1. Abatement/ Remission/ Demand/ Refund/ Warehousing/ Baggage
By:
A.Saiprasad
B.Com, LLB, ACA, DISA, AMIMA
Advocate

2. Session Outline Remission & Re-Imports Demands of Customs Duty
Normal Period
Extended Period
Interest for delayed payment
Refund of Duty
Warehousing in Customs
Baggage
Exemptions
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3. Remission & Re-Imports
Pilferage – S.13
Meaning ?
Theft of small but costly items
When should the goods get pilfered?
After unloading but before proper officer has made order
for clearance for home consumption or
deposit in a warehouse
What if the pilfered goods are restored to the exporter?
Summary – Any time before clearance
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4. Remission & Re-Imports
Abatement on Damage/ Deterioration– S.22
Damage or Deterioration - any time before or during the unloading of the goods in India; or
Other than warehoused goods damaged at any time after the unloading but before assessment under section 17, on account of any accident
Warehoused goods damaged at any time before clearance for home consumption on account of any accident
What if damage in 2,3, due to any wilful act, negligence or default of the owner, his employee or agent?
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5. Remission & Re-Imports
Abatement on Damage/ Deterioration– S.22
Goods destroyed by fire after order for clearance for home consumption is made but before actual clearance from the bonded warehouse
Mount Shivalik Breweries V. UOI, 2003 (157) ELT 9 (Del.)
Loss due to transit/ evaporation/ storage is permissible?
National Organic Chemical V. CC, 2000 (126) ELT 1072 (T)
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6. Remission & Re-Imports
Loss/ Relinquishment – S.23
Imported goods lost otherwise than as a result of pilferage or
Destroyed,
Any time before clearance for home consumption,
Relinquishment of Title to goods
Any time before clearance for home consumption or
Deposit of goods in a warehouse
Thereupon importer shall not be liable to pay the duty thereon.
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7. Remission & Re-Imports
Vessel Imported
Vessel was damaged
Whether
Pilferage available u/s 13 or
Abatement available u/s 22 or
Remission available u/s 23
All of the above
None of the above
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8. Remission & Re-Imports
Goods cleared under green channel & found short ?
Shortage noticed in factory
CC V. Kennametal Widia, (2007) 213 ELT 353 (T)
Remission on ocean loss?
Exim India Co Ltd V. CC, (2001) 131 ELT 207 (T)
Remission after goods are warehoused?
Whether warehoused goods are goods cleared for home consumption?
Winsome Yarn V. CCE, 2001 (134) ELT 686 (T)
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9. Remission & Re-Imports
Warehoused goods destroyed due to fire?
Goods insured – Whether remission available?
Jindal Vijaynagar Steel Ltd V. CC, (2006) 201 ELT 18 (T)
If Loss is due to leakage, then benefit is available
U/s 13
U/s 22
U/s 23
All of the above
None of the above
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10. Difference b/w S. 13 & 23 Section 13 Section 23 Pilferage
Loss or destruction except pilferage
Liability revives if goods are restored
Unless remitted duty has to be paid
Importer does not have to prove
Burden of proof is on importer
Pilferage before order for clearance is made
Loss or destruction can be at any time before clearance
Loss only due to pilferage
Loss may due to fire, accident etc
Not applicable to warehoused goods
Applicable to warehoused goods since warehoused goods are not cleared for home consumption
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11. Relinquishment of Goods
Importer abandons the goods
Not liable to pay any duty – S.23(2)
Situation
Goods are in a very deteriorated position
Not worthwhile to pay duty
Incur further loss
Assessment done on higher side
Cheaper to abandon goods than pay heavy duty
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12. Relinquishment of Goods
Conditions:
Relinquish title to goods before
Order for clearance of goods for home consumption
Order permitting deposit of goods in warehouse
Can owner claim right of sale proceeds of abondoned goods?
Official Liquidator V. CC, (2009) 238 ELT 711 (Ker.)
Can refund be claimed if title relinquished before ‘out of charge’ order?
Cooper Pharma V. CC, (2009) 243 ELT 199 (T)
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13. Relinquishment of Goods
Can relinquishment be made after warehousing?
