K. Gopal Hegde, Member (J)
1. The Revision Application filed before the Government of India against the Order-in-Appeal bearing No. S/49-1488/81 M, dated 16-10-1981 passed by the Appellate Collector of Customs, Bombay, statutorily stood transferred to the Tribunal for being heard as an appeal.
2. The undisputed facts are :
The National Leather Cloth Mfg. Co. imported 60,000 kgs. of PVC Resin Solvic. They filed B/E for home consumption. Originally, the duty assessed was Rs. 2,29,186.10. They deposited this amount on 25-3-1980. When they went to take delivery of the consignment they were told that there had been less assessment and were asked to file a revised B/E and accordingly, they filed a revised B/E on 27th March, 1980 and paid the duty of Rs. 25,600.58 on 28th March, 1980. Thereafter, there was Customs examination of the goods and the examination disclosed shortage of 9610 kgs. of PVC Resin Solvic.
3. On 26th September, 1980, they claimed refund of Customs duty on the short delivered quantity. Their application for refund of duty was rejected by the Assistant Collector of Customs MCD holding that the refund claim was barred under Section 27(1). On appeal, the Appellate Collector confirmed the order of the Assistant Collector.
4. In the Revision Application, the appellants contended that the Assistant Collector and the Appellate Collector had committed an error in applying the provisions of Section 27. Their claim fell under Section 23(1) of the Customs Act and that Section does not specify any period of limitation. It was further contended that the goods had been assessed to duty and an order for clearance for home consumption had been passed, but before goods were actually cleared out of the warehouse, they were found to be lost. Hence, the appellant's claim would fall under Sub-section (1) of Section 23 and not Section 27 of the Act.
5. During the hearing of this appeal, Shri Manoj Sanklecha, the appellant's learned Advocate reiterated the contentions set out in the Revision Application. He further contended that when once the Assistant Collector was satisfied tnat the imported goods had been lost or destroyed, the law makes it obligatory to send by post the duty paid by the appellants. He further contended that no application for refund is required and that there is a statutory obligation on the Assistant Collector to remit the duty to the appellants. It was urged that in law the Assistant Collector cannot refuse to pay back the duty on the ground that the claim was barred by time. It was the contention of Shri Sanklecha that the expression "remit" appearing in Section 23(1) would mean remitting the amount, namely, in the instant case duty to the party who had paid the duty. In support of his contention, Shri Sanklecha relied upon the dicision of the Supreme Court, The Commissioner of Income Tax, Bombay South Bombay v. Ogale Glass Works Ltd. LVI Bombay Law Reporter Page 1196.
6. Finally, Shri Sanklecha urged that the refund envisaged under Section 27(1) is different from the claim falling under Section 23(1).
7. Shri Krishan Kumar, Learned Departmental Representative for the Respondent Collector however urged that the appellant's application was for refund of duty. Further, the application was made under Section 27(1). There is no other provision in the Customs Act providing grant of refund other than Section 27. Having invoked Section 27(1) it is not open to the appellants to contend that Section is not attracted. Shri Krishan Kumar also submitted that the contention of the learned Advocate that no application for refund is required and that limitation prescribed under Section 27(1) is not applicable to their claim cannot be countenanced. Shri Krishan Kumar questioned the correctness of the interpretation of the word "remit" mentioned in Section 23(1). Finally, Shri Krishan Kumar submitted that the appellants' claim for refund of duty paid had been rightly rejected as barred by time since the application for refund was made after the expiry of the prescribed period of six months from the date of payment of duty. He, therefore, submitted that the appeal may be rejected.
8. Considered the submissions made on both sides and perused the records of the case.
9. This appeal does involve a short but an important question of law. That being whether the provisions of Section 27(1) are attracted to the claim arising out of Section 23(1) of the Customs Act.
10. If the provisions of Section 27(1) are attracted to the claim under Section 23(1) then this appeal shall have to be rejected because admittedly the claim for refund was made after the expiry of six months from the date of payment of duty. (The payment of duty was not under protest or provisional and not by Government or other institutions mentioned in Clause (a) of Section 27(1) or made by an individual).
11. For the better understanding and proper appreciation of the issue involved it is desirable to set out the relevant portions of Sections 23 and 27 of the Act.
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.
27. Claim for refund of duty.-(1) Any person claiming refund of any duty paid by him in pursuance of an order of assessment made by an officer of Customs lower in rank than an Assistant Collector of Customs may make an application for refund of such duty to the Assistant Collector of Customs."
