AI Structured Summary
Not yet generated for this judgment
Judgment
BY this order, we propose to dispose of the above noted consumer complaints involving similar question of law and facts.
BRIEFLY stated facts relevant for the disposal of the above complaints are that both the complainant companies placed orders for import of 2000 matric tones each of Brazalian White Crystal Sugar with M/s Susden of Paris. Vendor M/s Susden of Paris shipped the same in 40,000 bags consignment respectively for each of the complainant per M V Alex from Paranagua (Brazil) to Calcutta or Haldia at buyer''s option under the bill of lading no.2 each dated 06.10.1999 in apparent good condition. Invoices were also issued on 06.10.1999.
THE sugar was imported on CIF basis and the supplier had insured the same against the risk of loss or damage with Llyods of London under certificate of insurance No.C 16864/100358. This insurance did not provide cover in respect of custom duty. The ship was expected to arrive at Calcutta Port on 04.02.2000. Respective complainants approached the opposite party / insurance company and obtained insurance cover in respect of custom duty on payment of premium of Rs.22,478/ - for insured sum of Rs.88,00,000/ - representing estimated amount of custom duty payable at the respective consignments. Opposite party issued cover note on 02.02.2000 but failed to supply to the complainants their respective insurance policies.
THAT the complainant through their clearing agent submitted the Bills of Entries under prior entry system on 03.02.2000 and after verification by the custom authorities paid Rs.88,66,556/ - as custom duty on 11.02.2000.
IT is the case of the respective complainants that on discharge of the goods from the ship, it was noticed that the part of their respective consignments were damaged because of the sugar bags coming in contact with water during ocean transit.
THAT on claims being lodged, M/s Seascan Services (W.B) P.Ltd., Kolkata were deputed on behalf of the foreign insurers for inspection and assessment of loss. The said surveyors on investigation found certain number of bags short delivered and some of the bags was found burst and torn and water damaged. According to the surveyor, the damage to the cargo was caused as the bags came in contact with water during transit.
THAT the complainants submitted their bill in respect of damage caused to M/s Tata Marine Agencies, the agents of foreign insurers in India and the said claims have been settled by the foreign insurer.
THAT the respondent insurer, however, repudiated the claim of the respective complainants for loss of custom duty vide their repudiation letter dated 29.08.2002 on the plea that the complainants had practiced fraud on the insurance company and they had obtained the insurance for custom duty cover on 02.02.2000 after coming to know about the loss caused to the consignment somewhere during 31.10.1999 to 03.11.1999.
BEING aggrieved of repudiation of their respective claims, the complainants preferred the consumer complaints alleging deficiency in service on the part of the opposite party.
THE opposite party resisted the complaints. A preliminary objection was taken that National Commission does not have pecuniary jurisdiction to entertain the complaints because the value of the relied claimed was much less than its pecuniary jurisdiction. On merits, opposite party justified the repudiation on the ground that the insurance contracts itself was invalid because those were obtained by the complainants by concealing material facts that the ship had encountered rough weather during sea passage between 31.10.1999 to 03.11.1999 and as a consequence the bilge sounding pipe for no.4 hold was broken and the water found its way to the hole and caused damage to the consignment. According to the opposite party at the time taking insurance cover for custom duty, the complainants were aware of the damage to the sugar which material fact was not disclosed and, therefore, the insurance contracts are invalid. The opposite party also pleaded that the complainants are not the consumers as defined under section 2 (1) (d) of the Consumer Protection Act, 1986 because the services of the insurance company were availed by the complainants for commercial purpose.
WE have heard the counsel for the parties and perused the record.
THE opposite party in their written statements to the respective complaints have taken a preliminary objection that the consumer complaints filed by the respective complainants are not within the pecuniary jurisdiction of the National Commission in view of section 21 (a) (i) of the Consumer Protection Act, 1986 which provides that National Commission has jurisdiction to entertain the complaints where the value of the goods and services and compensation, if any, exceeds Rs.1.00 crore. This contention in our view is misconceived for the reason that earlier the pecuniary jurisdiction of the National Commission to entertain original complaint was Rs.20.00 lacs and the jurisdiction was enhanced to Rs.1.00 crore by Act 62 of 2002 which came into operation w.e.f. 15.03.2003. The subject complaints as per record were filed prior to the enhancement of pecuniary jurisdiction on 04.02.2003. Therefore, the complaints are to be governed by the previous provision and as such, the complaints being more than Rs.20.00 lacs, the National Commission has jurisdiction to entertain the complaint. The preliminary objection is, therefore, rejected.
COMING to the merits of the case. It is not disputed that the complainants had taken insurance cover in respect of custom duty loss from the opposite party / insurance company. The claim of the complainants are based upon custom duty loss because of the damage caused to the sugar as a result of coming into contact with water which was noticed only after the payment of custom duty at the time of discharge of the goods from the ship. In order to succeed in their claims, the complainants are required to establish that they had actually suffered the loss of custom duty. Thus, the question for determination is whether the complainants had suffered any loss of custom duty?
IN order to find answer to this question, it would be useful to have a look on some relevant provisions of Customs Act, 1962.