Any time before order for home consumption
Pay rent, interest, other charges, penalties
CC V. Garden Silk, 2000 (118) ELT 369 (T)
Hooghly Dock V. CC, 2001 (137) ELT 806 (T)
Can remission be granted to EOU?
Goods imported by EOU deteriorated
Remission admissible u/s 23?
Suryyovonics V. CC, 2003 (156) ELT 391 (T)
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14. Relinquishment of Goods
Haldia Chemicals V. CC, 2004 (172) ELT 411 (T)
A’ee paid duty before examination of goods
On examination, goods different from invoice
A’ee relinquished title, applied for refund
Customs re-exported the goods
Whether refund admissible u/s 27?
Whether draw back admissible u/s 74?
Whether goods cleared for customs?
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15. Computation of Abatement
Abatement granted U/s 22
Value of imported goods Rs.10,000/-
Value of imported goods after damage Rs.2,000/-
Duty payable is 20% of the normal customs duty
Abatement = 80%
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16. Re-import of Goods Goods manufactured or produced in India
Goods imported into India after exportation
Such goods shall be liable to duty and
Subject to all the conditions and restrictions, if any, to which goods of the like kind and value are liable or subject, on the importation thereof
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17. Demands of Custom Duty Duty is: SCN issued u/s 28 demanding
Not levied
Short levied
Erroneously refunded
SCN issued u/s 28 demanding
Duty
Interest
Collusion or Wilful Mis-statement or Suppression
5 years from the relevant date
In case other than above
1 year from the relevant date
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18. Demands of Custom Duty
Once value enhanced and assessment finalised, can value be enhanced by re-adjudicating?
Hitashi Fine Craft Industries V. CC, (2002) 148 ELT 364 (T)
If Bill of Entry has been assessed by the department:
Can it issue show cause notice?
If so within what period?
If not what can the department do?
Conversely, If the assessee is aggrieved by assessment of BOE, what should assessee do?
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19. Relevant Date
Where duty is not levied, interest is not charged, the date on which the proper officer makes an order for the clearance of goods;
Where duty is provisionally assessed u/s 18, the date of adjustment of duty after the final assessment thereof
Where duty or interest has been erroneously refunded, the date of refund;
In any other case, the date of payment of duty or interest.
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20. Time Limit What is the time limit if Act amended retrospectively?
S.11A of Central Excise Act, 1944
S.28 of Customs Act, 1962
S.73 of the Finance Act are pari materia
JK Cotton Spinning & Weaving Mills Ltd. V. UOI, (1988) 68 STC 421 (SC)
What if the SCN for a period greater that 5 years, would the entire SCN be set aside?
UOI V. Maheshwari Wollen Mills, AIR 1993 SCW 483
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21. Show Cause Notice Whether simple letter asking to pay duty is SCN?
Metal Forgings V. UOI, (2003) 146 ELT 241 (SC)
No notice if the A’ee has paid full duty and interest before issue of SCN.
In case of collusion, mis-statement & suppression
No SCN if the duty, interest & 25% penalty paid
Payment within 30 days of issue of SCN
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22. Requirements of Valid SCN
Allegations must be not be vague/ lack details/ un-intelligible/ absent/ un-substantiated but be specific
CCE V. Brindavan Beverages, 2007 (213) ELT 487 (SC)
Eg: SCN proposes to change a classification but does not indicate the tariff classification it wants to adopt
Patel Coating Industries Ltd V. CC, 1993 (67) ELT 605 (T)
Wrong mention of rule and notification?
CCE V. Pradyumna Steel Ltd, (1996) 82 ELT 441 (SC)
Notice must be served on person liable to pay duty
Mere issue of SCN not sufficient
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23. Refund of Duty
Applicability & Validity of Doctrine of Unjust Enrichment
Section 11B of CEA, 1944
Section 27 of Customs Act, 1962
Section 83 of FA, 1994 makes section 11B applicable
Mafatlal Industries Ltd V. UOI, 1997 (89) ELT 247 (SC)
Just & Salutary Doctrine
Presumption of passing of burden valid(S.12B of CEA, 1944 & S.28D of the Customs Act, 1962)
Refund where levy is declared un-constitutional
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24. Refund of Duty Refund of Export Duty U/s 26
Goods are exported on payment of duty
Such duty shall be refunded to the person by whom or on whose behalf it was paid, if –
the goods are returned to such person otherwise than by way of re-sale;
the goods are re-imported within one year from the date of exportation; and
an application for refund of such duty is made before the expiry of six months from the date on which the proper officer makes an order for the clearance of the goods.
