ORDER
A. Kalyanasundharam, Accountant Member
1. [This para is not reproduced here as it involve minor issues.]
2. In the appeal by the assessee for the assessment year 1984-85 the main claim relates to the trading loss of Rs. 14,82,337 representing value of imported polyester yarn and imported consignment expenses.
3. Shri G.C. Sharma, the Senior Counsel for the assessee, submitted that the assessee is a limited company and has been in the business of trading of imported polyester yarn which were mainly imported from Taiwan and China. In the accounting year relevant to the assessment year 1983-84 it had imported polyester yarn weighing 84,960 Kgs. from Hualon Corporation, Taiwan. The goods landed at the Indian Ports in January 1983. The payments in regard to the imported goods were made to the supplier between January to April 1983. The assessee with a view to avoid heavy losses on trading of these goods did not lift the goods from the Customs Authorities. The assessee felt the crunch to such an extent that it was compelled to surrender the goods and accordingly it intimated its decision relinquishing its title to the imported goods as provided in Section 48 of the Customs Act, 1962 to the Customs Authorities in November/December 1983. He submitted that the details of the goods so surrendered are at page 2 of the paper book and the correspondence in this regard, copies of invoice of purchase, copies of. clearing agents bills for expenses are all contained at pages 3 to 18 of the paper book. His main plank of the argument was that since as required by the Customs Act, 1962, the assessee having relinquished its title to the goods in favour of the Customs Authorities, the assessee has lost its goods for ever. It is on this basis that the assessee had claimed the loss as a deduction. He pleaded that he had gone through the provisions of the Customs Act and has not been able to place his hands on any provision of the Act which required the authorities under that Act to confirm or inform their acceptance of the relinquishment of the title to the goods. He, therefore, pleaded that once the intimation of the assessee relinquishing its title to the goods has been made to the knowledge of the Customs Authorities, the action is complete insofar as the assessee is concerned and thereby culminating the complete process of surrender, the loss is thus established. He pleaded that the Customs Authorities took time for disposal of the goods and till the date of the argument no amount had been realized but on the contrary the authorities have raised the bills on account of various expenses incurred by them. Referring to the provisions of Sections 61,62 and 63 of the Major Port Trusts Act, 1963, he pleaded that the assessee had been levied various charges, interest etc. His plea was that the assessee did not take possession of the goods, which it could have done only by virtue of payment of customs duty, which it did not pay on account of paucity of funds and which is also done considering the fact that the assessee might have to incur huge losses in disposal of the goods. The plea was that the loss having been suffered during the course of trading, in the case of import of the goods, it is clearly a trading loss and did not require any further evidence in this connection. He also referred to the provisions of Sections 61, 62 and 63 of the Major Port Trusts Act, 1963 which provided sales of the goods after two months of the goods having passed into its custody, disposal of the goods not removed from the premises of the Board within the time-limit prescribed and the application of the sale proceeds. His plea was that the assessee-company could only receive if there remains surplus after meeting the various expenses which have been incurred by the authorities in the disposal of the goods. He pleaded that the authorities have also claimed customs duty on these goods which is not at all payable by the assessee or the assessee having relinquished its title to the goods.
4. Shri Bansal appearing for the Revenue strongly relied on the orders of the authorities.
5. We have given our very careful consideration to the rival submissions on this issue. The assessee-company had charged to the Profit & Loss Account loss on import consignment surrender of Rs. 14,82,337. This figure comprises of two elements, (i) purchase price of polyester yarn of Rs. 13,52,406 and (ii) import consignment expenses of Rs. 1,29,931. The imports were from Hualon Corporation, Taiwan and the goods landed in Indian Ports in January 1983. As per Section 48 of the Customs Act, 1962, the assessee intimated relinquishing of its title to the imported goods in December 1983. Since the assessee had intimated the Customs Authorities of its relinquishment of its title to the goods in December 1983, the assessee had claimed this value of the imported material and the expenses incurred on importing as a loss.
Section 48 of the Customs Act, 1962 provides that any goods which is brought into India from out of India and not so cleared for home consumption or warehoused or transhipped within two months from the date of unloading at a customs station or within such further time as permitted by the proper officer or if the title to any such imported goods is relinquished, such goods may, after notice to the importer and with the permission of the proper officer, be sold by the person having its custody. The proviso contains goods of the type of animals, perishable goods, hazardous goods which could be sold at any time and in case of arms and ammunition the same could be sold at such time and place and in the manner as directed by the Central Government.
