Customs Act, 1962 Section 70 — Allowance in case of volatile goods
Customs Act, 1962 · Allowance in case of volatile goods
Plain-English Explanation
Overview
Section 70 of the Customs Act, 1962 provides a mechanism for remitting customs duty on warehoused goods that suffer quantity deficiencies due to natural loss. It specifically targets volatile goods stored in warehouses, acknowledging their inherent tendency to evaporate or diminish over time. This is crucial for businesses dealing with such goods to avoid paying duty on quantities they no longer possess due to natural causes.
Who Does This Apply To?
This section primarily affects importers and owners of goods that:
- Are warehoused under the Customs Act, 1962.
- Are classified as volatile goods as specified by the Central Government via notification.
- Experience a natural loss in quantity while stored in a warehouse.
- The Assistant Commissioner of Customs or Deputy Commissioner of Customs who is responsible for assessing the deficiency claim.
How It Works
Here's a breakdown of how Section 70 operates:
- Warehousing: Goods are first deposited in a customs bonded warehouse.
- Natural Loss: While stored, the goods undergo a natural loss in quantity (e.g., evaporation of alcohol).
- Delivery Time: When the goods are to be removed from the warehouse for home consumption or export, the quantity is checked.
- Deficiency Detection: If a deficiency is found, it must be attributable to natural loss.
- Duty Remission: The Assistant Commissioner of Customs or Deputy Commissioner of Customs has the authority to remit the duty on the deficient quantity if they are satisfied that the loss is genuinely natural.
- Government Notification: The applicability of this section is contingent on the Central Government specifying the goods via notification. This notification will take into account volatility and storage methods.
Important Conditions & Exceptions
- Condition 1: The loss must be a natural loss, not due to theft, pilferage, or any other human intervention.
- Condition 2: The goods must be specified as volatile goods by the Central Government through an official notification. The notification typically outlines the specific goods eligible for this allowance.
- Exception: Section 70 does not apply to goods that are intentionally removed or consumed within the warehouse. It only applies to natural losses.
Practical Example
Imagine an importer warehouses 10,000 liters of ethyl alcohol, a volatile good, in a customs bonded warehouse. This alcohol is specifically named in a notification issued by the Central Government under Section 70(2). After six months, when the importer attempts to clear the goods, the quantity is found to be 9,950 liters. The deficiency of 50 liters is attributed to evaporation, a natural loss. The Assistant Commissioner of Customs examines the circumstances and, being satisfied that the loss is indeed natural, remits the customs duty payable on the 50 liters. The importer only pays duty on the 9,950 liters actually being removed from the warehouse.
Key Amendments
No major amendments since enactment.
No case laws found for this provision yet.
Browse all case laws →Frequently Asked Questions
What types of goods are eligible for duty remission under Section 70 of the Customs Act, 1962?
Section 70 applies to warehoused goods specified by the Central Government through notification in the Official Gazette, based on their volatility and storage methods. The notification will list specific goods eligible for duty remission due to natural loss during warehousing. Check the latest notifications issued by the CBIC for a comprehensive list.
How is the 'natural loss' of volatile goods determined for the purpose of duty remission under Section 70?
The 'natural loss' is determined by comparing the quantity of goods warehoused with the quantity found at the time of delivery from the warehouse. The Assistant Commissioner or Deputy Commissioner of Customs assesses this difference and may remit the duty on the deficient quantity, provided it's attributable to natural causes like evaporation or leakage inherent to the goods' nature.
Who is the authority responsible for remitting the duty on deficient volatile goods under Section 70, and what is the process?
The Assistant Commissioner or Deputy Commissioner of Customs is authorized to remit duty on deficient volatile goods under Section 70. The process involves an assessment of the quantity difference upon delivery from the warehouse. The importer or warehouse keeper typically needs to apply for remission and provide supporting documentation to demonstrate that the deficiency is due to natural loss.
Are there any specific storage requirements that must be met to claim duty remission under Section 70 for volatile goods?
While Section 70 doesn't explicitly detail storage requirements, the Central Government considers the 'manner of storage' when specifying eligible goods via notification. Therefore, following industry best practices and guidelines for storing volatile goods is crucial. Failure to adhere to appropriate storage standards may raise concerns about whether the loss was truly 'natural' and jeopardize the duty remission claim.
Is there a time limit within which a claim for duty remission under Section 70 must be filed?
The Customs Act and related regulations do not explicitly specify a time limit for filing a claim under Section 70. However, it is advisable to file the claim as soon as the deficiency is discovered at the time of delivery from the warehouse. Undue delay may raise questions about the genuineness of the claim and complicate the assessment process. Consult customs circulars and notifications for any specific guidelines.
What happens if the deficiency in volatile goods is found to be due to reasons other than 'natural loss'?
If the deficiency is attributed to reasons other than natural loss, such as theft, pilferage, or improper handling, duty remission under Section 70 will not be granted. In such cases, the applicable customs duty must be paid on the deficient quantity. Further investigations may be conducted, and penalties could be levied depending on the circumstances.
How does Section 70 of the Customs Act, 1962 interact with other sections related to warehousing and duty payment?
Section 70 provides a specific allowance for natural loss of volatile goods, supplementing the general provisions related to warehousing under Chapter IX of the Customs Act, 1962. While Section 68 deals with clearance of warehoused goods for home consumption upon payment of duty, Section 70 offers a concession when the warehoused goods, specified under Section 70(2), suffer natural loss. It essentially allows for a reduction in the assessable value upon which duty is calculated.
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Goods must be warehoused | The allowance applies only to goods that have been stored in a warehouse. |
| Natural loss is required | The deficiency in quantity must be due to a natural loss, such as evaporation or inherent vice. |
| Volatile goods qualification | The goods must be specified by the Central Government as volatile and stored in a specified manner. |
| Deficiency found at delivery | The deficiency in quantity must be discovered at the time of delivery from the warehouse. |
| Duty remission on deficiency | The Assistant/Deputy Commissioner of Customs may remit the duty on the quantity of the deficiency. |
| Central Government notification required | The Central Government must specify the applicable goods via Official Gazette notification. |
Amendment History
Substituted (w.e.f. 11-5-1999) by section 100 of the Finance Act, 1999 (27 of 1999),for"Assistant Commissioner of Customs". Earlier the words"Assistant Commissioner of Customs" were substituted (w.e.f. 26-5-1995) by section 50 of the Act 22 of 1995, for the words"Assistant Collector of Customs".