By TIOL News Service

MUMBAI, OCT 30, 2013: THE respondent imported machinery and paid duty as per the value assessed.Subsequently during examination, the goods were found to be in damaged condition.Therefore, the respondent filed a refund claim of the duty paid by them u/s 27 & 22 of the Customs Act, 1962.However, since damage could not be ascertained, no refund was granted.

Subsequently, the damaged goods were sent to Germany for repair and re-import on payment of duty on the value of repair charges plus to and fro freight charges and the appellant filed a refund claim for the duty paid second time on the repair and freight charges.This appeal was allowed by the lower appellate authority on the ground that since the duty has been paid twice on the same goods and the extent of damage is repair charges and freight charges, the original assessment for the damaged goods should have been on these charges and, therefore, the appellant is rightly eligible for the refund of the duty paid second time.

Revenue is aggrieved by this order and is before the CESTAT.

It is submitted that section 22(3) of the Customs Act, 1962 provides the method of ascertaining value of damaged/deteriorated goods and the methods prescribed are - value of such goods shall be determined by the proper officer, or if such goods are sold in public auction or by tender, or with the consent of the owner in any other manner, the gross sale proceeds shall be deemed to be the value of such goods.Inasmuch as if the value could not be ascertained by either of these methods, the question of allowing any abatement towards damage would not arise and hence the order of the Commissioner(A) is not sustainable in law.

The Bench referred to the provisions of section 22 of the Customs Act, 1962 and noted that since the second option (such goods may be sold by the proper officer by public auction or by tender, or with the consent of the owner) was not followed by the department, the only option available is ascertainment of value by the proper officer, which too was not done.

It was further observed -

"6.… Subsequently the goods were exported by the appellant for repairs abroad and brought back and the lower appellate authority held that the repair charges +cost of transportation to and fro including insurance can be considered as extent of damage and accordingly, he allowed the refund of the duty paid on the repair charges + freight charges.The ascertainment of damage has been done after the repairs were undertaken as equal to the cost of repair charges.Therefore, there is nothing wrong or unreasonable in the findings of the lower appellate authority.So long as Revenue has received the duty on the full value without any abatement towards damage, the Revenue cannot have any cause for grievance…."

Holding that there was no merit in the Revenue appeal, the same was dismissed.

(See 2013-TIOL-1614-CESTAT-MUM)