K. Gopal Hegde, Member (J)
1. This appeal arises out of and is directed against the Order-in-Appeal No. S/49-1196/82 MCD BCH No. 5980/82 dt. 30-10-1982 passed by the Collector of Customs (Appeals) Bombay, by which he confirmed the Order-in-Original bearing No. S/8-9-2285/79 dt. 30-4-82 passed by the Assistant Collector of Customs MCD, by which he rejected the appellants' claim for refund of duty amounting to Rs. 32084.00 in respect of 5 pallets undelivered to them.
The undisputed facts are :
2. The appellants imported 50.000 Metric Tonnes of fresh catalyst packed in 46-1 way pallets each pallet containing 50 bags of 25 kgs. each as per vessel 'Pittsburg/Saphire bounty and presented the B/E No. 05658 on 18-4-1979. The Customs Authorities carried out inspection and examination and an 'out of Charge' order was passed on 30-4-79. On 10-5-79 the Bombay Port Trust docks reported that the entire consignment of 46 pallets had landed in the docks, out of which 5 pallets were not available for delivery. On 26-9-79 the appellants made an application for refund of the proportionate duty of Rs. 32084.00 in- respect of undelivered 5 pallets. The Assistant Collector of Customs, MCD, rejected the refund application on the ground that the appellants have not produced any evidence to show that the goods were lost or have been destroyed within the meaning of the Customs Act, 1962 (hereinafter to be referred as the 'Act') and as such the claim cannot be considered under Section 23 of the Act. He further held that the relevant Section of the Act under which a claim on 'landed but missing' goods can be considered is Section 13 of the Act. Since the appellants have failed to establish that the pilferage had taken place before the 'Out of Charge' order in respect of the consignment was made and since the duplicate Bill of Entry disclosed that the 'Out of Charge' order has been given for the entire consignment, he rejected the refund claim. In appeal the Collector (Appeals) Bombay, rejected the claim on the ground that the duplicate Bill of Entry clearly indicate that the whole lot was presented for examination and after examination the whole lot of 46 pallets was passed for delivery. Since no shortage was noticed before 'Out of Charge' order was made, rejection of claim by the Assistant Collector was correct. Feeling aggrieved by the order of the Collector (Appeals) as stated earlier, the appellants have preferred this appeal.
3. Before noticing the contentions urged on behalf of the appellants it is necessary to set out a few more facts in respect of which there is no controversy. On 14-11-79 the BPT docks certified under Section 43 of the Major Port Trust Act that 5 boxes which were landed were missing. In their letter dated 11-2-81 the BPT informed the appellants that 5 pallets in question were landed from the vessel but have been subsequently found to be missing from the Docks and the docks has searched for the same in all transit sheds/and warehouses in Indira Deck having proved abortive, a complaint on presumption of theft was lodged at the Yellow Gate Police Station on 16-11-79. The Police investigation were over and the Police have classified the complaint as 'A' True but undetected, and have finally recorded their case.
4. With this we shall now proceed to consider the contentions urged by Shri D.P. Bhave, Jt. Tax Manager for the appellants and Shri CM. Gidwani, S.D.R. for the respondent. Shri Bhave contended that even though there was an 'Out of Charge' order, 5 pallets in question were admittedly undelivered to the appellants. After the goods were unloaded they remained in the custody of the Port Trust Authorities who were the approved custodian of the goods. The Port Trust Authorities as early as on 14-11-79 have informed the appellants that 5 pallets were not traceable. Subsequently, the Bombay Port Trust have confirmed that 5 pallets in question were found missing and they had lodged a complaint of theft at the Yellow Gate Police Station and the Police after investigation have classified the complaint as 'A' True but undetected, and thus the loss of goods while in custody of the Port Trust Authorities has been proved, and therefore the appellants have become entitled to claim refund under Section 23(1) of the Act.
5. Shri Gidwani, SDR for the Respondent Collector, on the other hand, contended that admittedly the entire consignment consisting of 46 pallets landed in India. The whole lot was inspected and examined by the Customs Authorities and a 'Out of Charge' for delivery ,was ordered on 30-4 79 after collecting the requisite duty of customs amounting to Rs. 2,95,172.95. In the said circumstances, it cannot be said that the imported goods were pilfered after the unloading thereof and before the proper officer had made an order for home consumption, and as such, the authorities below were justified in rejecting the claim. Shri Gidwani further submitted that the appellants refund claim cannot fall under Section 23(1) of the Act inasmuch as there was no proof that the imported goods have been lost or destroyed. On the other hand, there was material to show that the imported goods, namely, 5 pallets were stolen. Therefore, it is a case of pilferage and not loss or destruction, and as such squarely fell within the ambit of Section 13 and not 23(1).
