2001 (11) TMI 200 - AT - Customs

Tribunal upholds remission of customs duty for damaged machinery at export-oriented unit

COMMISSIONER OF C. EX. & CUS., SURAT-II Versus WELSPUN TERRI TOWELS

COMMISSIONER OF C. EX. & CUS., SURAT-II Versus WELSPUN TERRI TOWELS - 2002 (149) E.L.T. 593 (Tri. - Mumbai) Issues involved: The issues involved in this case are the demand for customs and excise duty foregone on machinery, remission of customs and excise duty, jurisdiction of the Asst. Commissioner's order, inquiry into insurance claims, safeguard against fire, compliance with notification 13/81 conditions, and liability for duty.Customs and Excise Duty Demand: The respondent, a 100% export oriented unit, faced a demand for customs and excise duty foregone on machinery due to a fire accident causing damage. The department demanded duty on the grounds that the machinery was not utilized for the intended purpose of manufacturing cotton towels and yarn for export. The firm paid the duty under protest and later sought remission under Section 23 of the Customs Act and Rule 147 of the Central Excise Rules. The Commissioner granted remission of customs duty, which was challenged in this appeal.Jurisdiction of Asst. Commissioner's Order: The appellant argued that the Asst. Commissioner's letter demanding duty should be considered an order of adjudication, but the Tribunal found it to be a demand for duty rather than an adjudication order. The ground that the original cause of action had lost its meaning was deemed baseless by the Tribunal.Inquiry into Insurance Claims: The appellant contended that the Commissioner should have inquired about the respondent's insurance claim, but the Tribunal found this ground untenable. Granting remission of customs duty under Section 23 was unrelated to any insurance claims made by the respondent.Safeguard Against Fire: The appellant claimed that the respondent had not taken sufficient safeguards against fire, but the Tribunal noted that the fire was certified as accidental by appropriate authorities. There was no evidence of negligence or fraud by the respondent, and the Commissioner was not obligated to investigate the cause of the fire.Compliance with Notification 13/81 Conditions: The appellant argued that non-compliance with Notification 13/81 conditions rendered duty payable. However, the Tribunal clarified that since the goods were in a bonded warehouse and not cleared for home consumption, remission of duty under Section 23 would be applicable. Even without the benefit of the notification, duty would not be payable, as per Section 23(1).Liability for Duty: Ultimately, the Tribunal found no merit in the department's appeal and dismissed it, upholding the remission of customs duty granted by the Commissioner.