Relief to ONGC: CESTAT allows Customs Duty Remission as Fire incident was an Accident That was Beyond the Control of the Assessee [Read Order]

The Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has allowed the customs duty remission on the goods that were lost on fire where the fire incident was an accident that was beyond the control of ONGC Petro.

ONGC Petro Additions, the appellant challenged the impugned order-in-original whereby the Adjudicating Authority namely the Commissioner has rejected the application for remission of duty in respect of imported raw material destroyed in fire, in the appellant’s SEZ unit.

The Commissioner while rejecting the application stated that the Customs provision of Section 23 in respect of remission of  Customs duty does not apply to the SEZ unit, as the SEZ unit is governed by the SEZ Act, which overrides all other Acts.  Further mentioned that the appellant have not taken proper precautions to avoid the fire incident.

Shri. Sujit Ghose, Counsel with Shri. Shubh Dixit, and Shri. Ajinkya Tiwari,  Advocates appeared on behalf of the appellant submitted that Section 23 of the Customs Act, is applicable in the present case for the reason that as regards the overriding effect of the SEZ Act, it only applies to the provision of other Acts, which is not inconsistent with the provision of other Act. In the present case, the appellant has sought the remission of Customs Duty. As regards the levy of Customs Duty the Customs Act is applicable. Therefore, for remission of duty provision for remission provided under Section 23 shall apply. Which is not inconsistence with the provision of the SEZ Act. 

It was argued that the fire incidenthad taken place all of a sudden and beyond the control of the insured. Therefore, the thorough survey conducted for insurance established that there was no carelessness or any negligence on the part of the appellant, due to which the fire incident could not be avoided. 

It was evident from reports that there was no negligence on the part of the appellant as the fire broke out suddenly beyond the control of the appellant. Therefore, the allegation that the appellant has not taken the proper precautions to avoid a fire incident is baseless and imaginary. Moreover, it is the appellant who has to be most careful about their goods as it is not only the duty but the huge stake inthe value of the goods involved. Therefore, it cannot be imagined that the appellant was careless due to which fire incidenttook place

The two-member bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) viewed that once after carrying out a thorough inspection and survey, the insurance company has satisfactorily granted the insurance claim that itself is evidence to establish that the fire incident was beyond the control of the appellant. Therefore, the ground that the appellant was negligent in the matter of the fire incident cannot be accepted.

Further observed that the grant of remission in respect of customs duty in terms of Section 23 does not contradict any of the provisions of the SEZ Act. Therefore, the contention of the Adjudicating Authority about non-applicability of Section 23 of the Customs Act, is not sustainable.

The CESTAT set aside the impugned order and allowed the appeal with consequential relief.   

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates