SARGODHA JUTE MILLS LTD. VS COLLECTOR and others
2004 P T D 1911
[Lahore High Court]
Before Nasim Sikandar and Muhammad Sair Ali, JJ
SARGODHA JUTE MILLS LTD.
Versus
COLLECTOR and others
Customs Appeal No.98 of 2003, decided on /01/.
th
March, 2004. (a) Customs Act (IV of 1969)‑‑‑--
‑‑‑‑Ss. 27(2), 84 & 108‑‑‑Damage by fire to imported goods before reaching bonded warehouse‑‑‑Importer claimed remission of duty with request of Revenue to conduct joint inspection of damaged goods‑‑ Revenue without conducting joint survey raised demand against importer, which order was upheld by Tribunal‑‑‑Validity‑‑‑Failure of Revenue to conduct joint survey as requested by importer showed that goods had been totally damaged and, nothing had remained marketable even as junk‑‑‑Goods though entered for warehousing had .not been actually warehoused‑‑‑Admitted damage to goods could not be denied on technicalities‑‑‑Partial payment on account of customs duty/taxes as interim relief made by Insurance Company would be of no relevance as importer had duly informed Revenue about damage to goods‑‑‑High Court accepted appeal and set aside impugned order with observations that importer was not liable to‑any sum as customs duty, taxes and other dues to Revenue in respect of goods damaged by fire.
Tata Textile Mills Ltd. v. Assistant Collector (Recovery Officer PLD 2000 Lah. 286 fol.
(b) Customs Act (IV of 1969)‑‑‑--
‑‑‑‑S. 108‑‑‑Damaged or deteriorated goods‑‑‑Part payment of insurance claim to importer by Insurance Company‑‑‑Effect‑‑‑Revenue would not become entitled to proportionate sum as customs duty on payment of such insurance claim to importer.
Civil Appeal No. 1333 of 2001 ref.
(c) Customs Act (IV of 1969)‑‑‑--
‑‑‑S. 108‑‑‑Re‑assessment of damaged or deteriorated goods‑‑‑Only Customs Authorities were empowered to do so under S.108 of Customs Act; 1969.
(d) Customs Act (IV of 1969)‑‑‑
‑‑‑‑S. 108‑‑‑Damage/deterioration or diminishing in value of imported goods could not be partial only, but there could be total loss resulting into zero value in number of situations.
(e) Customs Act (IV of 1969)‑‑‑--
‑‑‑‑S.84 Expression "entered for warehousing" and "warehoused"‑ Distinction‑‑‑Meanings of both said ‑ expressions were different.
Tata Textile Mills Ltd. v. Assistant Collector (Recovery Officer PLD 2000 Lah. 286 fol.
Salman Akram Raja for Appellant.
Sh. Izhar‑ul‑Haq for Respondents.
Date of hearing: 10th February, 2004
JUDGMENT
NASIM SIKANDAR, J.‑‑‑In this appeal under section 196 of the Customs Act, 1969 an order of the Customs, Excise and Sales Tax Appellate Tribunal, Lahore, dated 19‑4‑2003 is assailed.
2. The appellant imported 3805 bales of raw jute from Bangladesh and filed. 10 into bonds bills of entry with Karachi Customs for ultimate transportation of goods to the customs private bonded warehouse of the Company at Lahore. Out of them only, 326 bales were received in the bonded warehouse while the remaining 3479 bales pertaining to all the 10 into bonds bills of entry were not received in the bonded warehouse. The appellant on the reverse of each bill of entry recorded/noted that the goods in question were burnt on 19‑3‑2001 while these were still lying at Karachi Port Trust. Also they submitted two applications, dated 14‑4‑2001 and 15‑6‑2001 supported by necessary documents from the Karachi Port Trust indicating that 3805 bales relating to IGM No. 447 of 2001 were burnt with fire and were also damaged with water.
3. The department on consideration of the applications found that the appellant was not entitled to any remission/abatement of duty in terms of sections 27, 108, and 115 of the Customs Act, 1969. Accordingly the Adjudication Officer found the appellant liable to pay an. amount of Rs.7,18,513 as customs duty Rs.1633318 as sales tax + Rs.8,68,928 as withholding income tax in all amounting to Rs.32,20,756.
4. Before the learned Tribunal the appellant relied upon a, judgment of this Court in re: Tata Textile Mills‑ Ltd. v. Assistant Collector (Recovery Officer (PLD 2060 Lahore 286). The learned Tribunal agreed with the proposition discussed in that judgment qua the distinction in the expressions "entered for warehousing" and "warehoused". Learned members of the Bench however proceeded to decide the matter against the appellant mainly for two reasons. Firstly, that the appellant failed to fulfill the requirements of section 108 read with section 27(2) of, the Customs Act, 1979 as they did not present the goods in damaged/ deteriorated condition for the purpose of appraisement. Learned members of the Tribunal appear to have agreed with the averments of the DR that there was no concept of complete loss of goods under section 108 of the Customs Act and that a prayer for abatement/ remission could only succeed if corpse of goods remained available for re‑appraisal and execution of new bond by the importer according to the diminished duty. In that aspect the learned Members of the Tribunal also expressed, the view that the provisions of section 108 and 27(2) of the Act‑did not empower the appellant to assume for itself the authority for re‑appraisement of goods in damaged/deteriorated condition as was done in the case in hand. In support of their view the learned members of the Bench made a reference to a report prepared by Messrs Iqbal A. Najee Company as "Surveyors" of the Insurance Company which had assessed the damage of goods at 70% of the total imported value. Learned Beach posed itself a hypothetical question if the appellant had filed his home consumption bills of entry and paid assessed duty/taxes and the goods were damaged by fire before physical removal of the goods from the port areas in the view of the learned Bench the appellant could not request for refund of already paid duty/taxes as there was no such provision in the Customs Act. Lastly the learned members of the Tribunal appear to have agreed with the proposition advanced at the bar by the departmental representative that the appellant will be fully compensated from the Insurance Company and therefore, the principle of justice and equity demanded that loss to the Government exchequer should also be compensated.
