Calcutta High Court
Sharad Himatlal Daftary vs Collector Of Customs on 29 January, 1988
Equivalent citations: 1988(17)ECC319, 1988(18)ECR191(CALCUTTA), 1988(36)ELT468(CAL)
JUDGMENT Ajit Kumar Sengupta, J.
1. In this application under Article 226 of the Constitution the petitioner has challenged the order dated 29th December, 1986 passed by the Collector of Customs (Preventive). The facts of the case are stated hereafter.
2. The petitioner has been carrying on business of general merchandise and importer and exporter of various goods. In course of his business he obtained trade licence from the Calcutta Municipal Corporation as also the Importer's Code Number from the Joint Chief Controller of Imports and Exports, Calcutta.
3. Pursuant to an agreement between the petitioner and M/s. Syarikat Nyalchand Motichand of Singapore (hereinafter referred to as the said foreign supplier) the said foreign suppliers shipped 94 bales containing 280 cartons of Staple Pins (hereinafter referred to as the said goods) to Calcutta. The price in respect of the said goods was agreed to be paid by the petitioner on documents against payment basis. The said goods were shipped by the said foreign supplier from Singapore to Calcutta on 6th September 1985.
4. The said goods arrived at the Port of Calcutta on or about 28th September, 1985. According to the petitioner, the said goods were imported by the petitioner in the ordinary and usual course of his business under REP Transferable Licence in terms of Appendix 17 of the Import and Export Policy - April 1985 to March 1988.
5. After the arrival of the said goods at the Port of Calcutta, and before the petitioner could file the Bill of Entry along with Import Licences in respect thereof, 93 bales out of 94 bales of the said goods were seized by the Customs authorities on 10.10.1985. The remaining one bale of the said goods was thereafter seized on 5.12.1985. After the seizure of the said goods the authorities kept the said goods under their custody and control. It is significant that although the said goods were seized by the concerned Customs authorities in October and December 1985 as aforesaid, the petitioner was not favoured with any seizure list by the concerned authorities in that behalf.
6. Thereafter, on or about 19.11.1985 the petitioner received a summons under Section 108 of the Customs Act, dated 13.11.1985. In the said summons it was, inter alia alleged that there were grounds for investigation being made in connection with the seizure of 93 bales of Staple Pins. It was further alleged in the said summons that the Superintendent of Customs considered the attendance of the petitioner necessary for giving evidence or producing documents or things viz. Import Licence Bill of lading, invoice, packing List and so on. On or about 4th December, 1985 the petitioner made a statement before the Superintendent of Customs (Preventive) inter alia stating the facts and circumstances of the case. Thereafter on or about 4th April 1986 the petitioner received a show cause notice being Notice No. SI(VII-75/85 SI(VII-l03/85 dated 1.4.1986 inter alia alleging that the petitioner failed to produce any trade licence in the name of Crescent Commercial Corporation to show the place of business of the petitioner. It was further alleged in the said show cause notice that as from the available evidence concerning 94 bales of staple pins the petitioner's firm is not in existence at the notified address at 21/A, Canning Street, Calcutta which indicates that the petitioner's firm is a fictitious party.
7. By the said show cause notice the petitioner was called upon to explain the matter in writing and to show cause to the Collector of Customs (Preventive) within 20 days from the date as to why the goods under seizure should not be confiscated under Section 111(d) of the Customs Act, 1962 and why penal action should not be taken against the petitioner under Section 112 of the said Act
8. The said show cause notice is a composite notice directed against several persons to show cause why the concerned seized goods should not be confiscated.
9. It may be mentioned that in this application the impugned import is only with regard to 94 bales containing 280 cartons of the said goods. The petitioner replied to the said show cause notice. He also appeared before the Collector of Customs (Preventive) on 25th August 1986. The petitioner also made further representation on 3.1.1987.
10. On or about 29.1.1987 the petitioner received an order being No. 5/87 Prev. dated 29.12.1986 which was dispatched on 27.1.1987. By the said order the goods under seizure namely 94 bales of Staple Pins were confiscated absolutely under Section 111(d) of the Customs Act, 1962 and a personal penalty of Rs. 15,000/- was imposed under Section 112 of the said Act. This order is under challenge in the writ application.
11. To appreciate the contention it is necessary to set out the relevant part of the show cause notice and the adjudication order.
