1. This is an appeal directed against the order passed by the Collector (Appeals) bearing No. S/49-58/90 Misc (Air) dated 28-9-1990 rejecting the appellants' appeal.
The appellants, herein, had imported a consignment of ball and roller bearings and filed Bill of Entry on 24-1-1989. The examination of the goods took place on 1-2-1989 when the goods were found to be in order.
Thereafter, duty has been paid on the goods on 29-3-1989. After the payment of duty, the proper officer gave the out of charge order on 31-3-1989. When the appellants went to take delivery of the consignment on 3-4-1989, they found the packages in torn condition and one package was found missing. Thereafter, they had a survey done by M/s. Lloyds Agencies Tata Tea Ltd. The Customs was not associated in the survey.
However, the survey was reported to have been done in the premises of the custodian viz. International Airport Authority of India in the Customs' area. They, thereafter, filed refund claim in respect of the goods alleged to have been pilfered based on the survey report. The claim was rejected by the Asstt. Collector on the ground that pilferage has taken place after the out of charge order has been given and the survey also has been conducted not before the out of charge order has been given and not before the officers of the Customs. The matter was taken up in appeal before the Collector of Customs (Appeals) who upheld the order of the Asstt. Collector. The present appeal is, therefore, before us.
3. Dr. Kantawala, does not dispute the fact that the judgment of the Delhi High Court in the case of Sialkot Industrial Corporation reported in 1979 (4) E.L.T. (J 329) was in the context of the provisions of section 23 of the Customs Act prior to the amendments by the Finance Act, 1983. He, however, sought to advance his argument that notwithstanding the amendments carried out in Section 23, the appellants are entitled to get relief on the following grounds :- As per the provisions of Section 45 of the Customs Act, save as otherwise provided in any law for the time being in force, all imported goods unloaded in a customs area shall remain in the custody of custodian as may be approved by the Collector of Customs until they are cleared for home consumption or for warehousing. In this case, the International Airport Authority of India have been appointed as custodian by the Collector and the goods are not under the custody of the importers. Since on the date of examination of the goods they were found to be all right, they had paid the duty and got the out of charge order. However, when they went to take delivery of the goods, they noticed the goods tampered with pilferage and one package missing.
Since they are not having any control over the goods kept in the customs area under the custody of the custodian they are not liable to pay duty in respect of the goods not delivered to them by the custodian. The Customs Department and the custodian are responsible for the proper custody and delivery of the goods. In this context, he relied upon some judicial pronouncements. He, therefore, pleaded that notwithstanding the amendments carried out in Section 23 of the Customs Act, they are entitled to get refund of duty on goods not delivered to them. He also mentioned that in this case, consequent upon the police complaint, a part of the goods was also recovered and restored to the custodian and naturally on these restored goods, when they are returned to them, they would be paying duty.
4. Heard Shri Arya. He did not dispute the facts. He however contended that after the judgment in the case of Sialkot Industrial Corporation, legislature has amended the provisions of Section 23 of the Customs Act clearly bringing out the position that both the Sections 13 and 23 are mutually exclusive. In this case, the admitted position is that the goods have been pilferred after the out of charge order is given.
Hence, provisions of Section 13 clearly indicate that remission of duty cannot be claimed after such an out of charge order is given. He thus supported the order.
5. After hearing both the sides, we find that the question to be considered is in the facts and circumstances of the case, which are not disputed, whether the appellants are entitled to refund of duty in respect of goods, which have been pilferred and pilferage has been noticed after the out of charge order is given. For appreciating the advocate's argument, it would be necessary to reproduce the Section 13 and Section 23 of the Customs Act prior to the amendments through Finance Act, 1983 :"Section 13 : If any imported goods are pilferred after the unload- ing thereof and before the proper officer has made an order for clearance for home consumption or deposit in warehouse, the importer shall not be liable to pay the duty leviable on goods except where such goods are restored to the importer after pilferage.""Section 23 : (1) Where it is shown to the satisfaction of the Assis- tant Collector of Customs that any imported goods have been lost or destroyed, at any time before clearance for home consumption, the Assistant Collector (2) The owner of any imported goods may at any time before an order for clearance of the goods for home consumption has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon." While in Section 13, there is no amendment, Section 23 has been amended through Finance Act, 1983 and the amended Section 23 is reproduced below:"Section 23 : Remission of duty on lost, destroyed or abandoned goods - (1) Without prejudice to the provisions of Section 13, where is shown to the satisfaction of the Assistant Collector of Customs that any imported goods have been lost (otherwise than as a result of pilferage) or destroyed, at any time before clearance for home consumption, the Assistant Collector of Customs shall remit the duty on such goods.