12. Section 23(1) confers a right on an importer to claim remission of duty on the goods which had been lost or destroyed at any time before clearance for home consumption. In order to claim remission, duty should have been paid. The payment of Customs duty arises after the duty is assessed. The assessment of duty could be made only when the importer of the goods presents to the Proper Officer a B/E for home consumption or warehousing in the prescribed form vide Section 46(1). Section 17(1) among other things provides that after an importer files a B/E as provided under Section 46, the Proper Officer shall examine and test the goods or part of the goods imported. After examination and testing, the Proper Officer is required to assess the duty leviable on such goods. Sub-section (4) of Section 17 however permits assessment of duty leviable on imported goods without examination or testing. Thus, without assessment there cannot be payment of duty. In other words, payment of duty is proceeded by an assessment.
13. In the instant case admittedly there was an assessment and also a revision and thereafter payment of duty had been made. After the duty had been paid, there was Customs examination of the imported goods and this examination disclosed shortage of 9610 kgs. of imported goods. This shortage was noticed after the out of charge order was made but before the actual clearance of the goods for home consumption. This Bench relying on the decision of the Delhi High Court in Sialkot Industrial Corporation, 1979 E.L.T. (J 329) case had held that Section 23(1) would apply to goods which have lost or destroyed while in the custody of the custodian even though there might have been an order for clearance of goods for home consumption but before the importer actually clears the goods. Therefore, it could be said that the appellants became entitled to remission of duty on the goods found short but then the contention of the learned Advocate for the appellant that when once the Assistant Collector was satisfied that the imported goods had been lost or destroyed before their actual clearance, there is a legal obligation on his part to send the duty on such goods to the importer is not well founded. Similarly, the contention of the learned Advocate that there need be no application for refund of duty which the importer became entitled under Section 23(1) also cannot be accepted. His interpretation of the expression "remit" again appears incorrect. What is contemplated under Section 23(1) is remission of duty and not remittance of duty. The obligation case on the Assistant Collector under Section 23(1) is to determine the quantum of remission and not an obligation to remit the duty. The decision relied upon by the learned Advocate has no application and it has no relevance for the interpretation of Sub-section (1) of Section 23. In the Supreme Court's decision referred to above there was a contract between the assessee and the Government of India and the contract provided for payment by cheque. The assessee made a request to remit the amount due but did not indicate the mode of remittance. In that context the Supreme Court held 'that the request by the credition' to 'remit' the amount due without more, is tantamount to a request to send the amount by post. It is not clear how the learned Advocate could press into service the above decision of the Supreme Court.
14. The power conferred on the Assistant Collector under Section 23(1) to remit the duty on the goods lost or destroyed could only mean to grant remission of duty. The expression 'remit' in the context could only mean granting remission of the entire duty or part of the duty paidIt could also mean reducing the duty already paid. It is not possible to interpret that expression as casting an obligation on the Assistant Collector to send by post the duty to the assessee. Under Section 23(1) the remission of duty depends upon the extent of loss or destruction of the imported goods. As a matter of fact, the appellants' claim for remission of duty was not in respect of the entire quantity that had been imported but only in respect of the shortage noticed during Customs examination. The Assistant Collector is required to quantify the remission of duty eligible by the importers. The expression remit in Section 23(1) should have the same meaning as that of the expression 'remit' found in Articles 72 and 161 of the Constitution of India. The President of India under Article 72 and the Governor of a State under Article 161 are conferred with the power to remit the sentence.
15. Section 23(1) does not provide for suo motu action by the Assistant Collector. It is only when an importer satisfies the Assistant Collector that any imported goods had been lost or destroyed at any time before clearance for home consumption the Assistant Collector had been given power to grant remission of duty on such goods. Therefore, the contention of the learned Advocate that the importer is not required to make any application and that there is a legal obligation on the part of the Assistant Collector to remit the duty in the sense to send by post untenable.
16. The assessee who is entitled to claim refund of duty or part of the duty already paid is required to make an application to the Assistant Collector. Excepting 27(1) there is no other provision in the Customs Act providing for making an application for refund of the duty already paid. As a matter of fact, the appellant's application in the instant case was also made under Section 27(1). It may be stated here that Section 27(1) does not lay down the circumstances under which refund is permissible or the grounds on which refund could be sought, but it only prescribes the procedure for claiming refund and also provides the period within which refund should be sought. When an appellant makes an application for refund of duty already paid, that application shall have to be treated as an application under Section 27(1) even though the basis for claim is Section 23(1). Therefore, such an application should have been filed within the period prescribed in that Section. Admittedly, the appellant's claim was beyond the period of limitation prescribed under Section 27(1). In the circumstances, the authorities below were justified in rejecting the appellant's claim as barred by time.
17. As the order passed by the authorities below is legally correct, there is no scope to interfere and accordingly I reject this appeal.