12. The show cause notice as indicated earlier was issued to 12 parties and one of them is the petitioner. The address of the petitioner has been given as 35/1, Chowringhee Road, Calcutta. So far as the petitioner is concerned it has been alleged in the show cause notice, inter alia, as follows:
"Sri S. M. Daftary, proprietor of M/s. Crescent Commercial Corporation could not prove by any evidence of existence of the said firm at 21 /A, Canning Street, Calcutta-1. He also failed to produce any trade licence in the name of the said firm to show its place of business of the said address.
"As from the available evidence concerning 94 bales of staple pins, the importers M/s. Crescent Commercial Corporation are not existent at the notified address at 21/A, Canning Street, Calcutta-1, which indicates that the importer is a fictitious party. This inference further gets corroborated from the evidence that their overseas supplier M/s. Dolly Enterprises 0/B Syarket Nyalchand Motichand SON BHD of 93 Market Street, C.Y.S. Building Nex DS-02, Singapore 104 in strong anticipation of Customs interception of their shipped consignment bound for unloading at Calcutta as per manifest for which the freight was prepaid, suddenly advised the Calcutta Steamer agents to retain the cargo on board for subsequent return to them. Besides, the absence of any Banker's name in the manifest to negotiate financial transactions involved in the import of any consignment from overseas, as in this case, as well as the cargo receipt in respect of the said consignment of 94 bales issued at the port of loading (Singapore) without showing the name of Indian importer, as aforesaid, are conspicuous mysteries rendering the goods liable to confiscation under the provisions of the Customs Act, 1962 and the importers are liable to penal action under the provisions of the said Act."
13. In the adjudication order, the Collector of Customs (Preventive) inter alia, held as follows :-
"I nave gone through the records of the case and considered the submission of the parties, written and oral. The case was booked by the officers of the Directorate of Revenue Intelligence, Zonal Unit, Calcutta on the basis of intelligence collected and developed to the effect that some unscrupulous/fictitious parties had been indulging in importation of goods of sensitive nature from overseas countries unauthorisedly through unknown sources and by dubious negotiation. They detected two import consignments one comprising 93 bales of staple pins and the other 4000 cartons of staple pins-both were made in Japan. The officers were subsequently able to detect another bale at C P T shed No. 19 KPD Calcutta which was the party of the former consignment. Both the consignments were shipped by the Overseas suppliers not to a particular consignee but 'To order". The freight in both the cases were prepaid....
As for the 94 bales of staple pins, the charge in the show cause notice is that the importer M/s. Crescent Commercial Corporation are not in existence at the notified address. This charge is not cofrect as M/s. Crescent Commercial Corporation have replied to the show cause notice in their letter dated 10.6.1986 from the address 21/A, Biplabi Rash Behari Basu Road, Calcutta. However, in the same reply, the proprietor of the said Corporation Shri S. H. Daftary has stated inter alia, that the goods were sent by the foreign suppliers on their own initiative and the responsibility for anything done in violation of the provisions of law are not their. In the statement before the Customs officer on 4.12.1985, Shri Daftary stated inter alia, that M/s. Syarikat Nyalchand Motichand Sd. D. Bhd. of Singapore sent a letter to him on 31.7.1985 showing their interest in sending staple pins and that in reply they expressed their inability to clear the consignment on documents against payment basis because of their financial condition; that on telephone conversation with the exporter at Singapore, he expressed that he could accept the offer if they agreed to send the consignment on D/A basis and not on D/P basis. Shri Daftary added that although there was no more correspondence, but astonishing, In the month of October, he came to know from the overseas supplier over phone that they had already despatched the consignment although no final negotiation was done. It is very surprising that the overseas supplier had sent the consignment to M/s. Crescent Commercial Corporation without getting a written confirmation and even after payment of freight etc; and further without the backing of any letter of credit of similar documents. As for the steamer agents M/s. Everett (India) Pvt. Ltd. It is quite surprising that they brought the consignment without consignee's name indicated either In the cargo Receipt or in the import Manifest. Even the banker's name is not indicated in the manifest. It is, therefore, surprising what consideration led the steamer agents to bring the cargo when they did not know who the consignee is or in the absence of consignee who the bankers are, is all the more surprising that the steamer agent requested for an amendment on the I.G. M on 4.10.1985 while at least In one case, importer M/s. H. D. Benefit Trust requested their bank to send back the documents on a later date I.e. on 9.10.1985. All these circumstances make it clear that the transactions in these two cases are shady and not straight forward. As for the goods on the day of their arrival In India, they were clearly unauthorised in the absence of any licences and therefore, liable to confiscation as for the overseas suppliers, since they acted on the advice, of the Importers mentioned above, I do not find it appropriate to bring them within the mischief of Section 112 of the Customs Act, 1962". Accordingly the said goods were absolutely confiscated under Section 111(d) of the Customs Act, 1962 and the personal penalty of Rs. 15.000/- was imposed on the petitioner.