The reading of the above indicates that consequent to the assessee relinquishing its title to the imported goods, it gives the Customs Authorities right under the Act to sell the goods so imported after giving due notice to the importer. The term ‘relinquish’ has been defined to mean to give up, to let go and the term ‘relinquishment’ has been defined to mean to leave (Chambers 20th Century Dictionary, Revised Edition, page 931). The Legal Glossary issued by Ministry of Law & Justice, 1988 Edition, at page 287 defines the terms ‘relinquish’ to mean to give over possession or control of, to leave of. The term ‘relinquishment’ in the same Dictionary at the same page has been defined to mean a release of a claim or portion of it, an act of relinquishing. The act of relinquishment, therefore, is an act of surrender of title to the possession of the goods or its title. In the instant case the act of relinquishment was made in accordance with the provisions of Section 48 of the Customs Act by which act of relinquishment the Customs Authorities derive the right of disposal of the goods, recover the customs duty from the purchaser, etc. Section 61 of the Major Port Trusts Act, 1963 provides the Board deriving the power of sale of the goods within two months of the goods having passed into its custody. Section 62 provides for disposal of the goods not removed from the premises of the Board within the time limit. While doing do, the Board is expected to give a show-cause notice to the owner of the goods if the address is available and if the address is not available cause a notice to be published in the Port Gazette or in the Official Gazette, as the case may be and in at least one of the principal local daily newspapers mentioning therein that the goods are liable to be sold by public auction or by tender etc. Section 63 provides the manner in which the sale proceeds shall be applied. The sale proceeds shall be utilized for meeting the expenses of the sale, in meeting any prior liens and claims, payment of rates and expenses of landing, removing, storing or warehousing, payment of any penalty or fine due to the Central Government, payment of any other sum due to the Board. After meeting all these expenses, the surplus, if any, that is remaining shall be paid to the importer, owner or consignee of the goods. On an application made by him in this behalf within six months from the date of the sale of the goods. In a case where there has been no application for claim of the surplus by the importer, the surplus shall be applied by the Board for the purposes of this Act.
6. The above have been brought out to analyse as to whether consequent to the assessee’s act of relinquishment of its title in favour of the Customs Authorities, could the assessee be said to have suffered the loss to the extent of the value of the goods or not. Reading of Section 48 and the provisions of the Customs Act, 1962, as brought out above, goes to indicate that the assessee instead of selling the goods itself has allowed the Customs or the Port authorities to step into its shoes as far as the title to the goods goes. The assessee by relinquishing its title has only avoided payment of any customs duty on the goods. This act of relinquishment therefore, in our opinion, does not result in any loss of the goods to the assessee. This is amply clear by virtue of the provisions contained in Section 61 of Major Port Trusts Act, 1963, by which the importer i.e., the assessee, would be given a notice of the intended sale at which point of time also the assessee has the right of revoking its relinquishment. The Act is absolutely silent in not providing for any right for cancelling the relinquishment earlier done or the Act directly or otherwise does not prohibit the assessee to revoke its earlier act of relinquishment. As observed earlier, the act of relinquishment results in the assessee not claiming title to the goods, but this by itself does not mean that the assessee has surrendered even the value of the goods. As observed earlier, the act of relinquishment only provides the Customs Authorities the right to sell the goods either by public auction or by tender, etc. and realize the value of the goods & customs duty from the actual purchaser other than the assessec itself. It is an undisputed fact that in the year under review i.e., by 31st of March, 1984 the goods have not been sold. It is also not the case of the assessee that time-lag of six months has elapsed from the date of actual sale and within which time the assessee should have made its application claiming for the surplus consequent to the sale of the goods in which event to the extent of the amount actually realized by the assessee and the value of the goods result either in a surplus when the amount realized exceeds the value of the goods or a loss when the amount realized falls short of the value of the goods. In the instant case neither being the situation, the goods having not been sold as yet, for, the assessee had not taken the goods in its possession but giving up the goods to the Customs Authorities and the Port Authorities, there being no loss of the goods as such, the claim of the assessee of having lost the goods does not arise at all in the accounting period. The claim being baseless is rejected.
7 to 24. [These paras are not reproduced here as they involve minor issues.]