Bombay High Court
Cawasji Behramji & Co. vs H.N. Saifi on 1 January, 1800
Equivalent citations: 1991ECR391(BOMBAY), 1990(49)ELT161(BOM)
JUDGMENT
1. This is a Petition filed by the Petitioners who are a Partnership Firm registered under the Indian Partnership Act, and carry on business for the past 25 years as Stevedores, Ship-Chandlers and Canteen suppliers to ships. They challenge inter alia the vires of the Public Notice No.22 dated 27th February 1964, which imposes certain mandatory conditions before claiming exemption from liability to pay duty under Sections 13 and 23 of the Customs Act, 1962 (hereinafter referred to as "the said Act"). Several contentions have been taken in the Petition but I shall only deal with two of them which have been argued before me.
2. The short facts that are necessary for appreciation of this Petition, are that the Petitioners in the course of the business, import into India goods for re-export as ship stores or otherwise and as the goods which are so imported are meant for re-export they are exempted from duty under certain conditions. It is stated in the Petition that the Customs authorities follow two procedures for clearance of goods imported by the Petitioners, for the purpose of re- exporting the same as ship stores or otherwise. It is unnecessary to set out the two procedures mentioned in the Petition because in the present case the Court is concerned with the only question as to whether the conditions imposed upon the Petitioners in the Public Notice, dated 22nd February 1964, Exh. A, to the Petition, are valid and binding and even assuming the same to be valid, whether the Petitioners are bound to act upon those conditions mentioned therein. Relevant Sections of the Customs Act viz., Sections 12,13 and 23 are set out below:
"12. (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Indian Tariff Act, 1934, or any other law for the time being in force, on goods imported into, or exported from, India.
(2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government".
"13. If any imported goods are pilfered after the unloading thereof and before the proper officer has made an order for clearance for home consumption or deposit in a warehouse, the importer shall not be liable to pay the duty leviable on such goods except where such goods are restored to the importer after pilferage."
"23. (1) Where it is shown to the satisfaction of the Assistant Collector of Customs that any imported goods have been lost or destroyed at any time before clearance for home consumption, the Assistant Collector of Customs shall remit the duty on such goods.
(2) The owner of any imported goods may at any time before an order for clearance of the goods for home consumption has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon."
3. It is the case of the Petitioners that after the goods are imported the Petitioners are entitled to claim exemption from duty under Section 13 of the said Act, if any imported goods are pilfered after unloading thereof and before the proper officer has made an order for clearance for home consumption or deposit in a warehouse, the importer is then liable to pay duty leviable on such goods except where such goods are restored to the importer after pilferage. Similarly, an exemption has been granted under Section 23 of the said Act, where also if it is shown to the satisfaction of the Assistant Collector of Customs that any imported goods have been lost or destroyed at any time before clearance for home consumption, remission of duty is permitted but it must as stated above be so shown to the satisfaction of the Assistant Collector of Customs.
4. In the present case, the Petitioners on 10th December 1966, presented a Shipping Bill dated 6th December 1966, for issue from bond for Lux Toilet Soap and Camay Toilet Soap for supplying the same to I.N.S. "KIRPAN". The said Shipping Bill was returned by the Preventive Officer in charge of the Petitioners private bonded warehouse that "no issue can be effected from the bonds shown on S/B.U. attached herewith as no duty has been paid on shortage or reversion order has been brought from the A.C.Appr.concerned." Thereafter after correspondence the Customs authority allowed the Petitioners to operate the bond and issued the goods as per the Shipping Bill. This has been stated in the Petition in order to show that at some time even after 1966, the Petitioners were permitted to operate on the bond and issued the goods as per the said Shipping Bill. After certain further correspondence the Petitioners received a letter dated 9th December 1968, from Respondent No.1 stating that unless the Petitioners paid the arrears of undisputed duty amounting to Rs. 16,531.88 ps. and Rs.99,524.69 ps.as arrears of disputed duty as on 31st July 1969, within a month from the receipt of the said letter by the Petitioners' operations in Bond are liable to be stopped. The Petitioners have paid the arrears of undisputed amount of duty amounting to Rs.16,531.88 ps. and have challenged the rights of the Respondents to claim the amount of Rs.99,524.69 ps. in respect of the disputed duty on the ground that the claim relates to shortage of goods which were either not landed in India and therefore not imported into India or which were pilfered after the unloading and before the Customs proper officer made an order for deposit in a warehouse.
