Duty and Tax Remission on Exports: Taxpayer avails duty & taxes applicable on damaged goods

LAHORE: A taxpayer has succeeded in availing duty and taxes applicable on damaged goods under Duty and Tax Remission on Exports (DTRE).

According to details, the taxpayer had failed to report the incident of fire in his factory within due time, leading to damaging of goods.

However, the department refused any such facility to the taxpayer on the pretext that he had failed to report the fire incident within time, therefore, he was not entitled to the benefits of duty and tax remission.

The taxpayer, on the other hand, contended that the incident of fire and damage to the factory was an admitted fact, whereas, the insurance claim was also settled in his favour, therefore, he was entitled to duty and taxes applicable on the damaged goods.

The relevant appellate forum maintained that the incident of fire on the relevant date was not disputed, and the tribunal had observed that once it had come on record that the goods were destroyed due to fire, then benefit of the relevant rule ought to have been granted the facility of duty and tax remission on Exports (DTRE) has to account for all of such goods on which such benefit has been granted, whereas, under the relevant rule the unaccounted goods are dealt with and it further deals with the permission of the regulatory collector for disposal of such goods within the prescribed utilization period and permits destruction of such goods after approval of the regulatory collector if such goods are not fit for consumption or sale.

Goods in question were, admittedly, never fit for consumption, once they were destroyed in the fire. Regulatory authority ought to have exercised the discretion conferred upon under the relevant rule, as the law permits remission of duty and taxes.

Whereas, the present case was of an exceptional nature where an incident happened and the factory including various other factories were destroyed in riots.

Therefore, the order passed by the tribunal was correct in law and no cogent reasons had been assigned by the authority below for refusing such discretion. Reference application filed by the department was dismissed.

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