(2) The owner of any imported goods may at any time before an order for clearance of the goods for home consumptionhas been made, relinquish his title to the goods and thereupon 7. It is also pertinent to note that the Select Committee of the Parliament went into the question of remission of duty on pilferred goods, when the Customs Bill was considered by that Committee. They thought it fit that the importer shall not be required to pay the duty on any goods that may be pilferred, before the Customs officer makes an order for clearance of the goods. Hence on this basis, the legislative intention is clear and that has been specifically spelt out in Section 13. The out of charge order for clearance for home consumption is given by the Customs officer under the provisions of Section 47 of the Customs Act. The goods, even though held by the custodian appointed by the Collector, are held by him for purposes of completion of customs formalities. Any pilferage noticed during that period is on the account of Customs formalities. Once an out of charge order has been given, it will clearly indicate that the Customs are no longer interested in keeping the goods and the importers are at liberty to clear the goods, the moment such an out of charge order has been given for home consumption or an order given for deposit in the warehouse. If the importers have continued to keep the goods in the Customs area under the custody of the custodian, the legislature has intended that it is at their own risk and responsibility, in so far as the duty liability is concerned in respect of the pilferrage.
8. It is also a settled law that the goods imported are liable to pay duty (unless exempted), when they go for home consumption. The goods pilferred and stolen go into home consumption and hence duty is to be paid. The question is, whether the importers should be saddled with the payment of duty in respect of goods pilferred, while they were on customs account. The legislature has thought it fit to grant remission of duty on pilferred goods, so long as it is established that the pilferage has taken place after the unloading of the goods but before an order for clearance for home consumption or for deposit in the warehouse is given by the proper officer. In other words, legislature has thought it fit to consider remission of duty held in the customs area only for the period required for completion of customs formalities and not beyond that.
9. In the judgment of the Delhi High Court in Sialkot Industrial Corporation, the question considered essentially was, whether Section 23 prior to its amendment could cover the goods pilferred before the clearance from Customs for home consumption, though such pilferrage has occurred after the out of charge is given. In that context, the Delhi High Court observed as below : "It is difficult to construe the provision as including all kinds of loss and destruction, but excluding the loss by pilferage. There is no warrant for this narrow construction. Mr. Nanda submits that the relief in respect of pilferred goods is specifically granted under Section 13 of the Act, but that provision applies only to the stage before order for home consumption has been passed. What is the remedy if the goods are pilferred after the passing of the order but before they are actually cleared. For that purpose Section 23 applies and there is no valid reason for drawing a distinction that the duty liable to be remitted if the goods are after the payments of the duty and before their actual clearance, lost or destroyed in any other manner excepting their theft. Theft of the goods in the said circumstances cannot stand on a different footing. It is, therefore, reasonable to hold that the expression 'lost or destroyed' is used in the generic and comprehensive sense and includes within it the case of loss to the party by pilferage".
10. From the above, it is clear that the Delhi High Court (prior to the amendment of Section 23) construed the term 'lost or destroyed' as covering even loss due to theft or pilferage. Now we have the amended Section 23 before us, where the legislature specifically excluded "loss" as a result of pilferage, from the purview of Section 23. The amendment makes it abundently clear that if, after an order for clearance for home consumption, pilferage is noticed (though the goods were lying in the customs area and yet to be cleared for home consumption) remission cannot be granted under Section 23. They are to be considered only under Section 13 and the ld. advocate also does not have any dispute about it. His argument is that because of Section 45 of the Customs Act, since the goods are required to be kept in the Customs area under the custody of the approved custodian and the importers have no option, they, should not be saddled with the duty liability in respect of the goods not delivered on account of pilferage or theft, while in the custody of the appointed custodian. This, however, does not appeal to us, because of the legislative intention clearly brought out in the aforesaid discussions and also taking note of the fact that the appointment of custodian for custody of the goods on behalf of the Collector, is mainly for the purpose of getting the customs formalities completed and the proper officer gives an order for clearance for home consumption or for deposit in warehouse or for transhipment. He is not appointed by the Collector as a custodian for custody of the goods, treating the customs area as a warehouse thereafter. If the importers choose to keep the goods in the customs area in the custody of the custodian, they are doing it on their own risk and responsibility. In this case, we observe that even though the examination of the goods took place on 1-2-1989 and duty paid on 29-3-1989, they had not looked into the condition of the goods before payment of duty and sought for customs survey for claiming remission of duty before the out of charge order is given. If the goods had been pilferred after payment of duty and out of charge order is given and they went to take delivery on 3-4-1989 and conducted survey thereafter, that too without association of the Customs Department, no remission could be considered in such a case. Provisions of Section 45, even if read harmoniously with Section 13 of the Customs Act, does not warrant the acceptance of the plea made by the advocate. In the case of Section 23, remission of duty is provided in respect of the goods lost, destroyed or abandoned goods and it is also clearly spelt out that 'loss' should be due to cause other than pilferage. In the case of Section 23, it is also provided that such remission is admissible at any time, before the clearance for home consumption, that would mean that after warehousing, the goods happened to be lost or destroyed or abandoned before clearance for home consumption, remission can be considered under Section 23; because in such cases of loss due to fire or other natural causes, goods do not go into home consumption and the legislature has thought it fit to remit the duty in respect of the goods, which have no possibility to go into home consumption, whereas in the case of pilferred goods, such goods go into home consumption and hence, standards for remission have been made more rigid and Department's liability to extend the remission is limited only upto the date, upto which the goods are required to be kept by the custodian for the customs purpose. We also take note of the fact that the Customs Act itself provides for procedure in case of goods not cleared, warehoused or transhipped, after unloading, under Section 48 of the Customs Act.