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25. Refund of Duty Refund of Import Duty U/s 26A
Goods capable of being identified as imported goods,
Duty paid on clearance of for home consumption,
Duty refunded to the person if —
Goods found defective or otherwise not in conformity with agreed specifications between the importer and the supplier of goods :
Goods identified to the satisfaction of the ACC or DCC as the goods which were imported;
the importer does not claim drawback under any other provision of this Act; and
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26. Refund of Duty Within a period of thirty days from
Goods are exported; or
Importer relinquishes his title to goods and abandons them to customs; or
Goods are destroyed or rendered commercially valueless in the presence of the proper officer,
Within a period of thirty days from
the date of order for the clearance of imported goods for home consumption under section 47 :
Application for refund made before expiry of six months from the relevant date
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27. Refund of Duty Relevant Date means:
Where goods exported out of India, the date on which order permitting clearance and loading of goods for exportation is made.
Where the title to the goods is relinquished, the date of such relinquishment;
Where the goods are destroyed or rendered commercially valueless, the date of such destruction or rendering of goods commercially valueless
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28. Refund of Duty Refund U/s 27
Any person claiming refund of any duty or interest, —
(a) paid by him; or
(b) borne by him,
may make an application in such form and manner as may be prescribed for such refund to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, before the expiry of one year, from the date of payment of such duty or interest :
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29. Refund of Duty What if duty has been paid under protest
Does the time limit of one year apply?
Application to accompany documentary or other evidence establishing that duty paid by him has not been passed on by him to any other person.
Refund of customs duty can be made to the importer/ buyer / exporter only in the following cases:
If importer/ exporter buyer has not passed on the incidence to another person
Imports made by individual for personal use
Refund of export duty u/s 26
Drawback u/s 74 or 75
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30. Refund of Duty Refund if goods short shipped?
Board of Trustees V. UOI, 1993 (68) ELT 39 (Bom)
Appeal should be filed & Refund claim not to be made when adjudication order is issued.
Assessment of BOE is an adjudication order for customs.
Appeal to be filed as aggrieved by assessment of BOE
CCE V. Flock India Pvt Limited, (2000) 120 ELT 285 (SC)
Refund claim contrary to Assmt order maintainable?
Priya Blue Industries V. CC, 2004 (172) ELT 145 (SC)
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31. Warehousing Goods not required immediately
Goods stored in W/h without payment of duty
Defer payment of customs duty
No payment of duty till goods inside W/h
Facility available to traders & direct importers
Assists the importer in planning purchases in advance
Bonded W/h – Mfr & Export
Avoid payment of demmurage & Pilferage
Warehousing pending Import Authorisation
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32. Warehousing Bond Imported goods kept in W/h without payment of duty
Importer to execute bond binding himself to:
Pay on demand – duty, interest
Warehousing rent and charges with interest
Penalty if any
Bond Amount = Twice the amount of duty assessed
Would Bond continue to be valid if:
Goods transferred to another person
Goods removed to other W/h
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33. Types of Warehouses Warehouse – S.2(43) Public W/h Private W/h
Means a Public W/h appointed U/s 57 or
Private W/h licenses U/s 58
Public W/h
Appointed by ACC u/s 57
Private W/h
Licensed by ACC/ DCC u/s 58
License can be cancelled by granting 1 month notice
Bonded W/h
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34. Warehousing Period Capital goods intended for use by 100% EOU – 5 yrs
Other than capital goods for 100% EOU – 3 yrs
Any other goods – 1 yr
From the date of deposit of the goods in a warehouse
Extension of period
CBEC Circular No.47/2002 Cus dt
Interest
EOU – after expiry of 3/ 5yrs
Others – after expiry of 1 yr (though within one yr)
Interest not payable when customs duty not payable
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35. Owner’s Right of goods in W/h
inspect the goods;
separate damaged or deteriorated goods from the rest;
sort the goods or change their containers for the purpose of preservation, sale, export or disposal
deal with the goods to prevent loss or deterioration or damage to the goods;
show the goods for sale; or
take samples of goods without entry for home consumption, and if the proper officer so permits, without payment of duty on such samples
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36. Manufacture in Bonded W/h
Manufacturing or other operations
Carried on inside the W/h
Sanction of ACC
Export of final product after Manufacture in W/h
Provisions applicable to EOU, STP, EHTP, BTP
They have to obtain licensed from the department
Permission for in-bond W/h
Removal of waste or refuse arising during Mfr
When Final product exported
When Final product is cleared to DTA
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37. Clearance from Bonded W/h
Goods manufactured in Customs Bonded W/h
Whether customs duty is liable to be paid?
