to detain this package and release the other two. But at the time of making the request the appellant indicated that the package 1/3 may be detained. It is, however, the case of the appellant that actually the request should have been for package 2/3. The Insurance Survey was conducted for the detained package and the survey report indicates that the package surveyed was 2/3. The survey report also states that the shortage was due to pilferage. Thereafter, the appellant made the relevant refund claim. The refund claim was rejected. Against that order, an appeal was filed to this Tribunal and this Tribunal remanded the matter in terms of Order No. 254/Cal/88 dated 21st July, 1988 holding that the survey report should have been considered and there was no requirement that the Custom House should be present at the time of survey. In so ordering, this Tribunal relied on the decision reported in 1985 (21) ELT 185 (Tribunal). Thereafter, the Assistant Collector rejected the claim. The learned Collector of Customs & Central Excise in the impugned order confirmed the same. The learned Consultant contended that there was no requirement that the Customs Officers should be associated with the survey in question. In this connection, he relied on the following decisions : 1981 (21) ELT 185 : 1990 (48) ELT 300. Shri Basu Roy also contended that the import took place before the amendment of Section 23 by Finance Act, 1983. He pointed out that the import took place in 1981. It was his submission that all types of losses including pilferage are covered under Section 23 before the amendment of the Finance Act. In this connection, he relied on the decision of the Tribunal reported in 1991 (53) ELT 429. He also stated that what actually was surveyed was package No. 2/3 and not 1/3. He contended that the appellant wanted package No. 2/3 to be detained but by mistake indicated that package No. 1/3 to be detained. He further mentioned that prior to the amendment of Section 23 of the Finance Act, 1983 all types of losses including pilferage arc covered under Section 23 and for this reason he contended that the claim made by the appellants is in accordance with the law. He also stated that the decision of the Delhi High Court reported in 1979 (4) ELT (J 329) Delhi is relevant on this point. He pointed out that Section 23 of the Customs Act covers all types of losses including pilferage and, therefore, it was his contention that this decision of the Delhi High Court should be preferred in the absence of the decision of any other High Court or the Supreme Court decision in this regard. To this extent he distinguished the decision of the Tribunal reported in 1985 (21) ELT 249.
(2.) The learned SDR Shri Biswas replying the above contentions submitted before us that what was actually detained was package No. 1/3 as per records. He, therefore, stated that package Nos. 2/3 and 3/3 were gone out of Customs Control and, therefore, the question of granting any refund with respect to the shortage found in package No. 2/3 does not arise in this case. He contended that the Customs Officers were not associated with any such survey and such report is not binding on the Customs Authorities. It was his contention that if the Customs Authorities have to make the refund they have also a right to get associated in the survey which was made for the box in question. Shri Biswas also stated that even prior to the amendment of Section 23 by the Finance Act, 1983 the loss due to pilferage was not covered by Section 23. He pointed out that Section 13 specifically mentions about pilferage. Therefore, Section 13 being specific in this regard it prevails over Section 23 of the Customs Act. He also contended that if Section 23 is presumed to cover cases of pilferage then Section 13 of the Customs Act becomes redundant. In support of his contention he relied on the decision of the South Regional Bench reported in 1985 (21) ELT 249. Shri Biswas also mentioned that these facts were taken into consideration by the learned Collector of Customs and Central Excise (Appeals). He pointed out that in the above cited decision of the SRB they had referred to the decision of the Delhi High Court and had distinguished the Same. In the circumstances, it was his submission that the orders passed by the Collector (Appeals) is in accordance with law. He raised a plea that if the refund is allowed, the appellant will get unjust enrichment in this case. Reliance was also placed on the decision of the Tribunal reported in 1990 (50) ELT 322 in the case of Hindustan Motors Ltd. v. Collector of Customs to put forth the plea that in this case it is not clear as to whether the pilferage took place when the package was in the ship or after it was unloaded. Therefore, he pointed out that the report of the surveyor that it was due to pilferage does not show whether pilferage took place after the unloading or before the unloading. In the circumstances, relying on the above decision he contended that the refund in this case in not admissible. He also pointed out that if actually the pilferage had taken place when the same was in the vessel then neither Section 13 nor Section 23 would apply to the facts of this case and it is only under Section 27 read with Section 116 of the Act refund can be granted. In reply to the above submissions made by the learned SDR, Shri Basu-Roy gave a brief rejoinder that it is not definite as to whether pilferage took place when the package was in the ship or after it was unloaded and in view of this uncertainty the benefit of doubt should go in favour of the appellant and not to the department.