14. It has been contended by Mr. Ashok Sen, Ld. Counsel appearing on behalf of the petitioner that the Collector of Customs (Preventive) exceeded his jurisdiction in passing the order of adjudication so far as the petitioner is concerned, It is also his submission that three grounds have been taken in show cause notice. Firstly, the petitioner could not adduce any evidence of existence of the firm at 21/A, Canning Street, Calcutta. The petitioner also failed to produce any trade licence in the name of the said firm to show its place of business. According to him none of these grounds is factually correct. Not only the petitioner was available in the given address, but as a matter of fact the notice was served upon him at his residential address on 31.11.1985.
15. Secondly, the petitioner allegedly failed to produce the Licence for the import. It is contended that the petitioner was having REP Licence, but he could not submit the said licence. The licence is usually filed along with the Bill of Entry. But before the bill of entry could be filed, the goods were seized.
16. The third ground taken in the show cause notice is that the importer is a fictitious party. According to Customs in absence of bankers to negotiate financial transactions Involved in the import of any consignment from overseas, without showing the name of the Indian importer is a mysterious circumstance rendering the goods liable to confiscation. This according to the Id. counsel is no ground at all. In the Bill of lading and related import documents and in the Import Manifest the name of the petitioner appears as party to be notified at Calcutta Port and in any event merely on suspicion no Import can be held to be invalid or illegal,
17. In the adjudication order the Collector of Customs had admitted that the allegation that the importer is not In existence at the notified address is not correct. The Collector has, however, proceeded on the footing that the consignee's name is not found in the cargo receipt or in the import manifest and that the banker's name was not found and that the import licence was not available. These are the circumstances which would lead to the conclusion that the goods are illegally imported and the same are liable to confiscation.
18. It is contended that this view of the adjudicating authority is manifestly incorrect and cannot be sustained on the facts of this case. The adjudicating authority did look into the tacts of the case and arrived at a decision ignoring the relevant materials which were produced before him.
19. On the other hand the contention of Mr. Roy Chowdhury for the respondents is that no material has been placed before this Court to show that the findings arrived at in the adjudication order are based on no evidence or based on incorrect facts. He has supported the adjudication order.
20. Records have also been produced. I have gone through the records and considered the contentions of the learned counsel appearing for the parties. It may be mentioned that the goods were seized by the respondents before the Bill of Entry could be filed for release of the goods. Goods were seized on the allegation that some unscrupulous/fictitious parties had been indulging in importation of goods of sensitive nature to evade custom duty. This is an assumption of fact. So far as the petitioner is concerned the allegation is not that the petitioner imported the said goods to evade the custom duty. That is not what the show cause notice alleged. But the adjudication order has proceeded on that footing.
21. In my view the seizure as made was without jurisdiction and the respondents proceeded merely on surmise and conjecture in seizing the goods. The records would show that goods were properly manifested and accordingly the appropriate authority for seizure of such manifested goods was the Collector of Customs (Appraising) Calcutta and not the Collector of Customs (Preventive) who has purportedly seized the goods in this case. In any view of the matter the seizure of the goods by the Collector of Customs (Preventive) was wholly unauthorised and without jurisdiction. Since the goods were seized, the petitioner was not allowed to file the Bill of Entry. The usual practice of the Customs Department is that when the goods are imported, the Bill of Entry for home consumption is filed along with the licence. The licence for importation of the goods covered by the Bill of entry may be allowed to be submitted at a later date. But no licence is filed or produced before submission of the Bill of Entry. The contention that there was no import licence at the material time is not correct. After the personal hearing on 25th August, 1986 the petitioner made a representation on 3rd January, 1987 when he submitted that he has requisite import licence and sufficient evidence to show the CIF value of the goods, the said letter is as follows:
"Re: Show cause notice No. 5-1 (vii) 75/85 p dt. 1.4.1986 issued by the Assistant Collector of Customs for preventive adjudication, Customs House, Calcutta-1.