It is laid down that if the goods are not cleared either for home consumption or for warehousing or for transhipment within 45 days from the date of unloading, such goods may be sold by the custodian with the permission of the proper officer of the Customs. Hence, it is open for the proper officer to even reject a request for clearance for home consumption after the period of 45 days, if the customs formalities are not completed and the importer is delaying either for the payment of duty or for compliance with the customs formalities. In the circumstances, wherever the goods pass into home consumption, the Customs Department's liability to extend remission should only be upto the stage of the requirement for holding of the goods on their account and it cannot extend beyond that. The legislative intention is clear and has been made more explicit, after the Delhi High Court's decision in the case of Sialkot Industrial Corporation Ltd., we are therefore left with no other option but to confirm the view taken by the lower authorities and dismiss the appeal.
11. Having had the privilege of going through the order proposed by Brother R. Jayaraman, Member (T), and having considered the interpretation given to the statutory provisions applicable, as also the conclusion drawn on the factual position, and not being able to convince myself to agree with and endorse to the said view, on both the counts, I give my separate findings in that regards.
12. Undisputed factual position, relevant for the purpose of deciding the issues involved here, is that the appellants imported Ball and Roller Bearings packed in several cartons but received as a single consignment, and filed Bill of Entry for home consumption on 24-1-1989.
The Customs examination under first check procedure was done on 1-2-1989, where all the cartons were reportedly opened and were found in order. As the consignment was received as Air Cargo, the same was placed under the custody of the International Air Port Authority of India, the custodian appointed vide Section 45 of the Customs Act. The appellants paid the requisite customs duty on 29-3-1989, and consequently order for clearance for home consumption, contemplated under Section 47 of the Customs Act was passed on 31-3-1989. When, however, the appellants approached the custodian for taking delivery of the consignment, on 3-4-1989 the consignment was found in torn condition and one package was altogether missing and hence, postponing to take delivery of the consignment in pursuance to the order of clearance given by the customs authorities, the appellants, with permission obtained from the custodians, requested surveyors M/s. Tata Tea Ltd. to conduct the survey which was carried out on 4-4-1989, in presence of Air India Duty Officer, where it was revealed that some items were missing from each of the cartons and carton No. 9 was entirely missing. Suspecting the pilferage, the appellants lodged a complaint to that effect with the Sahar Police Station on 9-4-1989 and ultimately on 27-6-1989 preferred the claim for refund of the customs duty paid on the quantity allegedly pilferred. The claim was considered by the Assistant Collector, as not maintainable holding that the pilferage was after the issue of out of charge order and did not fall within the ambit of Section 13 of the Customs Act, and being the case of pilferage provisions of Section 23 of the Act were not attracted. In the appeal before the Collector of Customs (Appeals), the said order was confirmed.
13. Section 13 of the Act, which has been relied upon by the authorities below, to reject the claim of the appellants, reads thus : If any imported goods are pilferred 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".
Though it is not possible, for the reasons that are discussed hereafter, that the provisions of Section 13 of the Act would cease to stand attracted, the moment, the officer of the customs issues the order for clearance from his office, even assuming for the sake of arguments that such could be the meaning, then what the Section provides is that the imported goods ought to have been pilferred "after unloading thereof and before the proper officer has made an order for clearance". This shows that the act of pilferage must have taken place before the order for clearance is passed. It does not provide that it should be also made known to the officer before he passes such order.
In other words, if the act of pilferage has taken place before the passing of the order for clearance, but the pilferage was noticed after such an order was passed, then the provisions of Section 13, should and do stand attracted. The criteria for applicability of Section 13, therefore, is the time of the incident and not when the incident came to light.
