Messrs K & N'S POULTRY FARMS (PVT.) LTD., KARACHI VS ADDITIONAL COLLECTOR OF CUSTOMS, KARACHI and another, 2006 PTD-KARACHI-HIGH-COURT-SINDH 2780 (2006)

(a) Customs Act (IV of 1969)---

----S. 27---Damaged or deteriorated goods---Abatement of duties---Pre-condition---Abatement of duties is to be claimed and processed at the time of import of consignment, which has been damaged or deteriorated; it is a condition precedent that importer at the import stage should inform customs authorities that damage or deterioration has taken place before or during unloading of goods at the port of discharge---Such intimation gives an opportunity to customs authorities to appraise the value of damage or deterioration in the manner provided under S.27 (2) of Customs Act, 1969---Upon such appraisal if any damage is ascertained then abatement in customs duties is allowed.

(b) Customs Act (IV of 1969)---

----S. 27---Damaged or deteriorated goods--Abatement of duties---Claim---Importer sought abatement against import of chicks made in August, 1998, for loss sustained to previous consignment of chicks imported in July 1998---When earlier imports were made, the consign ment was got released upon payment of customs duties and charges without lodging any complaint in writing with regard to dead chicks---Complaint was lodged for the first time after more than one month of earlier import---Abatement of duty was declined by Customs Appellate Tribunal---Validity---Importer failed to take prescribed steps at the appropriate time provided under S.27 of Customs Act, 1969---Customs Appellate Tribunal rightly found that provisions of S.27 of Customs Act, 1969, were not followed and therefore, claim of importer was not legally maintainable---High Court declined to interfere in the order passed by Tribunal---Appeal was dismissed accordingly.

Sohail Muzaffar for Appellant.

S. Ashfaq Hussain for Respondents.

Date of hearing: 22nd August, 2006.

JUDGMENT

FAISAL ARAB, J.---The present appeal has arisen from the order, dated 14-3-2002 passed by the Appellate Tribunal, Customs, Excise and Sales Tax, Karachi in Customs Appeal No.K-87 of 2000, wherein the following questions of law have been raised for this Court's consideration:--

(1) Whether the abatement of Custom Duty sought under section 27 of the Customs Act, 1969 was available to the appellant and whether such abatement of Custom Duty was wrongly denied to the appellant? The appellant craves for an answer in affirmative.

(2) Whether any misdeclaration in respect of description of consignment was made by the appellant so to disentitle the appellant to claim the abatement of Custom Duty under section 27 of the Customs Act, 1969. The appellant craves for an answer in negative.

The facts of the case are that the appellant is importer of day old chicks from abroad. In August, 1998 the appellant imported 7800 day old chicks which arrived at Karachi vide IGM No.D-7741/98, dated 6-8-1998. The appellant then filed two Goods Declarations for their release. The first was filed on 13-8-1998 and the second on 21-8-1998. Along with both the Goods Declarations, the Appellant submitted its claim seeking abatement of customs duty under section 27 of the Customs Act, 1969. On 4860 chicks as these quantities were found dead from the total quantity of checks imported in July, 1998 vide Goods Declarations filed on 1-7-1998 and 16-7-1998.

The matter was adjudicated by Additional Collector of Customs, Quaid-e-Azam International Airport, Karachi and vide his order, dated 31-3-2000 the rejected appellant's claim. Being aggrieved by the said order, the appellant preferred appeal before the Tribunal which too received the same fate. The Appellant has impugned Tribunal's decision in the present appeal.

The reasons which mainly prevailed with the Tribunal were that Appellant was seeking abatement of duties paid for imports of July, 1998 against the imports made in August, 1998 on the ground that 4860 chicks from July, 1998 imports were found dead. It is an admitted position that at the time of seeking clearance of chicks in July, 1998, no request was made of the competent authority in writing for examining the dead chicks nor any survey of the dead chicks by an independent surveyor was sought in order to establish the claim under the provisions of section 27 of the Customs Act. Section 27 of the Customs reads as under:--

(27) Abatement allowed on damaged or deteriorated goods.----(1) If before the examination of any imported goods the owner thereof informs the (Assistant Collector or Deputy Collector) in writing that the value of the goods as declared in the bill of entry has diminished as a result of some damage or deterioration sustained by them before or during unloading at the port of destination, an offer of customs not below the rank of (Assistant Collector or Deputy Collector) may appraise the value of the damaged or deteriorated goods in the manner given in subsection (2) and the owner shall be allowed abatement of duty in proportion to the diminution of value so appraised, whether duty is leviable ad valorem or otherwise.

(2) For the purpose of this section, the value of damaged or deteriorated goods may be ascertained by either of the following methods, at the option the owner:--

(a) Value may be appraised by an officer of custom not below the rank of (Assistant Collector or Deputy Collector) on the basis of physical examination of the goods; or

(b) Such goods may be sold by public auction or by tender or, with the consent of the owner, in any other manner and the gross sale proceeds shall be deemed to be the value such goods inclusive duties.

(3) In the case of short-landing or short-shipment or goods, the appropriate officer may, if satisfied with regard to the bona fide of short-landing or short-shipment of goods, allow reduction in duty proportionate to the goods short-landed or short-shipped on first examination.

From a bare reading of section 27 of the Customs Act it is evident that if before the examination of any imported goods, the owner thereof informs the Customs Authority in writing that the value of the goods as declared has diminished as a result of some damage or deterioration sustained before or during its unloading, the Customs Authority shall appraise the value of the damaged or deteriorated goods and if the claim for damage or deterioration is found to be correct, the owner shall be allowed abatement of the duty in proportion to the diminution of value so determined.

Thus from the provisions of section 27 of customs Act, it is clear that for abatement of duties is to be claimed and processed at the time of import of the very consignment which has been damaged or deteriorated. It is a condition precedent that the importer at the import stage shall inform the Customs Authorities in writing that the damage or deterioration has taken place before or during unloading of the goods at the port of discharge. Such intimation gives an opportunity to the Customs Authorities to appraise the value of damage or deterioration in the manner provided under subsection (2) of section 27 and upon such appraisal if any damage is ascertained then abatement in customs duties is allowed.

In the present case the abatement was sought against the imports of chicks made in August, 1998 for loss sustained to previous consignment of chicks imported in July, 1998. Learned counsel for the Appellant has admitted before us that when the July, 1998 imports were made they were got released upon payment of customs duties and charges without lodging any complaint in writing with regard to dead chicks and the same was lodged for the first time on 13-8-1998 and B thereafter on 21-8-1998 i.e. after more than one month of earlier imports., Thus the appellant failed to take prescribed steps at the appropriate time provided under section 27 of the Customs Act, 1969. In the circumstances the Tribunal rightly held that the provisions of section 27 of the Customs Act were not followed and therefore the claim of the appellant was not legally maintainable. The first question of law is answered in negative. The question No.2, does not arise out of order of the Tribunal and therefore need not be answered.

After hearing learned Advocates for the parties, the appeal was decided by a short order.

These are the detailed reasons in support thereof.

M.H./K/36/KOrder accordingly.