5. The grounds on which this right of the Respondents to stop the operation in Bond by the Petitioners is concerned, is that the Petitioners were directed by the Respondents in order to claim exemption inter alia under Section 13 of the said Act, to obtain a certificate from the Bombay Port Trust authorities stating that the goods in question were landed in good order and that the theft has been duly reported by them to the Police who were investigating into the matter and further containing an undertaking that in the event of the said goods or any part thereof being found or recovered the same would not be restored to the Importer without first informing the Customs House. The Petitioners have stated in the Petition that although they requested the Bombay Port Trust to issue such a certificate, the Bombay Port Trust failed to issue the same in spite of several reminders and that on an inquiry it was found that the Bombay Port Trust had destroyed all the records inclusive those of 1964. In any event, it is stated that the Respondents cannot call upon the Petitioners to produce such a certificate because in so far as Section 13 of the said Act is concerned, pilferage has to be proved and it may be proved in such a manner as the law permits and no specific direction can be laid down, that the proof of pilferage has to be proved in a particular manner. It is under Section 13 of the said Act, the proper officer has to be satisfied on evidence that there is pilferage. The proper officer's duty to decide this question as to whether there is pilferage cannot be restricted in any manner whatsoever and his jurisdiction to decide is restricted in so far as the manner of proof of pilferage is concerned by directing that pilferage can only be proved by obtaining a certificate to that effect from the Bombay Port Trust. This is based upon the Public Notice dated 27th February 1964, issued by the Collector of Customs. Relevant portion of the Public Notice is set out below:
I. PERMISSION OF DUTY ON PILFERED GOODS under Section 13:-
(a) ........
(b) ........
(c) The claim should be accompanied by the following documents :-
(i) The original and duplicate Bill of Entry if duty has not been paid, and if duty has already been paid the duplicate or in its absence the triplicate copy of the bill of entry.
(ii) Original Customs attested invoices together with packing slip or specification, if any,
(iii) A certificate from the Bombay Port Trust stating that the goods in question were landed in good order and that the theft has been duly reported by them to the police who are investigating into the matter and further containing an undertaking that in the event of the goods or part thereof being found or recovered, they will not be restored to the importer without first informing the Customs House; and
(iv) Any other documentary evidence such as correspondence of claim with Steamer agents, Insurance Cos. etc., which the Customs House may call for having regard to the circumstances of the particular case.
Under sub-cl.(c) a duty is cast upon the importer to produce a certificate from the Bombay Port Trust stating that the goods in question were landed in good order and that the theft has been duly reported by them to the police who are investigating into the matter and a further undertaking that in the event of the goods or part thereof being found or recovered the Bombay Port Trust will not part with the same without first informing the Customs House. As stated that the Petitioners cannot comply with these conditions on all occasions because the Bombay Port Trust is a third party and the Petitioners cannot and are not in a position to impose their own will upon the Bombay Port Trust to grant such a certificate. The Respondents in the affidavit of N.H.Saifee, the Assistant Collector of Customs, in reply dated 2nd June 1970 admit that it is necessary according to their view that a certificate from the Bombay Port Trust must be produced in accordance with the said Public Notice. In para 10 of the said affidavit in reply it is stated as follows :-
"I say that the said Public Notice is consistent with the aforesaid scheme of the Customs Act and in particular, the provisions of Sections 12, 13, 22 and 23 thereof. I deny the allegation that the said Public Notice imposes any impossible condition upon the petitioners or other importers."
