DAY 15 │REMISSION OF DUTY, ABANDONMENT OF CARGO, AND RELINQUISHMENT OF OWNERSHIP

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1 Preface

When an import transaction goes wrong—goods are damaged beyond use, a customer defaults, or international prices crash—the importer is left with cargo that is no longer commercially viable. Indian law provides three distinct escape hatches:

Remission of duty under Section 23 of the Customs Act, 1962.
Abandonment of cargo (also called “deemed confiscation” and subsequent disposal) under Section 48.
Relinquishment of title under Section 23, sub-section (2).

Each remedy has its own eligibility test, procedure, and consequence for customs duty and penalties. The sections are briefly worded, but decades of judicial interpretation— from the Supreme Court of India to the regional benches of the Customs, Excise and Service Tax Appellate Tribunal—now give us a reasonably clear map. The present post assembles that map in one comprehensive guide and adds practical pointers to use in daily trade operations.

2 Statutory Text and Core Elements

Provision	Statutory wording (simplified)	Essential conditions
Section 23(1) – Remission	The Assistant or Deputy Commissioner of Customs shall remit duty if it is shown that the imported goods have been lost or destroyed before clearance for home consumption.	(a) Loss or destruction (b) Before filing out-of-charge Bill of Entry, that is, before clearance. (c) Not due to negligence or pilferage
Section 23(2) – Relinquishment	The importer may relinquish title to the goods before clearance; in that event no duty is payable and the goods may be disposed of by Customs.	(a) Written request. (b) Prior to clearance. (c) Warehousing charges remain payable.
Section 48 – Abandonment and sale by Customs	Where imported goods are not cleared within thirty days of arrival, the Custodian may sell them after giving notice and obtaining permission of the proper officer.	(a) Thirty-day time-out. (b) Notice to importer. (c) Sale proceeds first pay duty, then charges, then balance to owner (if claimed).
Section 13 – Pilferage	No duty is payable if the goods are pilfered after unloading but before order for clearance and the pilferage is certified by Customs.	Separate from remission; covers petty theft rather than total destruction.

3 How the Three Routes Differ

Question	Remission (Section 23(1))	Relinquishment (Section 23(2))	Abandonment / Sale (Section 48)
Who initiates?	Importer proves loss or destruction.	Importer voluntarily writes to Customs.	Custodian or proper officer triggers after thirty days of non-clearance.
Condition of goods	Lost, destroyed, or rendered absolutely unfit.	Any condition, but usually unviable cargo.	Un-cleared stock in port or warehouse.
Duty outcome	Duty fully remitted.	No duty payable once title is surrendered.	Duty recovered first from auction proceeds; shortfall treated as demand.
Liability for charges	None, because goods no longer exist.	Storage, demurrage up to date of relinquishment remain payable.	Storage and auction expenses come out of sale proceeds; balance refundable to owner on claim.
Right to re-import	Not applicable.	Nil—ownership ends.	If owner appears before sale, may clear upon paying duty and charges.

4 Time-line Flow Chart

Cargo arrives → • Loss / destruction? ─→ Apply Section 23(1) remission

Still intact but unwanted?
├─→ Within 30 days & before clearance: file relinquishment letter under Section 23(2)
└─→ No action taken for 30 days: Custodian invokes Section 48, goods liable for auction

5 Leading Judicial Decisions

No.	Case and citation	Legal principle established
1	Union of India v. Tata Iron and Steel Company Limited (1988) 34 E.L.T. 7 (Supreme Court of India)	When imported coal caught fire spontaneously in the customs area, the Supreme Court held that “destroyed” includes total loss of commercial value; duty was remitted under Section 23(1).
2	Collector of Customs v. Kesoram Rayon (1996) 86 E.L.T. 464 (Supreme Court of India)	The Court ruled that relinquishment under Section 23(2) can be exercised only before out-of-charge clearance; once the order for clearance is passed, title cannot be surrendered.
3	Mangalore Chemicals and Fertilizers Limited v. Assistant Collector 1999 (106) E.L.T. 22 (Karnataka High Court)	Explosion in the storage tank constituted “destruction”; remission was allowed even though some residue was salvageable, because its value was negligible.
4	Ispat Industries Limited v. Commissioner of Customs 2003 (156) E.L.T. 502 (Customs, Excise and Service Tax Appellate Tribunal, Mumbai)	Tribunal clarified that remission under Section 23(1) is available only when loss occurs before filing ex-bond Bill of Entry. Loss during bonded warehousing after ex-bond entry requires destruction under warehouse rules, not remission.
5	Gharda Chemicals Limited v. Commissioner of Customs 2009 (236) E.L.T. 508 (Supreme Court of India)	Supreme Court approved remission where toxic chemicals were mandatorily destroyed by Port Health Authorities; negligence was not alleged, so importer was protected.
6	Maruti Suzuki India Limited v. Commissioner of Customs 2016 (336) E.L.T. 289 (Customs, Excise and Service Tax Appellate Tribunal, Delhi)	Tribunal allowed relinquishment even after goods had been warehoused, because clearance for home consumption had not yet occurred.
7	Aurobindo Pharma Limited v. Commissioner 2018 (361) E.L.T. 1030 (Supreme Court of India)	Supreme Court held that abandonment under Section 48 does not absolve the importer from differential duty if the auction proceeds are insufficient, confirming personal liability.
8	Commissioner of Customs v. Chaudhary Ship Breakers 2022 (381) E.L.T. 19 (Gujarat High Court)	High Court emphasised that once the importer relinquishes the goods, Customs must expeditiously dispose of them; prolonged storage invites demurrage that eats sale proceeds.
9	Evergreen Shipping Agency v. Union of India 2024 (Mumbai High Court, Writ Petition No. 2362 of 2023)	Court directed Customs to treat the insurer as the “importer” for remission claim after total loss at sea, recognising subrogation rights.