SECTION 18 of the Customs Act, 1962 deals with Provisional Assessment of duty and it reads as under : "18. Provisional assessment of duty. (1) Notwithstanding anything contained in this Act but without prejudice to the provisions contained in section 4 (a) where the proper officer is satisfied that an importer or exporter is unable to produce any document or furnish any information necessary for the assessment of duty on the imported goods or the export goods, as the case may be; or (b) where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test for the purpose of assessment of duty thereon; or (c) where the importer or the exporter has produced all the necessary documents and furnished full information for the assessment of duty but the proper officer deems it necessary to make further enquiry for assessing the duty, the proper officer may direct that the duty leviable on such goods may, pending the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally if the importer or the exporter as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty finally assessed and the duty provisionally assessed.
When the duty leviable on such goods is assessed finally in accordance with the provisions of this Act, then (a) in the case of goods cleared for home consumption or exportation, the amount paid shall be adjusted against the duty finally assessed and if the amount so paid falls short of, or is in excess of, 1[the duty finally assessed], the importer or the exporter of the goods shall pay the deficiency or be entitled to a refund, as the case may be;
(b) in the case of warehoused goods, the proper officer may, where the duty finally assessed is in excess of the duty provisionally assessed, require the importer to execute a bond, binding himself in a sum equal to twice the amount of the excess duty."
ON reading of the above, it is clear that Section 18 confers powers on the proper officer appointed under Customs Act to make provisional assessment of duty where the imported or exporter is unable to produce any document or furnish information necessary for assessment of duty or where the importer or exporter has produced all the necessary documents and furnish full information but the proper officer deems it necessary to make further inquiry for assessing the duty.
CLAUSE (2) of Section 18 of the Customs Act, 1962 provides that provisional assessment of duty under clause (1) shall be followed by final assessment in accordance with the provisions of the Act and in case the two assessment do not tally, the importer or exporter either shall have to pay the deficiency or he shall be entitled to the refund of the excess duty paid.
SECTION 22 of the Customs Act, 1962 deals with abatement of duty on damaged or deteriorated goods and it reads as under: "22. Abatement of duty on damaged or deteriorated goods. (1) Where it is shown to the satisfaction of the 1[Assistant Commissioner of Customs or Deputy Commissioner of Customs] (a) that any imported goods had been damaged or had deteriorated at any time before or during the unloading of the goods in India; or (b) that any imported goods, other than warehoused goods, had been damaged at any time after the unloading thereof in India but before their examination under section 17, on account of any accident not due to any wilful act, negligence or default of the importer, his employee or agent; or (c) that any warehoused goods had been damaged at any time before clearance for home consumption on account of any accident not due to any wilful act, negligence or default of the owner, his employee or agent, such goods shall be chargeable to duty in accordance with the provisions of sub -section (2).
(2) The duty to be charged on the goods referred to in sub -section (1) shall bear the same proportion to the duty chargeable on the goods before the damage or deterioration which the value of the damaged or deteriorated goods bears to the value of the goods before the damage or deterioration. (3) For the purposes of this section, the value of damaged or deteriorated goods may be ascertained by either of the following methods at the option of the owner: (a) the value of such goods may be ascertained by the proper officer, or (b) such goods may be sold by the proper officer by public auction or by tender, or with the consent of the owner in any other manner, and the gross sale proceeds shall be deemed to be the value of such goods."
ON reading of section 22 clause 1 (a) read with clause (2), it is clear that whenever it is shown to the satisfaction of the concerned authority of customs that any imported goods had been damaged or had deteriorated at any time before or during the unloading of goods in India, the duty charged shall be proportionate to the duty chargeable on the goods before damage or deterioration, taking into account the value of the damaged or deteriorated goods.
IT is the case of the complainants that damage to the sugar bags due to coming into contact with the water was noticed at the time of unloading of sugar bags from the ship. If this is true, then the complainants could easily have sought abatement of custom duty under section 22 of the Customs Act by bring the damage caused to the sugar to the notice of the custom authorities. The complaints are silent on the aspect whether or not the complainants after noticing alleged damage to the sugar consignment applied for abatement of custom duty on account of the damage to the imported goods noticed at the time of unloading and if so, whether said plea of the complainants were taken into account by the custom officer while doing final assessment of the import duty chargeable on the consignment? The complainants have failed to place on record the final assessment of duty done by the custom authorities in furtherance of the provisional assessment done under section 18 (1) of the Customs Act. Final assessment orders if produced would have given the clue whether or not the sugar consignments imported by the complainants were damaged and if so, whether or not the complainants at the time of final assessment took benefit of abatement of duty in terms of Section 22 of the Customs Act by bringing the damaged goods to the consignment because of seepage of water. Thus, we are of the view that complainants have not approached the Commission with clean hands and they have deliberately withheld the best evidence i.e. final custom duty assessment order as envisaged under section 18 (2) of the Customs Act. As the complainants have failed to produce the best evidence, we are inclined to draw an adverse inference against them that had they produced the final assessment order, it would have gone against them. Thus, we conclude that the complainants have failed to establish that they actually suffered any custom duty loss. Thus, the insurance company / opposite party cannot be held deficient in service.
IN view of the discussion above, we are of the opinion that the complainants have miserably failed to establish their claim. Repudiation of the insurance claims by the respondent is justified. The complaints are, therefore, dismissed.