(3.) I have considered the submissions made by both the sides. String reliance was placed by the learned SDR on the decision of the South Regional Bench reported in 1985 (28) ELT 249 in the case of Bharat Earth Movers v. Collector of Customs. In the above said decision the SRB held that even before amendment of Section 23 by the Finance Act, 1983 a case of pilferage will not come within the purview of Section 23. It was held therein that Section 13 alone applies to such cases. This view was taken by the SRB in the earlier decision passed by the same Bench reported in Bharat Electronics Ltd. v. Collector of Customs, Madras [1983 (12) ELT 653]. But the West Regional Bench in the decision reported in 1984 (18) ELT 358 - Hindustan Petroleum Corporation v. Collector of Customs had taken a different view. The decision by the SRB referred to supra was brought to the notice of the WRB, but they did not follow the same on the ground that the decision of the Delhi High Court in the case of Sialkot Industrial Corporation reported in 1979 (4) ELT 329 was based on the decision of the Supreme Court reported in AIR 1960 SC 1068 {East & West Steamship Co. v. Ramalingam). In the above case, their Lordships of the Delhi High Court had occasion to look into the words 'Lost or destroyed' which were used in Section 23 prior to its amendment. It was held by their Lordships that "loss" results when a thing is destroyed but is also caused when the owner has been made to part with it although the thing remained intact. It was, therefore, held that in this sense, loss means and implies "Deprivation". It is synonymous with damage resulting either in consequence of destruction, deprivation or depreciation and when a party is deprived of a thing either he can never recover or when it is withheld from him he is deemed to suffer the loss. Relying on the decision of the Supreme Court reported in AIR 1960 SC 1062 their Lordships of the Delhi High Court came to the conclusion that the words 'loss or destroyed' used in Section 23 of the Customs Act, 1962 prior to its amendment by Finance Act, 1983 included loss due to pilferage. In view of that matter, the WRB of the Tribunal in the case of Hindustan Petroleum Corporation did not follow the decision of the Southern Regional Bench. In this connection, the main argument of the learned SDR is that if Section 23 had included pilferage, then Section 13 was redundant. I am unable to appreciate this argument. There is essential difference between the two sections. Under Section 13 the importer is not liable to pay duty on the imported goods which are pilferred after unloading but before the proper officer has made an order for clearance for home consumption. But under Section 23 duty should have been paid by the importer in order to claim remission.Therefore, it is clear that Section 13 provides that if the goods have been pilferred the importer is not liable to pay duty leviable on such goods. But this liability revives if the goods are eventually restored after pilferage. Thus the liability to duty thereunder continues to exist on the pilferred goods though the payment of duty by the importer would not arise under specified circumstances. Under Section 23 of the Act before its amendment by Finance Act the duty payable on the lost goods is remitted. Thus, what is covered under Section 23 is a case of irretrievable loss. The occurrence of the words 'lost or destroyed' under the section suggests that the relevant goods are not physically available for use or consumption. Therefore, Section 13 and Section 23 operates under different circumstances. While Section 13 applies in case of loss by pilferage, Section 23 deals with a situation of losses or destruction. Under Section 13 the importer is not made liable to pay duty if the proper officer has made the order for clearance but under Section 23 duty should have been paid by the importer in order to claim remission of duty on goods lost, destroyed or abandoned. It is in these circumstances, the Tribunal had held in the decision of Hindustan Petroleum Corporation v. Collector of Customs - 1984 (18) ELT 358 at page 367, Para 21 as follows :- "21. 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 amendment Section 23(1) did not exclude from its purview goods pilfered before their clearance for home consumption. In this view of the matter, I agree with the conclusion reached by Shri Hegde and allow the appeal." I am accordingly of the view that in the absence of any other decision of any other High Court contrary to the decision of the Delhi High Court in the case of Sialkot Industrial Corporation, this decision is to be followed in view of the fact that the Delhi High Court had based their decision on the principles laid down by the Supreme Court reported in AIR 1960 SC 1068. This Tribunal also had taken a similar decision reported in 1985 (21) ELT 185.;


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