14. In the facts before us, the Bill of Entry has been filed on 24-1-1989, customs examination is carried out on 1-2-1989, customs duty was paid on 29-3-1989 and order for clearance was passed on 31-3-1989 and when on 3-4-1989, the appellants went to take delivery, the pilferage was noticed. It is undisputed that on 1-2-1989 when Customs examination was carried out, the goods were in order. With no evidence of any further examination of the consignment, available on record, the rational inference could be that the pilferage may have taken place any time between 1-2-1989 to 3-4-1989. The major span thus, falls within the period when the consignment was within the custody of the customs authority, and possibility cannot be ruled out that the pilferage took place during the said period. In any case, there is no evidence to show that the pilferage did not take place during that period, and must have taken place only within the span of three days i.e. 31-3-1989 and 3-4-1989. Non charging of the customs duty on the goods pilferred, or for that purpose, even remission of duty for the goods lost or destroyed before clearance for home consumption (Section 23 of the Act) being the statutory provisions made, for the benefit of the Importers and based on the principle that no customs duty be recovered from the importers when the consignment is not received by him, it has to be established, for the purpose of denying the said benefit that the act of pilferage was subsequent to the passing of the order for clearance.
Mere surmises or lack of vigilance on the part of the importer for having not checked the consignment prior to payment of duty, could not justify the customs authorities to reject the claim. It is once again re-iterated that it is the act of pilferage and not the one of getting information thereof, which is material, and here, in the instant case, there is nothing to indicate that the entire consignment was in order till 31-3-1989 and the pilferage was between 31-3-1989 to 3-4-1989. It is probable that it may have taken place between 1-2-1989 to 31-3-1989 though it is equally probable that it may have taken place after 31-3-1989.
15. When the equally strong probabilities exist both ways and when, going by the scheme of the Act, where statutorily benefit is intended to be given of non payment of duty or remission of duty in cases when the consignment could not be received by the Importers, the benefit thereunder has to go to the importer, and the probability tilting in favour of the importer has to be accepted. I am conscious of the fact that while implementing the fiscal statutes, in case of two probable interpretation, one favouring the Revenue should be accepted. Here, however, is not the question of interpretation of statute but as one of appreciating the factual probabilities. Moreover, as indicated above, even the fiscal statute itself has intended to give certain benefit, and the issue is, whether under the facts and circumstances, the importer ought to be denied the said statutory benefit.
16. Under the circumstances, with no evidence available to indicate that the pilferage took place only after 31-3-1989, and not prior to that, the authorities below were not justified in not entertaining the claim for refund. The orders passed by the authorities below rejecting the claim as falling outside the purview of Section 13 of the Act, therefore, cannot be sustained and has to be set aside, and direction has to be given to be Assistant Collector to entertain the claim for refund on merits and grant appropriate refund of duty.
17. With the finding based on the factual position as above, given on the assumption but without admission, that the interpretation given by the authorities below to the provisions of Section 13 is correct, the issue as to the scope and ambit of the provisions of the said section, more or less, becomes academic. However, when specific issue to that effect is raised and emphasised, I deem it desirable to give my finding also on the same.
18. One of the fundamentals of the Taxation Law is that, duty if not chargeable shall not be charged or collected and if so collected, shall be repaid or refunded, though under various Tax legislation, different procedure or different limit for claiming/granting such refunds may exist.
19. Amongst some other provisions, the Customs Act, provides for non charging of duty, if the goods are pilferred or lost or destroyed, and relevant provisions therefore, are found in Sections 13 and 23 of the Customs Act. The provisions of Section 13 of the Act are already reproduced, herein above, Section 23 of the Customs Act however reads thus : (1) Without prejudice to the provisions of Section 13, where it is shown to the satisfaction of the Assistant Collector of Customs that any imported goods have been lost otherwise than as a result of pilferage or destroyed, at any time before clearance for home consumption, the Assistant Collector of Customs shall remit the duty on such goods.
(2) The owner of any imported goods may at any time before an order for clearance of the goods for home consumption has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon".
The Section, as reproduced above, is the one as it now stands after amendment vide Finance Act, 1983 and for the purpose of proper appreciation, the words inserted by the amending provisions are underlined. The High Court of Delhi had in Sialkot Industries Corporation v. Union of India, 1979 (4) E.L.T. (J 329), occasion to deal with pre-amended Section 23, where the High Court has observed that Section 13 dealt with grant of relief at the stage before the order of clearance is passed while Section 23 dealt with the situation after the duty was paid and order of clearance for home consumption was passed, but the goods were actually not cleared, and holding that the word "lost" used in Section 23, included loss on account of pilferage, granted benefit of remission of duty in relation to theft after passing of the order for clearance. Subsequent thereto, However Section 23 has been amended, by prefixing the sentence "without prejudice to the provisions of Section 13" and qualifying the word "loss" to mean, other than on pilferage" Consequent to such amendment, the loss on account of pilferage is taken out of the purview of Section 23 and has virtually rendered the decision of the Delhi High Court in Re : Sialkot Industries Corporation (supra) as not a good law.
20. This, therefore, leaves only the provisions of Section 13, as applicable to the cases of pilferage after unloading of the goods, and the question that arises is what is the scope and ambit of Section 13, and subsidiary question that arises is whether by an amendment of Section 23, the benefit available to the importer, not to pay duty or to get remission, if the duty is paid, in case of pilferage, is sought to be withdrawn.