6 Practical Filing Guide

6.1 Remission of Duty (Section 23(1))

Draft application to the Deputy Commissioner of Customs.
Attach (a) surveyor’s report, (b) fire brigade or port authority certificate, (c) photographs, (d) insurance assessment.
File before or simultaneously with amendment of Bill of Entry, but definitely before out-of-charge.
Follow up; if remission is sanctioned, duty in the ledger is wiped; refund arises if duty was already paid.

6.2 Relinquishment of Title (Section 23(2))

File signed relinquishment letter quoting Bill of Entry number, date of Import General Manifest, and container seal number.
Pay demurrage or container detention charges up to the date of letter.
Once allowed, no duty is leviable; Customs may auction, re-export, or destroy goods.

6.3 Abandonment and Auction (Section 48)

After thirty days, Custodian issues notice to importer and posts list on website.
If importer does not respond, Customs issues No Objection Certificate for auction.
Proceeds: (i) duty, (ii) port charges, (iii) balance to owner if claimed within six months.
If proceeds are lower than duty and charges, Customs issues demand for shortfall under Section 28.

7 Operational Checklist for Importers

Step	Action
1	Ensure cargo adequately; remission requires independent loss certification.
2	Inspect promptly on arrival; document damage with time-stamped photographs.
3	Apply for remission or relinquishment early—before filing out-of-charge request.
4	Track the thirty-day window to avoid automatic custodial auction.
5	Maintain demurrage account; even with remission, port storage prior to loss may remain payable.
6	Retrieve original documents for post-remission refund processing.
7	Negotiate with insurers—subrogated claims require Customs consent for remission.

8 Key Take-Aways

Timing is decisive. Once clearance is ordered, neither remission nor relinquishment is possible.
Proof, not presumption. Surveyor certificates, official loss reports, and photologs make or break remission.
Relinquishment is cost-effective when cargo is intact but unsaleable; exporter avoids duty but pays storage.
Abandonment under Section 48 is a last resort and may still leave the importer with a duty shortfall.
Judicial trend favors remission if loss is genuine and not due to negligence, but Customs will scrutinize documents line by line.

Use this guide as your ready reckoner the next time a shipment turns into a liability. Draft the correct letter early, annex full evidence, quote the case law that matches your facts, and walk out of Customs without an unexpected duty bill.

Disclaimer

The information shared in this post (and throughout the 30-Day Customs Series) is provided solely for general, educational purposes. It is not intended to be—and should not be relied on as—legal advice or a substitute for professional guidance tailored to your specific facts and jurisdiction.

No attorney-client relationship is created by reading, commenting on, or sharing these materials.
Customs statutes, regulations, circulars and court rulings are subject to change, and their application can vary with minute factual differences.
While every effort is made to quote current law and landmark judgments accurately, no warranty—express or implied—is given as to completeness, timeliness or fitness for a particular purpose.
You should consult a qualified customs or trade lawyer, or other licensed professional adviser, before acting (or refraining from acting) on any information herein.
The authors, contributors and publishers disclaim all liability for any loss, damage or penalty arising from reliance on this content, whether in contract, tort (including negligence) or otherwise.
By continuing to read or share this material, you acknowledge and accept the above terms.

About the Author & Office Locations

CA Navjot Singh is a seasoned indirect-tax specialist with deep expertise in Customs, Foreign Trade Policy and GST. He delivers strategic advisory and hands-on execution to conglomerates, Fortune 500 companies and high-growth enterprises

Key architect of long-term retainership models that pre-empt audit objections and mitigate litigation risk.
Designs India-wide GST frameworks that optimise tax and cash-flow while dovetailing cross-border VAT regimes (EU VAT, GCC VAT).
Advises clients through assessment proceedings, prepares robust submissions and representations, and drafts precise replies to show-cause notices, audit objections and spot memos.
Represents taxpayers before adjudicating authorities, the Tribunal, the Sales-Tax Revisionary Board and the West Bengal Taxation Tribunal.
Conducts comprehensive GST-impact assessments, incentive-scheme evaluations and cash-flow modelling; recommends mitigation strategies as benefits phase out.
Prepares advance-ruling applications and engages with GST-Council committees to shape interpretative guidance.
Develops end-to-end dispute-resolution roadmaps, from pre-litigation negotiation to appellate and judicial forums.

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