Law: Customs Rules, 2001

Section: 307A(1),307-A(2)(d)

Law: Land Customs Act, (IV of 1969)

Section: 196(8)

Law: Limitation Act, 1908

Section: 5

SUMMARY;Duty and Tax Remission (DTRE) – Destruction of Unaccounted GoodsPOINTS. • The Customs Department filed a Reference against an order of the Customs Appellate Tribunal concerning unaccounted-for un-exported goods under SRO 450(I)/2001 and Rule 307-A(2)(d) of the Customs Rules, 2001.• The Department's stance was that the Textile Mill/Factory (respondent) failed to report a fire incident in time, and thus was not entitled to duty and tax remission.• The respondent countered that the fire incident was undisputed, the insurance claim was settled in its favor, and hence, it was entitled to duty and tax remission.DECICION;• The incident of fire was an admitted fact, and the Tribunal rightly observed that once goods are destroyed by fire, the benefit of Rule 307A(2)(d) must be granted.• SRO 450(I)/2001 requires accounting for all goods benefiting from DTRE. However, Rule 307-A(2)(d) allows destruction of such goods with the approval of the Regulatory Collector if they are unfit for sale or consumption.• Since the goods were completely destroyed in the fire and were not fit for consumption, the Regulatory Authority should have exercised discretion to grant duty and tax remission.• The Tribunal’s decision was upheld, as the authorities failed to provide valid reasons for denying the remission.• The Reference Application by the Department was dismissed, and the decision was in favor of the Textile Mill/Factory. ORDER:MUHAMMAD JUNAID GHAFFAR, JUSTICE:---.---Through this Reference Application the Applicant Department has impugned order dated 09.11.2015 passed by the Customs Appellate Tribunal in Customs Appeal No. K-l 173/2020 and had though proposed various Questions of Law; however, on 21.09.2020 notice was issued only on Question No. 1 which reads as under“1) Whether on the facts and circumstances of the case, the Customs Appellate Tribunal has erred in law to ignore the explicit provisions of rule 307A(1) of SRO 450(I)/2001 dated 18.06.2001 which have exclusive relevance to the recovery of Customs Duty and Taxes exempted due to the fact that the Respondent failed to give proper account of 526,733 kg of imported PSF claimed to have been burnt in the wake…

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