6. We have carefully considered the submissions made on both sides. The short point for our consideration is whether the refund claim of the appellants is admissible under Section 23(1) of the Act.
7. As has been stated earlier, the Assistant Collector as well as the Collector (Appeals) have held that the claim fell under Section 13 and that . Section 23(1) has no application to the facts of the case. In order to examine the correctness or otherwise of the decisions taken by the authorities below, it is necessary to refer to certain provisions of the Act. The expression 'duty' is defined in Section 2(15) :
'duty' means a duty of customs leviable under this Act;
Dutiable goods is defined in sub-Sec. (14) of Section 2 :
'dutiable goods' mean any goods which are chargeable to duty and on which duty has not been paid;
'Imported goods' is defined in Sub-sec. (25) of Section 2 :
'Imported goods' means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption;
Sec. 12(1) provides for levy of duty of customs on goods imported into India at the rates specified under the Customs Tariff Act, 1975 or any other law for the time being in force.
After Section 12 comes Section 13. It reads:
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.
Sec. 22 provides for abatement of duty on damaged or deteriorated goods.
Sub-sec. (1) of that Section reads: 'Where it is shown to the satisfaction of the Assistant Collector of Customs-
(a) that any imported goods, had been damaged or had deteriorated at any time before or during the unolading of the goods in India; or
(b) that any imported goods, other than warehoused goods, had been damaged at any time after the unloading thereof in India but before their examination, under Section 17, on account of any accident not due to any wilful act, negligence or default of the importer, his employees or agent; or
(c) that any warehoused goods had been damaged at any time before clearance for home consumption on account of any accident not due to any wilful act, negligence or default of the owner, his employee or agent.,
such goods shall be chargeable to duty in accordance with the provisions of Sub-section (2).
The methods to be adopted for ascertainment of the value of the damaged or deteriorated goods are enumerated in Sub-sec. (3) of Section 22. Sub-sec. 17(1) reads :
(1) After an importer has entered any imported goods under Section 46 or an exporter has entered any export goods under Section 50 the imported goods or the export goods, as the case may be, or such part thereof as may be necessary may, without undue delay, be examined and tested by the proper officer.
(2) After such examination and testing, the duty, if any leviable on such goods shall, save as otherwise provided in Section 85 be assessed.
Sec. 23. Remission of duty on lost, destroyed or abandoned goods-
(1) Where it is shown to the satisfaction of the Assistant Collector of Customs that any imported goods have been lost 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.
Sec. 45. Restrictions on custody and removal of imported goods-
(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 provision 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.
Sec. 47. Clearance of goods for home consumption-
Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same the proper officer may make an order permitting clearance of the goods for home consumption.
Sec. 48. Procedure in case of goods not cleared, warehoused, or transhipped within two months after unloading-
If any goods brought into India from a place outside India are not cleared for home consumption or warehoused or transhipped within two months from the date of the unloading thereof at a customs station or within such further time as the proper officer may allow or if the title to any imported goods is relinquished, such goods may, after notice to the importer and with the permission of the proper officer be sold by the person having the custody thereof.
8. Now it is seen that Section 12 of the Act provides for levy of duty of customs on goods imported into India. Section 13, however, provides that if there has been pilferage of imported goods after its landing but 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. This Section is in the nature of an exception to Section 12. The order for clearance for home consumption can be made only when the proper officer is satisfied that the importer had paid the import duty, if any, assessed thereon, and any charge payable under the Act. The method of assessment of duty is provided under Section 17. From the scheme of the Act it is clear that situation contemplated under Section 13 is prior to the assessment. Sac. 23(1) comes into operation subsequent to the assessment. It provides for remission of duty on lost, destroyed or abandoned goods. In order to claim remission under Section 23(1) the importer has to satisfy the Assistant Collector of Customs that the imported goods have been lost or destroyed at any time before physical clearance of the goods for home consumption. Section 13 however, does not cast any burden on the importer to satisfy the Assistant Collector of the pilferage. The essential difference 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 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. This distinction between the two sections is clear from the language employed in Section 13 and Section 23(1) and 23(2). Both under Secs. 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 custodians of the goods landed in Port area. Thus, it is clear that the situation contemplated under Section 23 (1) is altogether different from the situation contemplated under Section
9. In the above view of the matter it is necessary for us to examine whether the appellants in this case have established that the imported goods, namely, 5 pallets have been lost at any time before clearance for home consumption. The certificate issued by the Port Trust Authorities as well as their subsequent letter clearly established that the goods were not cleared for home consumption, and they were stolen or pilfered before they could be delivered to the appellants. The contention of Shri Gidwani, the learned Departmental Representative was, theft of goods is not the same as 'lost' or 'destroyed' and therefore the appellants are not entitled to claim remission.
