ORDER
T.K. Jayaraman, Member (J)
1. This is an appeal against the Order-in-Appeal No. 283/2003 dated 30.6.2003, passed by the Commissioner (Appeals), Bangalore.
2. The brief facts of the case are as under :
The appellants imported certain goods and deposited the same at the Central Warehousing Corporation near their factory after complying with the provisions of the Customs Act, 1962. On 20.12.1999 around 11 p.m., due to short circuit there was a fire accident in the warehouse where the goods were deposited. The goods which were deposited in the warehouse were destroyed in the fire. The Range Superintendent of Central Excise & Customs directed the appellants to pay duty in respect of 17 packages which were destroyed. Later interest of 24% was demanded. The appellants paid both the duty and interest. Subsequently, they filed a refund claim to the tune of Rs. 10,23,655/- representing the duty & interest paid by them on the goods which were destroyed by fire accident at CWC. A show cause notice dated 3.3.2001 was issued to the appellants alleging that the CEGAT decision relied on by the appellants in their claim is inapplicable to their case. It was also mentioned that the goods in question were imported under EPCG scheme and did not satisfy the condition (7) of Clause 2 of notification 111/95-Cus dated 5.6.1995. The insurance claim included customs duty demand which was to be paid by the insurance company and hence the refund was liable for rejection. The Original authority rejected the refund claim. The appellants approached the Commissioner (Appeals) who upheld the order of the Original authority. Hence the appellants have come before the Tribunal for relief.
2. Shri K.S. Ravi Shankar, learned Advocate appeared for the appellants and Shri K.S. Reddy, learned JDR for the Revenue.
3. The learned Advocate adduced the following arguments :
(i) Section 23 of the Customs Act, 1962 is squarely applicable to the loss arising out of destruction of the goods in the warehouse before clearance from their home consumption.
(ii) The Appellate authority has not considered the legal provisions of Sections 22, 23 & 27 and simply gone by the Chapter IX of the Act.
(iii) The Commissioner (Appeals) has not considered the several contentions raised by the appellants in the grounds of the appeal. Therefore, the brief order is not a speaking order.
(iv) The lower authorities have fallen into serious error by misunderstanding the provisions of Section 23 of the Act which categorically and in no uncertain terms envisages in Sub-section (1) that duty shall be remitted on the imported goods, which are destroyed at any time before clearance for home consumption.
(v) The Commissioner (Appeals) erred in invoking Section 61 which was uncalled for, not pressed into service during adjudication, nor put the appellants to notice at any stage of proceedings.
(vi) Section 27 applies to every kind of duty and interest paid under the Act and does not confine itself to duty paid on goods of non-warehoused nature.
(vii) Section 72(d) of Customs Act would apply only when the goods under a warehousing bond which have not been cleared for export or home consumption are not properly accounted to the satisfaction of the proper officer. In the present case the same would not be applicable.
(viii) The adjudicating authority manifestly erred in relying on the decision of the Supreme Court in the case of S.K. Pattanaik v. State of Orissa and quoted the same out of context in his order to illegally support the rejection of a valid refund claim. The said decision related to excise duty on liquor in the nature of CVD (countervailing duty) and secondly the said decision held that the liability to CVD does not get wiped out, because the goods were imported into India. The said case, it is humbly submitted did not deal either with Section 22 or 23 of the Customs Act. The said case related to State levy of Excise on liquor, and not customs duty. The ratio of the above decision ought not to have been applied by the original authority. The impugned order is therefore illegal as it has the effect of confirming a wrong reasoning adduced by the adjudicator to defeat a just claim of refund admissible to the appellants.
(ix) The learned Advocate relied on the following case laws :
(a) Ganpati Enterprises v. CC wherein it was held that warehoused goods completely destroyed in a fire accident in the warehouse, petitioners held entitled for refund of duty paid on such destroyed goods.
(b) Winsome Yarn Ltd. v. Commissioner of Central 3 Excise 2001 (143) ELT 686 (T-Del.) wherein it was held that warehoused goods destroyed in fire inside the warehouse are entitled for remission of duty.
(c) Ferro Alloys Corporation Ltd. v. CC & CE wherein it was held that the expression ‘lost’ or ‘destroyed’ in Section 23(1) is not used in any narrow or particular sense, but in a broader sense and includes by whatsoever reason before they are cleared for home consumption. Thus, goods imported which were lost or destroyed before clearance for home consumption was held to be entitled for remission of duty.
(d) CCE & Cus v. Welspun Terri Towels 2002 (149) ELT 593 (T) wherein it was held that Goods destroyed by fire were held to be entitled for remission of duty under Section 23 and further the claim of insurance benefit by assessee has not bearing on claim for remission.
4. The learned JDR contended that Section 23 of the Customs Act, 1962 would not be applicable to the warehoused goods. He reiterated the orders of lower authorities.
5. We have gone through the records of the case carefully. In the present case, the goods imported under the EPCG scheme were warehoused. However before the clearance from the warehouse, the goods were completely destroyed by fire accident. The appellants paid the duty and interest demanded by the Revenue but later filed the refund claim. The Commissioner (Appeal) has not examined the entitlement of remission of duty on the goods destroyed in the light of Section 23 of the Customs Act, 1962. He has relied on the decision of Tribunal in the case of Pasupati Overseas Pvt Ltd. v. CC, Madras . The learned Advocate pointed out that this decision was never referred to in the show cause notice issued to the appellants. We have gone through the above decision. The facts of the case have not been properly brought out in the said case. Hence the above case cannot be relied on to reject the refund claim. Section 23(1) of the Customs Act is reproduced below :
Section 23. Remission of duty on lost, destroyed or abandoned goods. – (1) [Without prejudice to the provisions of Section 13, where it is shown] to the satisfaction of the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] that any imported goods have been lost [(otherwise than as a result of pilferage)] or destroyed, at any time before clearance for home consumption, the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] shall remit the duty on such goods.
In the present case, there is ample evidence to show that the imported goods have been destroyed before their clearance for home consumption. The various case laws cited by the learned Advocate would show that the remission of duty is available where the goods are destroyed before their clearance for home consumption. As regards the Supreme Court decision in the case of S.K. Patnayak’s case relied on the by the learned SDR is concerned, we find that the said decision was rendered in the context of Section 27 of the Bihar & Orissa Excise Act, 1915. In our view, this decision would not relevant in the present case which is covered by Section 23 of the Customs Act, 1962. The reliance of the Commissioner (Appeals) on Section 72(d) is not correct. The Section 72(d) imposed a responsibility on the importer who has executed a bond under Section 59 for properly accounting of the goods which were warehoused. In the present case, the goods were destroyed by fire even before their clearance for home consumption. The learned SDR made the point that the appellants have claimed insurance which includes Customs duty. Hence they would not be entitled for remission. The learned Advocate submitted that the insurance claim does not include duty and even if it includes duty in terms of the Tribunal decision in the case of Welspun Terry Towels (supra), the insurance claim has no bearing on claim for remission. We agree with the learned Advocate that the insurance covers risk and is governed by separate enactments. We cannot mix up the provisions of the Customs Act with Insurance Act to deny the benefit specifically provided under Customs Act, 1962. The present case is squarely covered by Section 23 of the Customs Act, 1962. The Order-in-Appeal has no merit. Hence we set aside the impugned Order-in-Appeal and allow the appeal.