21. It may be re-iterated that both Sections 13 and 23 are based on the principle, that the importer should not be saddled with the liability to pay the duty if the goods could not be delivered or do not go in the hands of the importer, without any fault on his part, and as such, the provisions of Section 13, have to be read keeping in view the basic intention on which the provisions are made.
22. Before examining the same, it is relevant to consider certain other salient features of the Customs Act, in relation to the imported goods.
The said law provides that for the licit import of goods, the same have to be brought at the Customs Air Port or Customs Port, as defined in Sections 2(10) and 2(12) respectively and have to be unloaded in the Customs erea, as defined under Section 2(11) of the Act. The goods so unloaded remain in the Customs area till they are cleared for home consumption or warehoused. Chapter VII of the Customs Act, 1962, provides for clearance of the imported goods and Section 45, which falls within the said Chapter, reads thus : (1) Save as otherwise provided in any law for the time being in force, all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Collector of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. (2) The person having custody of any imported goods in a customs area, whether under the provisions of Sub-section (1) or under any law for the time being in force :- (a) shall keep a record of such goods and send a copy thereof to the proper officer.
(b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer." Two things emerge out from the said Section (1), a custodian for the goods has to be appointed by the Customs Department, to retain the custody of the imported goods, for and on behalf of the Customs Department, and (2) custodian shall hold the imported goods till the same is cleared for home consumption. From this, an inference can also be drawn that, though the customs department, itself ought to keep the goods imported, into their actual custody till cleared for home consumption on payment of appropriate customs duty feeling it impracticable to do so themselves, a person or an institution is appointed as custodian to retain the custody of the goods, which otherwise was to be done by the Customs Department. Custodian so appointed is thus, virtually an agent for the customs department. It is also significant to note that the importer has neither the custody nor control over the imported goods, till the clearance of the goods is effected by a proper authority, except under the cases where provision of Section 49 of the Act are invoked.
23. Section 13, accepts in principle, that the importer should not be asked to pay the customs duty if the goods are pilferred. The question that however focuses our attention is whether the provisions of this section ought to be read as extending the said benefit till the officer issues the order of clearance, which is, as a matter of course, done in the office, or that the wordings used, are liable to be liberally construed as to extend the benefit upto the stage when actual clearance is effected.
24. Provisions of Section 23 indicate that the benefit of remission of duty is available till the clearance, if the goods are lost or destroyed, and as per the judicial pronouncement referred to above (Re: Sialkot Industries Corpn.) the said benefit was also available, for pilferred goods, till the Section came to be amended. The precise purpose of the amendment in Section 23 being not available, as neither there is any mention in the Finance Act, 1983 nor anything in relation thereto, is found from the speech of the Finance Minister, two exigencies, under the circumstances, could be envisaged, (1) such benefit was intended to be withdrawn for pilferage after the order of clearance but before the actual clearance, or (2) Section 13 took care of the cases of pilferage and hence duplication was to be removed.
There does not appear to be any rational and probable intention to isolate the cases of pilferage, and discriminate against, vis-a-vis, loss or destruction on other counts. When ex facie Section 13 provides for non charging of duty on the goods pilferred before the order for home consumption is passed, it cannot be held that the legislature did not intend to give any benefit in cases of pilferage, and in that case, it does not stand to any reason that the importer ought to have examined the consignment before paying the duty, as the act of payment of duty and passing of the order for clearance may not always synchronize (as has happened in this appeal itself, where the duty is paid on 29-3-1989, and order for clearance is given on 31-1-1989) and entitlement of non payment of duty extends to pilferage till the issue of order for clearance. There could also be no rational in assuming that, the importer ought to be vigilent and get the consignment released forthwith, and pilferage being after the issue of order, was on account of negligence, in not seeking clearance forthwith, the importer should suffer, as the same reasoning could also stand attracted, for loss or destruction, under Section 23, as loss or destruction could be avoided if clearance was done immediately after obtaining order for clearance, but even then the benefit thereunder is made available till the goods are cleared. It also cannot be inferred that the loss or destruction contemplated under Section 23 ought to be such which were beyond the control, as these two exigencies contemplated are not circumscribed by such qualifying clauses and would include loss or destruction on account of even avoidable human error.
25. There, therefore, being no logical rational for giving any differential treatment to the cases of pilferage, a conclusion is probable that the acts of pilferage were not intended to be given any differential treatment, but were excluded from the purview of Section 23 as Section 13 duly took care of such act.
