1987 (9) TMI 141 - AT - Customs

Tribunal upholds duty demand for lost/stolen Di-Ammonium Phosphate, importer's obligation to prove proper use.

COLLECTOR OF CUSTOMS, RAJKOT Versus INDIAN POTASH LIMITED

COLLECTOR OF CUSTOMS, RAJKOT Versus INDIAN POTASH LIMITED - 1987 (32) E.L.T. 741 (Tribunal) Issues:Liability of respondents to customs duty for lost or stolen Di-Ammonium Phosphate & applicability of Section 28 of the Customs Act, 1962.Analysis:The judgment involves the liability of the respondents to customs duty for 725.0 MT of Di-Ammonium Phosphate reported as lost or stolen out of a total quantity imported. The main issue is whether the demands raised against the respondents are barred by limitation under Section 28 of the Customs Act, 1962. The case revolves around two consignments of Di-Ammonium Phosphate cleared without duty payment under a notification. A shortage of 728.900 MT was detected, leading to a show cause notice for duty payment. The Assistant Collector found against the respondent, confirming the duty demand.In appeal, the Collector of Customs (Appeals) Bombay set aside the demand, stating that as the goods were not leviable to duty upon importation due to the exemption notification, the importer was not liable to pay duty for stolen goods post-clearance. The Collector of Customs, Rajkot, appealed to the Tribunal, arguing that the respondents did not fulfill the conditions of the exemption notification. The respondent's advocate contended that the demand was barred by limitation under Section 28 and referenced the provision for remission of duty on lost goods.The Tribunal analyzed the notification exempting Di-Ammonium Phosphate from duty if used as manure, noting that the respondent had executed a bond agreeing to pay duty if the goods were not used as specified. The Tribunal rejected the argument that the demand was time-barred, as final assessment had not taken place. It emphasized the importer's failure to prove the use of the material as required. The Tribunal also dismissed the argument for remission of duty under Section 23, as the loss occurred post-clearance. The Tribunal upheld the Assistant Collector's decision, emphasizing the importer's obligation to satisfy the Customs regarding the use of the imported goods.The Tribunal rejected arguments that the demand was premature or based solely on the police report, given the admitted loss of goods. It cited a Supreme Court precedent emphasizing adherence to the plain language of tax exemptions. Consequently, the Tribunal set aside the Collector of Customs (Appeals) Bombay's order and reinstated the Assistant Collector of Customs Jamnagar's decision, allowing the appeal and upholding the duty demand against the respondents.