Remission of customs duty for warehoused goods lost before home consumption clearance remains available, even during bonded transit.

Warehoused goods lost or destroyed before clearance for home consumption remain eligible for remission of customs duty under Section 23(1) of the Customs Act, 1962. The provision applies even where the goods are moved under bond from one warehouse to another, because they retain their character as warehoused goods until home consumption clearance. The note also records that genuine shortages caused by natural factors such as moisture variation, weighment difference and handling loss, with no allegation of theft or clandestine removal, support remission and render the duty demand unsustainable.

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Issues: Whether remission of customs duty was admissible for shortage of warehoused goods lost in transit before clearance for home consumption, and whether the demand raised by the Revenue was sustainable.

Analysis: The shortage occurred while the goods continued to retain the character of warehoused goods, as they had not yet been cleared for home consumption. The applicable legal position was that goods lost or destroyed at any time before such clearance attract remission under Section 23(1) of the Customs Act, 1962. The fact that the goods were removed from one warehouse to another under bond did not exclude the operation of that provision. The earlier Larger Bench view had already held that Section 23(1) applies to transit loss in warehousing cases, and the lower authorities had also found the shortage to be genuine, arising from natural causes such as moisture variation, weighment difference, and handling loss, with no allegation of theft, pilferage, or clandestine removal.

Conclusion: Remission of duty was correctly allowed and the Revenue's demand was not sustainable.

Final Conclusion: The appeal filed by the Revenue failed, and the order granting remission of duty was affirmed.

Ratio Decidendi: Warehoused goods lost or destroyed before clearance for home consumption remain eligible for remission of duty under Section 23(1) of the Customs Act, 1962, even when moved under bond from one warehouse to another.

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