Full Judgment
2. The short point to be considered in this case is whether duty can be demanded under Section 72 of the Customs Act when the goods were stolen in the warehouse.
3. Facts of the case in brief are that in the months of June and July, 1999, the appellants had imported various electronic items and have filed Bills of Entry for warehousing. They had warehoused goods so imported in the Customs Public Bonded Warehouse of Central Warehousing Corporation, for the period of one year. Admittedly, theft took place at the Central Warehousing Corporation on 14th/15th November, 1999 and the goods warehoused by various importers, including those warehoused by the appellants, were stolen. The goods were stolen from the warehouse much before the bonding period of one year had expired. The Deputy Commissioner of Customs issued four show cause notices in respect of the goods covered by four Bills of Entry and the respective bonds proposing to demand in all customs duty to the extent of Rs. 1,93,329/-, interest, rent and other charges as also to impose penalties, on the ground that the appellants had neither removed the goods in terms of Section 68/69 of the Customs Act, 1962 nor obtained the extension of the warehousing period and therefore, the goods were to be treated as improperly removed in terms of Section 72(1)(b) of the Act. The details of the bonds and relevant demands are as given in the table below.
The Deputy Commissioner, as per his Order dated. 26-12-2000, confirmed the demanded duty and interest and also imposed a penalty of Rs. 12,000/- under Section 117 of the Customs Act on the ground that the goods have not been cleared from the warehouse even after the expiry of the one year period nor any extension has been obtained by them from the Customs Department. On an appeal, the Commissioner (Appeals) has set aside the penalty imposed, nevertheless, confirmed the duty as well as interest on the ground that the goods have been cleared from the warehouse and therefore, duty is payable by the importer under Section 72 of the Customs Act.
4. The ld. Counsel appearing for the appellants, while assailing the action of the Department submitted that duty cannot be demanded under Section 72 of the Customs Act in the facts and circumstances of this case since none of the circumstances mentioned in Section 72 are attracted. He contended that in any case there is no duty liability in respect of the stolen goods since Section 23 of the Customs Act, 1962 provides for remission of duty in respect of imported goods that have been lost or destroyed at any time before clearance for home consumption. It was also argued by him that liability, if any, is on the Public Bonded Warehouse and not on the importer in terms of Section 45 of the Customs Act, 1962.
5. It was also submitted by him that it is now settled by the decision of the Hon'ble High Court of Calcutta in the case of Sushil Kumar Kayan v. Assistant Collector of Customs reported in 1993 (68) E.L.T. 537 (Cal.) that no customs duty shall be levied on the goods which have been stolen. This decision has been attained finality by the Apex Court in the case of West Bengal State Warehousing Corporation v. Assistant Collector as reported in 2002 (145) E.L.T. A61 (S.C.).
6. Smt. Radha Arun, appearing for the Revenue submitted that the appellant's goods have been warehoused and consequently, the warehousing provisions will come into play in case of the appellants and the appellants are liable to pay duty in terms of warehousing provisions and the bond executed by them in respect of goods, which are not accounted for. In terms of the bond, responsibility is cast on the appellant for the accounting of the goods, which have been warehoused.
In terms of Section 72(d) of the Customs Act, 1962, the person who warehoused the goods are duty bound to pay the duty in respect of the goods which have been warehoused. She said that precisely this was the view of the Tribunal in the case of Pashupathi Overseas v. CCE, Madras reported in 1996 (88) E.L.T. 795 and this view was upheld by the Supreme Court as reported in [2001 (130) E.L.T. 19 (S.C.)]. In support of her contention that liability of the importer continues in terms of bond she referred to the decision of the Supreme Court in the case of S.K. Pattnaik v. State of Orissa reported in 2000 (115) E.L.T. 9 wherein it was observed that the fact was that the liquor was rendered unfit for human consumption and destroyed, after its import, which by itself attracted the levy of duty could not wipe out the liability of the appellant for payment of duty on the excisable goods, after their import in the bonded warehouse. She also referred to the decision of the Madras High Court in the case of Bharat Earth Movers Ltd. v.Collector of Customs, Madras reported in 2001 (129) E.L.T. 580 wherein it answered on reference that claim for refund of duty on account of pilferage is not covered by Section 23 of the Customs Act, 1962.
