Customs duty remission for bonded goods destroyed by accidental fire before clearance under the statutory scheme.

Imported machinery lying in a bonded warehouse and damaged by an accidental fire before clearance for home consumption qualified for remission of customs duty under section 23 of the Customs Act, 1962. The statutory test was whether the goods were lost or destroyed before clearance, and that requirement was satisfied on the certified fire damage. Alleged non-compliance with exemption notification conditions, including non-utilisation for export manufacture, did not displace the remission provision, because the goods had not yet been cleared and the statutory scheme governed the liability. Insurance issues and alleged lack of fire precautions were treated as irrelevant absent proof of fraud or negligence by the importer. Remission was therefore allowed.

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Issues: Whether customs duty was remittable under section 23 of the Customs Act, 1962 in respect of imported machinery kept in bond and damaged by an accidental fire, and whether breach of the exemption notification conditions by non-utilisation of the machinery for export manufacture made the duty payable.

Analysis: The machinery had not been cleared for home consumption and was lying in a bonded warehouse when it was damaged by an accidental fire certified by the competent authorities. Remission under section 23 is attracted where duty becomes payable on goods lost or destroyed before clearance, and the availability of exemption under the notification did not alter the position that the goods were not liable to duty in the manner suggested by the department. The plea regarding insurance claim and alleged lack of precautions against fire was held to be irrelevant to the statutory question of remission, and there was no material to attribute the fire to fraud or negligence by the assessee. The objection based on the notification conditions was also rejected because the goods had not been cleared for home consumption and the statutory remission provision governed the case.

Conclusion: The respondent was entitled to remission of customs duty and the department's challenge to that relief failed.

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