Warehoused defective goods may qualify for remission where deterioration occurred without wilful act, negligence, or default.

Imported warehoused goods claimed to be defective may attract remission rather than duty where the record shows they remained in bonded storage and became unfit for use without wilful act, negligence, or default by the importer. The note applies Notification No. 77/80-Cus and the remission principles for warehoused goods, stating that duty was not sustainable on goods not clandestinely removed and that confiscation and penalty could not stand on those facts. The operative point is that remission and exemption principles may independently protect the importer when deterioration, damage, or loss is established in the statutory sense.

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Issues: Whether customs duty, confiscation, and penalty were sustainable in respect of imported goods claimed to be defective and lying in bonded storage, in the light of Notification No. 77/80-Cus and the remission principles applicable to warehoused goods.

Analysis: The goods had been imported under the exemption notification for use in export production, and the record indicated that the importer had not clandestinely removed them but had kept them in the factory/warehouse. The Tribunal held that the surrounding circumstances supported the claim that the goods were not fit for use, bringing the notification's proviso on loss, destruction, damage, or deterioration without wilful act, negligence, or default into play. It also accepted the principle that warehoused goods not yet removed do not attract duty in the manner contended by the Revenue, and that remission principles under the customs law could apply independently of the notification conditions.

Conclusion: The demand of duty was not justified, and the confiscation and penalty were also unsustainable.

Final Conclusion: The appeal succeeded, and all adverse customs consequences were set aside in favour of the importer.

Ratio Decidendi: Where imported warehoused goods remain uncleared and the facts show that they became unfit for use without wilful act, negligence, or default, duty cannot be sustained and the importer is entitled to the benefit of remission/exemption.

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