Customs refund for empty or pilfered consignments cannot be denied merely because the loss is not final.

Customs duty on consignments found empty, not received, damaged, or lost after receipt including by pilferage is not payable, and any duty already paid may be refundable under Section 23 of the Customs Act, 1962. The rejection of refund cannot be sustained merely on the ground that the loss is not final, because there is no legal basis to withhold refund once the goods were imported empty or were lost in the custody chain. The stated result is that the refund claim is maintainable and consequential refund relief follows.

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Issues: Whether customs duty paid on consignments found empty or damaged after import was refundable under Section 23 of the Customs Act, 1962, and whether the rejection of refund could be sustained on the ground that the loss was not final.

Analysis: The consignments were treated as either having been imported empty, in which event no duty could arise, or having been lost after receipt, including by pilferage. On either footing, the importer was not liable to pay duty. The reasoning that refund could be denied because the loss was not final was found unsustainable, since Section 13 of the Customs Act, 1962 deals with pilfered goods and there was no legal basis for withholding refund merely because the goods were later traceable or restored through the custody chain. The record also showed receipt of the consignment in damaged or empty condition and, for one appeal, non-receipt on the flight itself.

Conclusion: The refund claim was held to be maintainable and the rejection of refund was set aside.

Final Conclusion: The assessee succeeded in both appeals and became entitled to consequential refund relief.

Ratio Decidendi: Where imported goods are found empty, not received, or lost after receipt including by pilferage, customs duty is not payable or is refundable, and refund cannot be denied on the ground that the loss is not final.

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