10. Shri Bhave on the other hand contended that the loss contemplated under Section 23(1) includes the loss to the owner and the loss may be either due to destruction or pilferage or theft or any other reason. The view taken by Shri Gidwani find support in the decision reported in 1983 ELT page 653 [Customs, Excise & Gold (Control) Appellate Tribunal] Bharat Electronics Ltd. v. Collector of Customs, Madras. The South Regional Bench of the Tribunal in the said case disagreeing with the view of the Delhi High Court in Sialkot Industrial Corporation Case (1979 ELT 329) held that in a situation where the goods are not available at the time of delivery and the non-availability is not due to physical destruction or loss, but due to theft, pilferage and the like, the provisions of sec. 13 should prevail.
11. The view canvassed by Shri Bhave, however, finds support in the judgment of the Delhi High Court referred to above The Delhi High Court in great detail considered the meaning of the word 'lost' in Section 23(1) of the Act. It relied on the Dictionary meaning and also on the decisions of the High Court of Punjab, Bombay, Andhra Pradesh and the Supreme Court. The decision of the Supreme Court relied upon by the Delhi High Court is the one reported in AIR 1960 S.C. 1068, East & West Steamship Co. v. S.K. Rama-lingam Chettiar. The reference to this decision is made in paragraph 11 of the judgment. The said paragraph reads:
The Supreme Court in East & West Steamship Co. v. S.K. Ramalingam Chettiar, AIR 1960 SC 1068, constructing the provisions of Carriage of Goods by Sea Act, 1925, Schedule, Article III, Paragraph 6, Clause 3, had construed the word 'loss'. That clause provided that 'in any event the carrier and the shipper shall be discharged from any liability in respect of loss or damages unless a suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered'. The argument advanced was that the loss or damages must be limited to the loss or damage to the goods themselves and if the goods had not been delivered and had thus been lost to the party, this kind of loss was not covered by the expression. This contention was rejected and it was held that the expression dealt with all cases of loss or damage whether the loss or damage was caused by the deterioration of the goods or was caused by the non-delivery of the goods and that it included any loss or damage caused to the party. This was the view that the High Court had taken in that case and the same was assailed before the Supreme Court, which the Supreme Court repelled and approving the view of the High Court, it observed thus :
"On the first question, therefore, we have come to the conclusion that the word 'loss' in the third clause of the 6th paragraph of Article III to the Act means and includes any loss caused to a shipper or a consignee by reason of the inability of the shipper or the carrier to deliver, part or whole of the goods, to whatever reason such failure may be due."
12. We have carefully examined the decision of the South Regional Bench. The reasons assigned by the said Bench for differing from the view taken by the Delhi High Court are found in paragraph 9 and subsequent paragraphs. Paragraph 9 reads :
"We have two provisions in the Customs Act, 1962-Sec. 13 and Section 23 dealing with deprivation of goods to the importer. Section 23 deals with a situation of loss or destruction. Section 23 specifically refers to loss by way of pilferage. Section 23 is more broadly worded. If the interpretation placed by His Lordship of the Delhi High Court is accepted, Section 23 will cover all cases where there is deprivation of goods prior to their physical clearance for home consumption, this would obviously cover all cases wherein there is deprivation of property because of pilferage during the period upto the passing of an order for clearance by the authorised Customs Officer. In this view, Section 13 would become redundant."
