ORDER
Gown Shankar, Member (T).
1. Kores (India) Ltd., Mumbai, the respondent to this appeal/ imported in 1991 a consignment of cold seamless steel tubes and cleared them into the public bonded warehouse operated by the Central Warehousing Corporation. Although the bond expired in May, 1991 the importer did not take any steps to dear the goods until 1997. In that year, it filed an application for abatement of duty in terms of Clause (c) to Sub-section (1) of Section 22 of the Act on the ground that the goods were damaged having been badly pitted. The Assistant Commissioner rejected this claim. He said that the goods had been stored in the bonded warehouse from 7-5-1991 onwards on which date the bond expired and no extension of the bond period has been granted. If they had been damaged due to accident during that period, the provisions of Clause (c) of Sub-section (1) of Section 22 of the Act would have been attracted. He attributed the damage to the goods to long storage in open and exposed atmosphere saying that it was not due to accident to natural causes, but due to because of negligence on the part of the importer. He declined to grant the abatement. The importer appealed this order. The Commissioner (Appeals) found that the damage was caused by the act of the custodian of the goods having stored the goods in open space and therefore not attributable to any negligence on the part of the importer. He found the case to be covered by the decision of the Tribunal in Kasturi and Sons Ltd. v. CC – 1985 (22) E.L.T. 161 allowed the appeal and set aside the order of the Assistant Commissioner. Hence this appeal by the department.
2. We have heard the departmental representative on the grounds of the appeal and the counsel for the respondent.
3. Despite the argument of the counsel to the contrary, we are unable to accept that the ratio of the decision in Kasturi and Sons Ltd. v. CC -1985 (22) E.L.T. 161 would apply to the facts of this case. The Tribunal in that decision was concerned with the claim of abatement based on the fact that one of the imported items was found on landing to have been damaged. The claim was rejected by the proper officer on the ground that the examination report was not clear and no survey has been conducted. The dispute revolved around whether any particular procedure was required to be followed or not. The Tribunal, noting that no procedure has been prescribed, and that the goods have been found to have been damaged, allowed the claim. The claim under consideration by the Tribunal was evidently in terms of Section 22(1)(a) of the Act which provides for abatement of duty on any imported goods which are if damaged or deteriorated at any time before or during unloading in India. The claim before us cannot fall under this clause or any clause which refers to imported goods other than warehoused goods, which are damaged at any time after unloading or before their examination.
4. The respondent’s claim would fall within Clause (c) of sub-section
(1) of Section 22 which applies to warehoused goods which are damaged at any time before they are cleared for home consumption. That there has been damage to the goods before the clearance for home consumption is true. However, the question is not whether the claim, if at all they are warehoused goods, remains open. Once the period of warehousing expired, it is debatable whether these goods, after their bond period expired, would continue to be warehouse goods. This point however is not free from doubt. The definition of “warehouse goods” under Sub-section (2) of Section 44 of the Act may perhaps apply to those warehoused goods the bond of which have expired. Even proceeding on the footing that goods are warehoused goods, it is still not possible to accept the claim. If the abatement to be granted under Section 22, it must be shown that the goods had been damaged on account of any accident and this accident is not due to any wilful negligence due to the importer’s employee or agent. Therefore, the damage must be caused by accident and the accident must not be due to any wilful act or negligence. In the case before us, the goods were permitted to be warehoused for a year. The goods in fact remained in the bonded warehouse for seven years. No reasons are advanced as to why they were not cleared within one year and continued to be there for seven years. The claim for abatement was not produced before us. There is however little doubt that it is the prolonged exposure of the goods to the elements, which caused their pitting. In any event, it is not claimed that the damage occurred due to any particular accident. The damage is therefore attributable to the operation of the elements. We do not find it possible to say that this amounts to an accident. The counsel for the respondent attempted to rely upon the dictionary meaning of the term “accident”, as “An event that is without apparent cause or unexpected; an unfortunate event, esp. one causing injury or damage”. We do not find it possible to accept that presence of moisture and chemical elements in the atmosphere causing pitting over a period of eight years either without cause is acceptable. One could hardly say that in a coastal city, the presence of moisture, etc., is unexpected or an accident. Had the appellant not chosen to leave these goods so long in this manner this damage would not have taken place. Apart from the fact that what caused the damage was not an accident, it was caused by the negligence or default of the respondent in not clearing the goods.
5. We do not see how the fact emphasised by the Commissioner (Appeals) and by the counsel for the respondent before us that the god’s were stored in the open by the Central Warehousing Corporation is relevant. After all, the importer was well aware that the goods were stored in an open area, and could have insisted upon storage in a closed area, or, if that was not possible not to continue to store in the open area. It was, in other words, only at the appellant’s instance that the Central Warehousing Corporation stored the goods.
6. The counsel cited before us various decisions of the Tribunal. In the decision in Verma Sports Industries v. CC -1990 (46) E.L.T. 537 it was held that the provisions of Section 22 of the Act would not apply to the goods under consideration, since they have been supplied sub-standard. There is no finding in this decision with regard to applicability of abatement. In Lubrizol India Ltd. v. CC – 1986 (25) E.L.T. 435 (T) = 1986 (8) ECR 410 provided that once the goods are cleared out of Customs control, assessment on the basis of
reduced value in terms of Section 22 could not be done away. The facts in Drillco Metal Carbides Ltd. v. CC 1990 (48) E.L.T. 138 did not relate to warehoused goods at all. The decision in Taj Mahal Hotel v. CC – 1995 (80) E.L.T. 588 was concerned with the applicability of Section 23 of the Act.
7. In the result, therefore, we allow the department’s appeal, holding that abatement was not permissible, set aside the order of the Commissioner (Appeals) and restore the Assistant Commissioner’s order.