26. To understand the phraseology of Section 13, one has to have the harmoneous reading on interpretation of all the collateral provisions, as also the inner thread running in making such provisions. Order for clearance for home consumption, is the one which not only authorises the importer to receive the goods but also authorises/directs the custodian of the goods to release the same from the custody, which the custodian held for and on behalf of the customs department. Section 45 of the Act clearly mentions of retention of custody by such custodian "until the goods are cleared" and not "until the order for clearance is passed." The goods, under the circumstances are deemed to have remained under the customs custody till they are released by the custodian and it is accepted principally that no liability to pay duty arises when the goods are pilferred while under customs custody. By a logical conclusion, therefore, it can be held that the wordings used in Section 13 have to be given a liberal construction and the phrase "before the proper officer has made an order for clearance for home consumption or deposit in a warehouse" has to be cons- trued as meaning that passing of the order includes the due implementation thereof and reading accordingly, the case of pilferage till the execution of the order for clearance has to be taken as covered under the provisions of Section 27. As indicated above, however, the discussion and the finding are more of academic importance here, and even going by whatever interpretation, considering factual position, there being no evidence on record to prove that pilferage took place after 31-3-1989, the benefit has to go to the importer and the importer is entitled to get the refund as is legally permissible.
28. The appeal is under the circumstances allowed, the appellant's right to claim refund is upheld. The orders of the authorities below are set aside and the Asstt. Collector is directed to grant the permissible refund after scrutiny of the claim.
Since there has been a difference between the two Members in deciding this appeal, the matter is referred to the President in terms of Section 129C(5) to determine the following points :- (i) Whether in the facts and circumstances of the case, when pilferage has been noticed for the first time, after the out of charge order has been given, whether presumption can be raised that it was only after the out of charge order was passed and whether there is a burden cast on the department to establish that the pilferage has taken place only after the out of charge order has been passed, before denying the benefit under Section 13 of the Customs Act; (ii) Whether the wordings in Section 13 of the Customs Act can be interpretted to mean, as extending the benefit even in respect of the goods, where out of charge order has been given and the pilferage has been noticed at the time of delivery from the Customs area, on a date subsequent to the out of charge order; or (iii) Whether the wordings in Section 13 of the Customs Act can be interpreted as extending the benefit, till the out of charge order is acted upon and release taken from the Customs area.
Sd/- Sd/-Dated: 22-4-1991 Member (J) Member (T) 29. I have gone through the orders passed by learned brother Shri R.Jayaraman, Member (Technical) and Shri P.K. Deasi, Member (Judicial).
The following points of difference have been referred to me :- "(i) Whether in the facts and circumstances of the case, when pilferage has been noticed for the first time, after the out of charge order has been given, whether presumption can be raised that it was only after the out of charge order was passed and whether there is a burden cast on the department to establish that the pilferage has taken place only after the out of charge order has been passed, before denying the benefit under Secion 13 of the Customs Act; (ii) whether the wordings in Section 13 of the Customs Act can be interpretted to mean, as extending the benefit even in respect of the goods, where out of charge order has been given and the pilferage has been noticed at the time of delivery from the Customs area, on a date subsequent to the out of charge order; or (iii) whether the wordings in Section 13 of the Customs Act can be interpretted as extending the benefit, till the out of charge order is acted upon and release taken from the Customs area." 30. Since my both the learned brothers have reiterated the facts in their order and as such I need not reproduce the same. Shri Nitin Kantawala, the learned Advocate has appeared on behalf of the appellants. He had drawn the attention to Sections 13 and 23 of the Customs Act, 1962. He argued that ball and roller bearings were imported at air cargo Bombay and the bill of entry was filed on 24-1-1989. The customs authorities have examined the goods on 1-2-1989 and the customs duty was paid on 29-3-1989 and out of charge order was given on 31-3-1989. On 3-4-1989, the appellants had gone for taking delivery of the imported goods and the appellants found that one package was missing before delivery. On 4th April, 1989 a survey was carried out in the presence of the International Airport Authorities.
Shri Kantawala referred to provisions of Section 45 of the Customs Act, 1962 which relates to the restrictions on cus-today and removal of imported goods and the Section provides that all imported goods unloaded in a customs area shall remain in the custody of such persons as may be approved by the Collector of Customs until they are cleared for home consumption or are transhipped in accordance with Chapter VIII to the person having custody of any imported goods in a customs area, whether under the provisions of Sub-section (1) or under any law for the time being in force, - (a) shall keep a record of such goods and send a copy thereof to the proper officer; (b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer.
