KARACHI:- The Customs appellate tribunal, bench I, Karachi allowed an appeal filed by Island Textile Mills challenging an order of Collector of Customs (Appeals) which rejected plea of the importer to remit the customs duty and other taxes amounting to rupees 2,736,258 as imported goods were burnt in arson and riots after assassination of Mohtarama Benazir Bhutto on 27-12-2007.
According to details the appellant mills imported a consignment of Polyester Staple Fiber weighing 621,741 Kilograms for manufacture and export of CVC Yarn of various counts under Duty Tax Remission on Exports (DTRE) regime in Nov 2007, they were supposed to show consumption and export of the finished product within 24 months of the date of approval. The consignment was stored at the mills premises in Rawalpindi when a mob broke into and torched the factory on 28-12-2007, next day of assassination of Mohtarama Benazir Bhutto. The factory administration called the police and fire brigade which controlled the blaze. The importer/appellant immediately informed the insurance company as well as authorities in Pakistan Customs and FBR about the loss of the imported goods. A claim was also lodged with the insurance company which paid a sum of rupees 90 million to the insurer/mills.
The appellant then moved the custom authorities for remission of suspended customs duty and taxes but the custom authorities continue to raise demand and later issued show cause notice to them at which they filed appeals. One such appeal was remanded to the Collector Customs-Appeals who after hearing the appellant and respondent department rejected the plea on ground that for remission of customs on burnt or destroyed goods in the wake of arson or riots, the damages goods shall be physically present and available for inspection and therefore section 27 and 115 of the Customs Act along with rule 307-A (d) of Custom Rules 2001 are not attracted. The Collector Customs also noted that appellant has received compensation from the insurance company to the tune of 90 million and custom duty demanded by the department is only 3 per cent of the compensation amount.
The appellant filed the instant appeal before Customs appellate tribunal under section 194-A of the Customs Act 1969 which allowed the appeal through order dated 09-11-2015 holding that extent of damage and circumstances in which the imported goods were damaged were never questioned by the Regulatory Collectorate. The respondent department also failed to establish that DTRE user had any intention of not exporting the finished goods made out of the imported goods therefore denial of remission of duty and taxes is illogical and harsh. The tribunal allowing the appeal held that appellant is entitled to remission of duty and taxes.