Whether excise duty is liable to be paid?
Mustan Teherbhai V. CC, (2003) 154 ELT 472 (T)
Clearance from Bonded W/h
For Home Consumption
For Re-exportation
For Removal to another W/h
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38. Clearance from Bonded W/h
Removal for Home Consumption
What rate of duty to be paid?
Rate as on clearance from W/h
Rate as when goods brought into W/h
Section 15(1)(b)
UOI V. Apar Private Limited, (1999) 112 ELT 3 (SC)
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39. Determination of Rate of Duty
Rate of duty for imported goods shall be:
Goods entered for home consumption u/s 46 - date on which bill of entry is presented
Goods cleared from a warehouse u/s 68 - date on which bill of entry for home consumption is presented
Any other goods - date of payment of duty
Kiran Spinning Mills V. CC,(2000) 113 ELT 753 (SC– 3MB)
Taxable event – when goods cross custom barrier and not when goods land in India or enter territorial water
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40. Baggage Means all dutiable goods imported by passenger/ crew
Includes ‘un-accompanied baggage’
Does not include
motor vehicle
alcoholic drinks
goods imported through courier
Articles imported under advance license
Baggage Rules therefore applicable to baggage received separately before or after the passenger
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41. Baggage S.79(1) – Bonafide Baggage exempted from duty
Includes wearing apparel and personal effects
S.79(2) – Baggage Rules, 1998
General Restrictions:
Foreign/ Indian Currency as per RBI restrictions
Narcotic Drugs
Domestic pets – Health certificate
Exotic birds, Endangered species
Articles made out of ivory, musk, reptile skin, fur
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42. Baggage Declaration by owner – S.77 Rate as on the date of declaration
Classification – 9803 – All dutiable articles imported by passenger or a member of crew in his baggage
Baggage exempt from CVD
EC & SHE C is payable
Laptop brought as baggage by person over 18 yrs, fully exempt u/n 11/2004 Cus dt
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43. Baggage
Is duty payable at baggage rate even if goods are leviable at lower rate of duty as per tariff?
Associated Cements Companies Ltd V. CC, (2001) 124 STC 59 (SC – 3 member bench)
Can furniture be treated as personal effects for baggage? – Jayantilal A Shah V. KN Anantharam Aiyar, CIT (1985) 156 ITR 448 (Bom)
Whether jewellery can be treated as personal effect?
CIT V HH Maharani Usha Devi, (1998) 231 ITR 793 (SC)
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44. Baggage Board Circular No.72/98 – Personal Effect Personal jewellery
One camera with film rolls not exceeding twenty
One video camera/camcorder with accessories and with video cassettes not exceeding twelve
One pair of binoculars
One portable colour television (not exceeding 15 cms in size)
One music system including compact disc player
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45. Baggage One portable typewriter One perambulator
One tent and other camping equipment
One computer (laptop/note book)
One electronic diary
One portable wireless receiving set (transistor radio)
Professional equipments, instruments and apparatus of appliances including professional audio / video equipments.
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46. Baggage
Sports equipments such as one fishing outfit, one sporting firearm with fifty cartridges, one non-powdered bicycles, one canoe of ranges less than 51 metres long, one pair of skids, two tennis rackets, one golf set (14 pcs. with a dozen of golf balls.)
One cell phone.
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47. Baggage
Baggage which is exempt from customs duty is listed in Notification No.49/96 Cus dt
General Free Allowance – Rs.25,000/-
Passenger > 10yrs
Can it be clubbed?
In addition to personal effects
Returning other than from Nepal, Bhutan, China, Hong Kong etc.
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48. Open House
Thank You.
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