With reference to the abovenoted seizures and show cause notice and also our written explanation 10.6.1986 and the personal hearing granted to us on 25.6.1986, we have to inform you that we are willing to take clearing of the seized consignment after observation of Customs formalities and subject to order as you may be pleased to pass in the case.
We have further to inform you that we have not requisite import licence and we have got sufficient evidence to show that CIF Calcutta value of the said goods will be about 28/- US Dollars per Carton of 40 boxes (100 pins in packet and 20 such packets in a box).
In the premises, we would pray that your honour would be graciously pleased to give us another personal hearing to further explain our position and to produce necessary documentary evidence with regard to the value of the goods for the purpose of assessment of Custom import duty."
22. The import licence can be submitted any time before the goods are released by the Customs Authority. In my view the submission of the petitioner that he was having requisite licence for clearance of the goods. If the petitioner had failed to produce the licence inspite of opportunity given in that event the Collector of Customs could have said that the petitioner did not have any requisite licence for import of the subject goods. That is hot, however the case here.
23. It appears that the Collector of Customs (Preventive) passed an order on 29th December, 1986, but it was not despatched until 27th January, 1987. After the said letter was received a note was put up in the file to the effect that "party has prayed for a fresh date for personal hearing to explain their position to produce necessary ;documentary evidence with regard to the value of the goods for the purpose of assessment of the Custom Import Duty". It may be mentioned that the goods had already been adjudicated by the learned C C P on 29.12.1986. The O/O has not been issued as yet. The party may be informed accordingly. That note was made on 13th January 1987. There is further note that "C C P is out of station. He has also approved 0/0. Please put up F/C urgently and send the same to all the parties Including Messrs. Crescent Commercial Corpn."
24. It appears that although the order was made on 29.12.1986, the order-in-original was approved on 10th January, 1987. Thus the respondent could have given further opportunity to the petitioner for producing the relevant documents. This is a case where the order is liable to be set aside on the ground of violation of principles of natural justice. The respondents are expected to act fairly and reasonably. In their anxiety to prevent evasion of customs duty they cannot take recourse to such procedure which would debar the importer from importing the goods lawfully. In my view in this case the adjudication order suffers from illegality which is apparent on the face of it.
25. In any event the bill of entry and licence were required to be filed before the Collector of Customs (Appraising) not before the Collector of Customs (Preventive). The Collector of Customs (Preventive) did not also make any enquiry from other wing of the department whether the importer has any licence or not.
26. It has been alleged in the adjudication order that the import is unauthorised on the ground that the name of the importer does not appear anywhere. It will be evident from the Bill of lading issued by the steamer company at the time of loading subject cargo that the name of 'notify party' is M/s. Crescent Commercial Corporation, 21/A, Canning Street, Calcutta. The import therefore cannot be unauthorised as the name of the importer appears in the Bill of Lading and the manifest. The importer was having import licence which could not be filed because prior thereto the manifest goods were seized by the Collector of Customs (Preventive). The petitioner was having requisite licence when the importation was made. In my view it cannot be said that the import was unauthorised. The order of adjudication is therefore, illegal and should be set aside.
27. Another contention has to be disposed of. It has been contended that the petitioner has alternative remedy before the Tribunal. It is true that there is an alternative remedy before the Tribunal against the order of adjudication, but where on the face of the order it appears that order is illegal or is without jurisdiction or when the order is vitiated in law being perverse because the relevant materials have not been considered and the findings are contrary to the evidence on record such an order can be challenged in the writ jurisdiction. I am unable to accept the contention of Mr. Roychowdhury, learned counsel for the respondents that the petitioner should have appealed to the Tribunal against the adjudication order.
28. For the reasons aforesaid this application is allowed. The order dated 29th December, 1986 is set aside. The petitioner is directed to submit the bill of entry along with Bill of Lading and the licence to the concerned officer of appraising, Collector of Customs, Calcutta who shall make assessment within 3 days for the connection of this order upon the submission of the said documents and shall release the goods upon payment of custom duty and other charges. Goods shall be released forthwith after the assessed dues and charges are paid by the petitioner. It may be observed that the staple pins are liable to be damaged and accordingly the respondents shall forthwith make assessment and release the goods to the petitioner upon completion of all the requisite formalities.
29. Ail parties shall act on a signed copy of the minutes of the operative part of this judgment and order.