5. Heard the learned counsel for the parties. Learned counsel for the appellant has again relied upon the aforesaid judgment of this Court while the learned counsel for the Revenue supports the impugned order for the reasons stated therein.
6. After hearing the learned counsel for both the parties we are inclined to agree with the appellant the at the claim of abatement/remission put forth by them could not be refused by the Revenue merely for the reason that there was a likelihood of receipt of compensation for the loss, of goods from the Insurance Company. The reliance of the learned counsel for the Revenue on interim order recorded by the Supreme Court of Pakistan in Civil Appeal No. 1333 of 2001, dated 6‑10‑2003 in support of that proposition is not valid in that Judgment the appellant before the Hon'ble apex Court was an Insurance Company which had already paid the assessee value of destroyed .goods to the owners; importer. The Hon'ble Bench of the Court by way of an interim relief directed the Revenue to determine the amount due to it as custom dues, and other Government dues covered by the Insurance Policy. That order of the Hon'ble Court cannot be cited as an authority that on receiving part of insurance claim the Revenue becomes entitled to proportionate l sum as customs duty.
7. The learned Tribunal is correct in saying that it is only the Customs Authorities who are empowered to make re‑assessment of damaged or deteriorated goods under section 108. However, their C opinion that the appellant itself attempted to do so is not correct. On the record the appellant has submitted a copy of letter, dated 20‑3‑2001 requesting joint inspection of goods which was received by the Principal Appraiser, Customs Department on 20‑3‑2001. However, apparently no proceedings on the request contained therein for joint survey was carried out by the respondent‑department.
8. We are also unable to share the view of the learned Tribunal when it agreed to the submissions made before it by the departmental representative that under section 108 of the Customs Act, 1969 there was no concept of complete remission of duty/taxes in case of goods "entered for warehousing". The damage/deterioration or diminution in value of the goods imported cannot be partial only. There can be total loss resulting into zero value of damaged or deteriorated goods in a number of situations.
9. The facts in hand as noted above being admitted the goods though entered for warehousing were not yet actually warehoused and therefore, admitted damage to them could not be denied on technicalities. The fact that surveyor recommended 70% compensation to the importer or that during the proceedings partial payment on account of customs duties/taxes to enjoy interim relief was made by the Insurance Company is again of no relevance when the petitioner duly informed the department of the damage done to the goods. The failure on the part of the department to conduct a joint survey as requested by way of the aforesaid letter, makes out a good case for the petitioner that the goods in question were totally damaged and nothing remained marketable even as junk. Lastly in our view the learned Tribunal was not correct in distinguishing facts in hand from those which fell for our consideration in the aforesaid case relied upon at the bar re: Tata Textile Mills v. Assistant Collector (Recovery Officer). Although the Tribunal agreed that the meanings of expression "entered for warehousing" was different from "warehoused" yet it proceeded to hold against the appellant for the' aforesaid reasons which was not justified in view of the following para of the judgment which indicates identity of the facts between the case in hand and the aforesaid reported judgment:
"The other contention raised by the learned counsel for the petitioner that the respondents have acted illegally in applying section 27(1) rather than section 27(2) of the Act, is equally well founded. Section 108 of the Customs Act refers to subsection (2) of section 27 which provides method for valuation of the goods. It neither refers to subsection (1) nor has the same been made applicable by reference. Section 27(1) of the Act, is therefore, in any case, not attracted. It is also pertinent to mention that admittedly 26 cases of machinery which were lying at the port and were destroyed by fire at the time when the petitioner had filed bill of entry but the goods had not been cleared or removed to a warehouse. The petitioner was in no way responsible for the fire which occurred due to some unavoidable circumstances as has been found by the Tribunal itself. The goods were not in possession or control of the petitioner at that time and have, as a matter of fact, not even cleared the customs barrier. In these circumstances, it is highly anomalous to demand the payment of customs duty on the goods which have yet to be cleared either for home‑consumption or for warehousing as the case may be, at a time, when the petitioner was not admittedly, in possession of the goods."
10. Therefore, we allow this appeal and set aside the impugned order of the Tribunal holding that in the given circumstances the appellant is not liable to pay any sum as customs duty as well as taxes or other dues to the Revenue in respect of the goods damaged by fire.
S.A.K./S‑59/LAppeal accepted.