It is urged on behalf of the Petitioners that if the Customs authorities can only act under Section 13 of the said Act in such a manner provided in te said Public Notice then the exempting authority is bound by the said provision or directions viz., that no exemption should be granted save and except when such a certificate from the Bombay Port Trust is produced. It is argued that such a direction though in the form of a Public Notice is a fetter upon an authority given the power to decide a matter quasi-judicially viz., whether on the facts of a particular case there has been or has not been a pilferage. Besides a further contention is that an impossible condition cannot be placed upon the importer when the same does not and cannot in the nature of things be within the powers of the importers to fulfil.
6. Mr. Korde on behalf of the Petitioners has relied upon the decision of the Supreme Court in the case of M/s. Ravi Roadways v.Asia Bi and others, and the relevant observations in paragraph 6 at page 1242 :-
"G.O.No. 2205 Home issued by the Government of Madras is without the authority of law. By that Order it is directed, inter alia, that all proposals formulated by the Transport Authorities regarding the transfer of permits in respect of state carriages shall be submitted to the Transport Commissioner for confirmation. This Order was issued in exercise of the powers conferred by Sec.43-A of the Motor Vehicles Act which was introduced by the Madras Act 20 of 1948. The section reads :
The character as it may consider necessary, in respect, of any matter relating to road transport, to the State Transport Authority or a Regional Transport Authority: and such Transport Authority shall give effect to all such orders and directions."
"This Court in B. Rajagopala Naidu v. State Transport Appellate Tribunal, held that Section 43-A confers power on the State Government to issue orders and directions to the State Transport Authority only in relation to its administrative functions. The Court further held that in dealing with applications for permits and evaluating the respective claims of the parties, the Transport Authority discharges quasi-judicial functions and an order issued by the State Government giving directions to the Transport Authority in respect of a matter entrusted to it under the Act which has to be dealt with by it in exercise of its quasi- judicial authority is outside the purview of Section 43-A of the Act. The same principle applies in the present case. Exercise of the power to sanction the transfer of a permit under Section 59(1) is quasi- judicial, and the State Government is not competent to impose any restriction upon the exercise of that power by issuing executive instructions."
It was argued that in the present case also the Collector of Customs has given direction in the shape of a Public Notice to the subordinates in respect of a matter entrusted to certain officers under the Act, dealt with in his exercise of a quasi-judicial authority and that no directions can be given save and except of an administrative nature to restrict or place fetter upon the exercise of such a power by the issue of executive instructions. That case was under the provisions of the Motor Vehicles Act, 1939, and related to the issue of instructions for confirmation by the Transport Commissioner on an application notified under Section 57 of the Motor Vehicles Act, and the application being sanctioned by the Transport Authority. The direction was that the said sanction of the transport authority was subject to confirmation by the Transport Commissioner and it was then sanctioned by the transport authority requiring confirmation by the Transport Commissioner which was challenged and the above observations relate to the issue of the said directions. Apart from this case, in my view where quasi-judicial powers are granted to persons or to an authority that cannot be said to act independently as observed by the Supreme Court in the case of Oriental Paper Mills v. The Union of India, "They cannot be controlled by the directions issued by the Board."
It was further observed in the same paragraph :
"No authority however high placed can control the direction of a judicial or a quasi-judicial system. There is no provision in the Act empowering the Board to issue directions to the assessing authorities or the appellate authorities in the matter of deciding disputes between the persons who are called upon to pay duty and the department."
That was a decision under the Central Excises and Salt Act, 1944, and the question was whether M.G. Poster papers for packing and wrapping board or printing paper and the Central Board of Revenue had issued directions to the effect that all types of papers of whatever colour including white should not be treated as printing and wrapping, packing and writing papers. It was this direction of the Central Board of Revenue which was challenged on the ground that quasi-judicial power of the assisting authority could not be controlled by any directions issued by the Board. The Supreme Court has observed that the exercise of judicial and quasi-judicial powers cannot be controlled by any directions of any authority however high placed that authority be.