He pleaded that the customs out of charge order was given on 31st March, 1989 which was a Friday. 1-4-1989 was Saturday, 2-4-1989 was Sunday and 3-4-1989 was Monday on which date the appellants had gone for taking the clearance of the goods. He pleaded that the duty refund works out to Rs. 1,04,559.00 less duty on pilferage recovered Rs. 2,373.00, net refund works out to Rs. 1,02,186.00. He argued that Section 45 of the Customs Act makes it statutory with regard to the custody of the goods within the customs charge. He argued that Airport Authority's premises are considered as customs area for purposes of safe keeping of the goods. He argued that it is a settled law that no goods are permitted to be removed unless there is customs clearance by a proper officer. He referred to Sub-section (11) of Section 2 which defines "customs area". "Customs area" means the area of a customs station and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities. He argued that original possession of such goods was with the Customs Authorities. He also referred to Section 47 which relates to the clearance of goods for home consumption. He has referred to a judgment of the Hon'ble Supreme Court in the case of Oswal Spinning & Weaving Mills Ltd. v. Collector of Customs and Anr., reported in 1988 (35) E.L.T. 244. He laid special emphasis on Para Nos. 4,5 & 12. He again referred to Sections 13 and 14 of the Customs Act, 1962. He argued that the customs clearance was ordered on 31st March, 1989 and the appellants had gone for clearance on 3rd April, 1989 and the customs authorities have not been able to show the pilferage that has taken place during the period whereas Member (Judicial) has held that pilferage has taken place during the period. He referred to Member (Technical)'s observations and referred to a judgment in the case of Ashok Dhawan v. Union of India, reported in 1990 (47) E.L.T. 218 (Del.). He laid special emphasis on Para Nos. 59, 60 & 61. He referred to a judgment in the case of Buckau Wolf India Ltd. v. Collector of Customs, Bombay reported in 1994 (69) E.L.T. 423 (Tri.) where the Tribunal has held that "the undisputed factual position is that non-availability of the goods with the custodian was made known to the Department before the out of charge order was given. In fact, it is reported to have been noticed, even before the examination of the goods. The duty has been paid under second appraisement procedure, before examination." The Tribunal had held that "so long as the conditions laid down under Section 13 or Section 23 of the Customs Act are satisfied and there are evidences to show non-delivery of the goods to the appellants, it has to be construed as a loss in the custody of the custodian and duty remission is to be given. Accordingly, we order that on the appellants furnishing an undertaking that they would pay back the refund amount to the Customs Department, in case the custodian traces the goods at a later date and restores the same to the appellants, refund is to be granted, if it has been claimed within the time limit laid down." Lastly, he has referred to a judgment of the West Regional Bench in the case of Bharat Petroleum Corporation Ltd. v.Collector of Customs, Bombay reported in 1993 (42) ECC 236 where the Tribunal has held as under :- "7. From the above, we are satisfied that for the purpose of considering remission under Section 23 of the Customs Act, the Assistant Collector is only required to be satisfied that loss has occurred and it is not for him to go into the reasons of loss. If that loss is established by acceptable evidence and it has been reported before the clearance for home consumption, remission of duty under Section 23 shall have to be given. The wordings used under Section 23 themselves indicate "shall remit" and no discretion is vested with him for looking to the reasons for loss and whether the loss has been reported within 48 hours or otherwise. The time limit prescribed is that, it should be noticed before the clearance for home consumption is effected. Only on account of this legal position, we are to allow the appeal, though we may agree with the findings of the authorities below that there had been negligence on the part of the appellants, causing not only loss to the Government by way of foreign exchange but also causing danger to the environment." He also referred to Section 141 of the Customs Act, 1962 which is reproduced below :- "Section 141. Conveyances and goods in a customs area subject to control of officers of customs. - All conveyances and goods in a customs area shall, for the purpose of enforcing the provisions of this Act, be subject to the control of officers of customs." He argued that until the goods are cleared for home consumption, the scheme of the Act requires the goods to remain in the hands of the customs authorities and obviously the statutory liability to account for the goods would be of the authorities under the Act charged with the responsibility of keeping the goods. He pleaded for the acceptance of the appeal.
31. Shri K.M. Mondal, the learned SDR who has appeared on behalf of the respondent relied on the order passed by Member (Technical). He has referred to Section 45 of the Customs Act, 1962 which relates to the restrictions on custody and removal of imported goods. Shri Mondal argued that there are two types of appraisements. In the first appraisement procedure, goods are examined first and then assessment is made and duty is paid. Under the second appraisement, goods are assessed first and then examination of goods takes place. He argued that customs authorities are having control over the customs area and customs are the custodian of the goods when the goods are with the customs. Shri K.M. Mondal argued that in the instant case, custodian is the International Airport Authority of India. He referred to Section 57 and argued that at any warehousing station, the Assistant Collector of Customs may appoint public warehouses wherein dutiable goods may be deposited. He referred to Sections 45, 46 & 47 of the Customs Act, 1962. He argued that Section 45 relates to the restrictions on custody and removal of imported goods. Section 46 deals with entry of goods on importation and he argued that Section 47 deals with the clearance of goods for home consumption. He argued that once the clearance of the goods have been ordered by the customs authorities, it is the sweet will of the importer when he is to take delivery of the goods. He referred to a judgment in the case of T.T. Blades, Bombay v. Union of India, reported in 1986 (24) E.L.T. 231 (Bom.) where the Hon'ble Bombay High Court has held that :- "Bill of entry - 'clearance' where duty has been paid and B/E endorsed "Passed out of Customs charge", clearance is complete even if the importer fails to take delivery of the goods. Refund of such duty cannot be made by the Customs under Section 27 if refund claim is made more than 6 months after date of payment. BE-amendment application rejected as the petition was conducted in a casual manner." He laid special emphasis on Para Nos. 3, 7 & 8. He argued that the learned Advocate has cited the judgment of the Hon'ble Supreme Court in the case of Oswal Spinning & Weaving Mills Ltd. v. Collector of Customs and Anr. reported in 1988 (35) E.L.T. 244 and referred to Para 12 on Page 250 which does not apply as 45 bales were the property of the Government of India. He further argued that in the present matter, the appellants did not inform the customs authorities. Survey was conducted in the absence of the customs authorities. Shri K.M. Mondal argued that the order passed by Member (Technical) is correct and the appeal filed by the appellants should be rejected.
