Allowance in respect of volatile goods [Section 70]:
Among the goods traditionally imported and warehoused are the following:
(1) Petroleum products
(2) Liquor and
(3) Ethylene dichloride and liquid helium.
Petroleum products like aviation turbine fuel, superior kerosene; high speed diesel oil, light diesel oil, motor spirit, vapourising stored in tanks, subjected to atmospheric pressure had a tendency to evaporate during long period of storage. Similarly, liquor like brandy and whisky were imported under over proof conditions, in wooden casks stored in bonded warehouses, were volatile in nature and there was considerable evaporation loss during storage. Even articles like wine, beer, suffered evaporation losses during storage. Among the lower order mineral products raw naptha, furnace oil and batching oil also were prone to evaporation. As such there was invariably difference between the bonded quantity and the quantity at the time of removal from the warehouse. This loss was due to natural causes and neither the importer nor the warehouse keeper can be found fault with. On the same grounds neither the importer nor the warehouse keeper could be called upon to bear the duty burden of this loss. This position has been recognised and placed on a legal footing under section 70 of the Customs Act. Section 70 provides that
(i) When any warehoused goods to which this section applies, are at the time of delivery from a warehouse found to be deficient in quantity on account of natural loss, the Assistant Commissioner of Customs or Deputy Commissioner of Customs may remit the duty on such deficiency.
(ii) This section applies to such warehoused goods the Central Government, having regard to the volatility of the goods and the manner of their storage, may be notification in the Official Gazette specify.
Essential ingredients of section 70(1):
(i) The goods should be warehoused goods;
(ii) The provisions of this section should apply to such goods by virtue of a notification under sub-section (2);
(iii) The goods should be found deficient in quantity at the time of removal;
(iv) The deficiency should be on account of natural loss;
(v) The import duty leviable on such deficiency may be remitted;
(vi) The Assistant Commissioner and the Deputy Commissioner are empowered to grant the remission.
The essential ingredients of section 70(2) are:
(a) The power to specify vests with the Central Government.
(b) Volatility and manner of storage will be the relevant factors;
(c) An official notification will have to be issued for this purpose;
(d) The remission under section 70(1) applies only to such specified warehoused goods.
Notification under section 70(2): Under MF(DR) Notification No.122/63-Cus dt.11.5.1963 as amended subsequently the following goods have been specified as goods to which the provisions of section 70 apply when they are deposited in a warehouse, namely:
| Aviation fuel | motor spirit | mineral turpentine |
| acetone | menthol | raw naptha |
| vaporising oil | kerosene | high speed diesel oil |
| batching oil | diesel oil | furnace oil |
and Ethylene Dichloride kept in tanks and Liquid helium gas kept in containers; and wine, spirit and beer, kept in casks.
Remission under section 23 and section 70 – A Distinction: Section 23 is a general provision applicable to cases where goods are lost before clearance for home consumption is made. Whereas, section 70 provides for remission of duty in respect of los s during warehousing of only the goods notified by the Central Government under that section. Therefore, granting remission for loss during transit between two warehouses does not render section 70 redundant. This view was taken by the Tribunal in the case of Indian Oil Corporation v. Commissioner of Customs 1985 (21) ELT 881 (Tri.- LB)