Thereafter, the Bench observed that the circumstances leading to the enactment of Section 23 had been canvassed before the Delhi High Court, but circumstances leading to the enactment of Section 13 were not canvassed. After referring to the legislative history and after setting out Section 13 the said Bench observed :
"It will thus be seen that the Government started with the intention of fixing responsibility for payment of duty on the goods pilfered. In deference to the recommendations of the Select Committee, the provision was amended to confine liability of the importer to a period of time after the Customs Officer makes an order for clearance of the goods. It is relevant to note that the Customs will cease to have control over the goods after an order for clearance is passed. Thus, liability to duty on pilfered goods was the subject matter of detailed consideration by the Parliament at the time of passing the Customs Act, 1962. It would be inappropriate to interpret the Act in such a way so as to render this new provision either otiose or redundant."
13. If the grant of relief under Section 13 is for the reason that the importer has no control over goods, the situation is not different for granting relief under Section 23(1). As pointed out earlier till physical delivery is taken after an order for home consumption is made, 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.
14. In our view it does not stand to reason that the importer should get relief if pilferage of the imported goods takes 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. We are unable to agree with the view taken by the South Regional Bench in Bharat Electronics Ltd. case, that Section 13 is rendered redundant, if a wider interpretation is given to the expression 'lost' in Section 23(1) so as to include pilferage as has been held by the Delhi High Court in Sialkot case. We have explained the essential distinction between the two sections, namely : Secs. 13 and 23(1). Under Sec 13 the importer is exonerated from paying the duty itself. But under Section 23(1) he could claim remission of duty already paid.
15. As we are taking a view different from the view taken by the South Regional Bench of the Tribunal in the normal course we should have made a reference to the President for the constitution of a larger Bench. But then such a reference in our opinion is not called for. 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(1). The only decision that had been brought to our notice is the decision of the Delhi High Court. Therefore, we are 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.
16. In the instant case the documentary evidence adduced by the appellants established beyond doubt that the goods were stolen when they were in the custody of the Port Trust Authorities, therefore, the appellants became entitled to claim remission.
17. In the above view of the matter we allow this appeal and direct the Customs Authorities to grant consequential relief to the appellants within 4 months from the date of the receipt of this order.
G. Sankaran, Member (T)
18. I have perused the order proposed by my learned colleague and agree with his conclusion. However, I would like to set out some additional points.
19. The assessment of imported goods to Customs duty could be done in 2 ways. One is to examine the goods, test them, if necessary, then assess the duty thereon, collect the duty and make the "out-of-charge" order. The other method is to assess the goods to duty on the basis of the documents presented by the importer, collect the duty, then examine the goods so as to verify the correctness of the assessment done on the basis of the documents and thereafter make the "out-of-charge" order. As such, in my opinion, the situation contemplated under Section 13 of the Act is not necessarily and inevitably prior to the assessment. Section 23 (1) could come into play at any time after the unloading of the goods till physical clearance of the goods from the docks. The application of Section 23 (1) is not, in my opinion, limited in point of time to a stage after the order of clearance of goods for home consumption is made by the proper officer of Customs.
20. There is no dispute about the position that the 5 pallets in question were landed but missing. They were in the lot presented for Customs examination on 30-4-1979 on which date the goods were examined and the "out-of-charge" order was made. It is seen from the B.P.T. Certificate that Police enquiries showed that the goods were pilfered but were not recovered. The pilferage was apparently after 30-4-1979. The question is whether in the facts and circumstances of the case (which show that pilferage took place after the order of clearance of the goods was made by the proper officer of Customs, but before the physical clearance of the goods from the docks), Section 23(1) which permits remission of duty on goods lost or destroyed at any time before clearance for home consumption would come into play. Apart from the authorities cited and the reasoning given by Shri Hegde, I would like to refer to the fact that Section 23(1) of the Act was amended by Clause 48 of the Finance Bill, 1983, which reads as follows :-
"48. In Section 23 of the Customs Act, in Sub-section (1),-
(a) for the words "Where it is shown", the words and figures "Without prejudice to the provisions of Section 13, where it is shown" shall be substituted;
(b) after the words "have been lost", the brackets and words "(otherwise than as a result of pilferage)" shall be inserted.'
The amended provision read thus :
"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."
The note on Clause 48 of the Finance Bill, 1983 reads as follows :-
"Clause 48 seeks to amend Section 23 of the Customs Act, 1962, to exclude from its purview goods pilfered before their clearance for home consumption."
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 the 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.