Customs Tribunal Partially Allows Appeal in Ajanta Soya's Fire Accident Case

Tribunal Upholds Duty on Lost Goods, Sets Aside Penalties Due to Lack of Evidence of Misstatement or Suppression

In a significant judgment delivered by the Customs, Excise, and Service Tax Appellate Tribunal, New Delhi, the appeal filed by M/s Ajanta Soya Limited was partially allowed concerning the customs duty and penalties imposed on imported Crude Palm Oil lost in a fire accident. The Tribunal, presided by Justice Dilip Gupta and Mr. P.V. Subba Rao, upheld the demand for customs duty on the lost goods but set aside the penalties citing lack of evidence of willful misstatement or suppression.

The case arose when a fire accident occurred at Ajanta Soya's factory in May 2017, leading to the destruction of a significant quantity of Crude Palm Oil. The company had imported the oil under an exemption notification that required it to be used in manufacturing specified products like refined oil and vanaspati. However, due to the accident, the oil was not utilized for its intended purpose, prompting the Commissioner of Customs (Preventive), Jodhpur, to impose duties and penalties.

The Tribunal examined the evidence, including the insurance surveyor's report which assessed the total loss at 230.77 metric tons, and found that the imposition of penalties under Sections 114A, 114AA, and 117 of the Customs Act, 1962, was unjustified. The judgment noted that there was no evidence of collusion or willful suppression by Ajanta Soya, and the discrepancies in reported losses were attributed to accounting errors rather than deceitful practices.

Despite setting aside the penalties, the Tribunal maintained that the company was liable to pay customs duty on the lost goods, amounting to Rs. 1,05,18,265, along with applicable interest under Section 28AA of the Customs Act. The decision acknowledged the exemption conditions were not met due to the fire, necessitating the duty payment.

The case highlights the complexities of customs regulations, especially in scenarios involving accidental loss of goods. The Tribunal's decision underscores the importance of clear evidence in imposing penalties under the Customs Act, ensuring that penalties are not levied without substantive proof of misconduct.

Ajanta Soya's counsel expressed relief over the partial allowance of the appeal but reiterated their stance on the unintentional nature of the errors in reporting the lost quantity. The judgment has provided clarity on the applicability of penalties in cases of accidental loss, setting a precedent for future cases of similar nature.

Bottom Line:

Customs duty on imported goods lost in fire accident must be paid; however, penalties under Sections 114A, 114AA, and 117 of the Customs Act, 1962, not justified due to lack of evidence of willful misstatement or suppression of facts.

Statutory provision(s): Customs Act, 1962 Sections 28A, 114A, 114AA, 117

M/s Ajanta Soya Limited v. Commissioner of Customs, (Preventive), Jodhpur, (CESTAT)(New Delhi)(Principal Bench) : Law Finder Doc Id # 2805297