32. In reply, Shri Nitin Kantawala, the learned Advocate again reiterated the facts. He referred to a judgment in the case of Sonal Vyapar Ltd., v. Collector of Customs, Madras reported in 1993 (65) E.L.T. 633 (Trib.), where the Tribunal has held that the appellants are entitled to proportionate remission of duty in respect of goods short delivered. He pleaded for the acceptance of the appeal.
33. I have heard both the sides and have gone through the facts and circumstances of the case. The main issue in dispute is that when pilferage has been noticed for the first time after the out of charge order has been given, whether presumption can be raised that it was only after the out of charge order was passed and whether there is a burden cast on the department to establish that the pilferage has taken place only after the out of charge order has been passed, before denying the benefit under Section 13 of the Customs Act.
34. For the proper appreciation of the legal position, Section 13 and Section 23 of the Customs Act, 1962 are reproduced below :- "Section 13. Duty on pilfered goods. - If any imported goods are pilferred 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." "Section 23. Remission of duty on lost, destroyed or abandoned goods. - (1) (Without prejudice to the provisions of Section 13, where it is shown) to the satisfaction of the Assistant Collector of Customs that any imported goods have been lost (Otherwise than as a result of pilferage) or destroyed, at any time before clearance for home consumption, the Assistant Collector of Customs shall remit the duty on such goods.
(2) The owner of any imported goods may at any time before an order for clearance of the goods for home consumption has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon." A perusal of Section 13 shows that it provides for grant of relief at a stage before an order for clearance for home consumption or deposit in warehouse has been made. At that stage although the bill of lading has been filed, the duty has not been paid and so the order for clearance has not been made, and if the goods are at that stage found pilfered, the law provides that the importer will not be liable to pay the duty on the same. This proivision deals with pilferage of the goods does not specify the lost or destruction. The Tribunal in the case of Hindustan Motors Ltd. v. Collector of Central Excise, reported in 1990 (50) E.L.T. 322 (Tribunal) in Para No. 5 has held as under :- Now, coming to the provisions of Section 23 of the Customs Act, 1962, an analysis of Section 23 shows that this comes into effect after the duty has been paid and even an order for clearance for home consumption was made but before the goods are actually cleared, and then if it is found that they have been lost or destroyed in that case, the provision is not that the goods will not be liable for the duty, but that the duty paid on such goods shall be remitted by the Assistant Collector.
Thus the stages at which the provisions of Sections 13 and 23 had come into are clearly distinguished and demarcated. In the matter before us, the shortage was found after the out of charge order had been given.
The Tribunal had occasion to deal with a similar issue in the case of Hindustan Motors Ltd. v. Collector of Central Excise reported in 1990 (50) E.L.T. 322 (Trib.). Para No. 5 which is relevant has already been reproduced above. The Tribunal had another occasion to deal with the same issue in the case of Best and Crompton Engineering Ltd. v.Collector of Customs, Madras, reported in 1987 (31) E.L.T. 576 (Tribunal). Para Nos. 1 to 8 are reproduced below :- Now, the question arises whether in Section 23 the word 'lost' has been interpreted in a wider way. The Tribunal had occasion to interpret the matter in the case of Collector of Central Excise, Chandigarh v.International Woollen Mills reported in 1987 (28) E.L.T. 310 (Tribunal). The Tribunal in Para No. 4 had held as under :- The learned Departmental Representative had relied on the judgment in the case of T.T. Blades, Bombay v. Union of India reported in 1986 (24) E.L.T. 231 (Bom.). Para Nos. 7 & 8 are reproduced below :- The learned advocate had cited many decisions in support of his arguments. The facts of the case are very different and the judgments cited by the learned advocate do not help him and are not applicable to the present matter.
35. Keeping in view the above observations, the points of difference (i) (ii) and (iii) are answered in negative. In view of these observations, I agree with the views of my learned brother Shri R.Jayaraman, Member (Technical) and I direct the Registry to place the matter before the regular Bench for passing appropriate orders in accordance with law.