1991 (11) TMI 159 - AT - Customs

Duty remission granted for lost goods due to pipeline leakage

The Tribunal allowed the appeal, granting duty remission to the appellants for lost goods due to leakage in the pipeline during discharge. Despite ... Remission of duty Issues:- Duty remission under Sec. 23 of the Customs Act for lost goods due to leakage in pipeline during discharge operation.- Negligence of the appellants in detecting and reporting the loss to Customs authorities.- Interpretation of Sec. 23 of the Customs Act regarding remission of duty on lost or destroyed goods.Analysis:1. The case involved an appeal against an order demanding duty on a shortage of goods lost during the discharge operation from a ship to bonded tanks. The appellants claimed remission of duty under Sec. 23 of the Customs Act due to leakage in the underground pipeline, resulting in the loss of goods.2. The appellants argued that the loss was confirmed by the out-turn report and a Committee appointed by the Chairman, attributing negligence to other officers, not from the appellants' firm. They contended that the loss was due to leakage in the pipeline, entitling them to remission under Sec. 23.3. The Respondent, however, claimed that the appellants were negligent and could have averted the loss if proper precautions were taken. They argued that the loss was not due to natural causes but negligence, justifying the refusal of duty remission.4. The Tribunal found that there was a confirmed shortage of goods due to leakage in the pipeline, leading to a total loss during the discharge operation. The loss was attributed to human failure in not addressing the leakage promptly, rather than natural causes, as confirmed by the out-turn report.5. The Tribunal analyzed Sec. 23 of the Customs Act, emphasizing that duty remission is allowed for lost or destroyed goods before clearance for home consumption, regardless of the reason for the loss. The revised provision allows remission in all cases of loss or destruction, not limited to unavoidable accidents or natural causes.6. The Tribunal clarified that the Asstt. Collector is only required to ascertain the occurrence of loss, not the reasons behind it, for granting remission under Sec. 23. The wording of the section mandates remission upon establishing the loss before clearance for home consumption, without discretion based on the cause of loss or reporting time.7. Despite acknowledging negligence on the part of the appellants, causing loss to the government and environmental risks, the Tribunal allowed the appeal based on the legal requirement of establishing loss before clearance for home consumption. The decision emphasized the mandatory nature of duty remission under Sec. 23 in cases of confirmed loss, regardless of the cause.8. Ultimately, the appeal was allowed, granting consequential relief to the appellants in the matter of duty remission for the lost goods due to leakage in the pipeline during the discharge operation.