7. Similarly, applying the said observations to the facts of the present case, the directions of the Collector of Customs issued in the form of a Public notice whereby the commissioner is directed to make a claim for exemption by following only a particular procedure and correspondingly restricting the power of the exempting authority to grant or not to grant exemmmption on the compliance or non-compliance only of such condition, is fetter upon his quasi-judicial authority. They are not merely administrative directions but in effect restict the right of exempting authority to decide on the facts ofeach case whether there has been or has not been pilferage of the goods as required by section 13 of the said Act. The same principle applies to the fulfilment of conditions in section 23 of the said Act. Under Section 23 an exemption is sought for under the Public Notice No. 22,dated 27th November 1964. Paragraph 2 sub-cl.(c)(iii) requires a certificate from the Bombay Port Trust stating the date, time and the circumstances in which the loss or destruction took place, is made obligatory. In my opinion, these directions to the importers with a corresponding obligation upon the exempting authority not to grant the exemption save and except when these conditions are fulfilled, is to my mind a restriction upon the exercise of quasi-judicial authority of the exempting officer. It is not disputed that the exempting authority both under sections 13 and 23 is exercising quasi-judicial powers.
8. Therefore, on the facts of the case it is quite clear that the Petitioners were unable to comply with the conditions of obtaining a certificate from the Bombay Port Trust. In the light of these observations, the Petitioners not being able to obtaining a certificate from the Bombay Port Trudt the Respondents have chosen not to exempt the payment of duty to the Petitioners as the Petitioners having not been able to comply with the conditions mentioned in the said Public Notice. The Collector of Customs had no authority to issue directions as given in the said Public Notice dated 27th February 1964, as the same is clearly beyond the scope of his powers. The only right which the Collector of Customs has is to make regulations as provided for in Section 152 of the said Act, read with Section 157 thereof. As these are admittedly under rules or regulations within the meaning of Section 152 as having been published in the official gazette as required by Section 158 of the said Act, it is unnecessary to consider whether these directions can be called regulations within the meaning of Section 152.
9. In my view, therefore, Public Notice No. 22, dated 27th February 1964, is null and void has to be ignored by the exempting authority in consideringthe questions whether or not to grant exemption under Section 13 and 23 of the said Act.In the present case the issue of the demand for Rs. 99,524.69ps. having been based upon the non-compliance of the said Public Notice, which I have declared to be void, must also fail and declared to be null and void.However, it does not mean that the Respondents have not to consider the questions after ignoring the conditions mentioned in the said Public Notice. Therefore it is a duty and an obligation upon the exempting authority under Sections 13 and 23 of the said Act, to consider on the facts of each case whether the conditions in sections 13 and 23 of the said Act have been complied with and after deciding that issue to determine whether exemption should be granted. I am quashing the Notice of demand pursuant to the letter dated 9th October 1969, only on the ground that the Respondents have taken into consideration the non-fulfilment of conditions to bbe complied with in accordance with the said Public Notice.
10. I, therefore, direct that Respondents do consider the claim of the Petitionersin accordance with the demand for Rs.99,524.69ps. and do thereafter consider any exemption of duty in respect thereof made by the Petitioners in the imports of the goods and after ignoring the condition mentioned in the Public Notice No.22 deted 27th February 1964.
11. I am not deciding any other points raised in the Petition on the question of the procedure to be followed by the Respondents in accordance with the goods imported by the petitioners nor am I deciding any other questions raised in the Petition as in my opinion, the Petitioners are entitled to reliefs on the ground that the Public Notice No.22, dated 27th February 1964,is to the extent mentioned alone bad in law. The Petitioners are therefore not prevented from agitating the other question raised in the Petition hereafter if need may arise.
12. In the result,I,therefore, allow the Petition and make the Rule absolute to the extent stated above, in terms of prayer (a) and also direct the Respondents not to act upon the letter dated 9th October 1969, being Exh .F, to the Petition.
13. There will be no order as order as to the costs of this Petition.