7. I have carefully considered the matter. In the present case, the goods in question have been stolen while in custody of the public warehouse before clearance for home consumption. It was the contention of the party that they are lost goods and as such duty cannot be demanded under Section 72 of the Customs Act. Furthermore, since they are lost goods, the appellants are entitled to remission of duty in terms of Section 23 of the Customs Act. It was also argued that the term 'lost' in Section 23 covers a situation where the goods have been stolen and reliance is placed on the decision of the Delhi High Court in the case of Sialkot Industrial Corporation, Meerut v. Union of India and Anr., reported in 1979 (4) E.L.T. (J329) (Del.) where it was held that 'lost' includes loss caused by way of theft. The Counsel also relied upon a series of decisions in support of his decision that loss includes loss caused by way of theft. Further, it was submitted by him that even after the amendment of Section 23 of the Customs Act, with effect from 13-5-1983, to exclude the applicability of the said Section in respect of goods which have been lost as a result of pilferage, the decision of the Delhi High Court continues to be applicable in respect of goods which have been lost as a result of theft inasmuch as what is excluded from the purview of the Section 23 is only loss by pilferage and not loss by theft. It was the contention of the Revenue that the appellants are liable to pay duty even in respect of the goods, which are lost in warehouse since the liability continues in terms of bond relying upon the decision in the case of Pashupathi Overseas (supra).
In this context, it was pointed out by the Counsel for the appellants that that case referred to by the Revenue, dealt with the refund claim and further more there is a categorical finding by the Supreme Court wherein it was observed that the Assistant Commissioner of Customs was not satisfied that the imported goods had been 'lost or destroyed.' In the instant case, it is an admitted position that the goods have been lost due to theft and accordingly, that ratio of the said decision is not applicable to the facts of this case.
8. It was also pointed out by him that there is a categorical finding by the Calcutta High Court in the case of Sushil Kumar Kayan (supra) that no customs duty can be levied in respect of the goods, which have been stolen. He drew my attention to the Para 17 of the said decision which is as under :- "17. There is another aspect of the matter. Admittedly, 18 coils weighing approximately 96 metric tons of the imported goods have been stolen from the Customs Bonded Warehouse. No Customs duty can be levied in respect of the goods, which have been stolen and the appellant cannot be asked to pay customs duty in respect of the said 18 coils. The appellant, therefore, is only liable to pay customs duty in respect of the goods, which were found after the theft and weighed at Paharpur at the weigh bridge of Falcon Steel Corporation before they were removed to the bonded warehouse at Ghusuri, Howrah.
The Collector of Customs shall bear in mind the aforesaid facts in determining the customs duty to be payable by the appellant upon the assessment to be made. But no customs duty shall be levied on the goods, which have been stolen and this has not been disputed by the ld. Counsel for the respondents." 9. I find lot of force in the arguments advanced on behalf of the assessee that in the present case none of the circumstances mentioned in Section 72 are attracted. Section 72 is as under : - "Section 72. Goods improperly removed from warehouse, etc. - (1) In any of the following cases, that is to say, - (a) where any warehoused goods are removed from a warehouse in contravention of Section 71; (b) where any warehoused goods have not been removed from a warehouse at the expiration of the period during which such goods are permitted under Section 61 to remain in a warehouse; (c) where any warehoused goods have been taken under Section 64 as samples without payment of duty; (d) where any goods in respect of which a bond has been executed under Section 59 and which have not been cleared for home consumption or exportation are not duly accounted for to the satisfaction of the proper officer, the proper officer may demand, and the owner of such goods shall forthwith pay, the full amount of duty chargeable on account of such goods together with all penalties, rent, interest and other charges payable in respect of such goods.
(2) If any owner fails to pay any amount demanded under Sub-section (1), the proper officer may, without prejudice to any other remedy, cause to be detained and sold, after notice to the owner (any transfer of the goods notwithstanding) such sufficient portion of his goods, if any, in the warehouse, as the said officer may select." Section 72(1)(a) is not applicable inasmuch as applicants have not removed the goods in contravention of Section 71 since the goods were stolen and similarly Section 72(1)(b) is also not applicable as rightly pointed out by the Counsel. Section 72(d) is also not attracted as there is no failure on the part of the appellants to account for the goods as Central Warehousing Corporation itself has acknowledged that the goods in question have been stolen. I am also not convinced with the arguments advanced on behalf of the Revenue that the Calcutta High Court has made only an observation that no customs duty shall be levied on the goods, which have been stolen and that observation is not binding with reference to the facts of this case. As can be seen from the entire decision and particularly Para 17 of the said decision, there is a clear finding by the Calcutta High Court that 'no customs duty can be levied in respect of the goods which have been stolen'.
This finding as such has not been set aside by the Apex Court and no contrary decision was brought to my notice. In the facts and circumstances, relying upon the decision of the Calcutta High Court, I am of the view that no customs duty can be levied in respect of the goods, which have been stolen in the warehouse and as such duty cannot be demanded under Section 72 of the Customs Act. Accordingly, appeals are allowed with consequential relief, if any.