Karnataka High Court
Abdul Wahab vs Deputy Collector Of Customs, Madras on 19 August, 1980
Equivalent citations: 1999(109)ELT117(KAR)
JUDGMENT
1. In this Writ Petition, the petitioner has challenged a notice, dated 21-5-1979 (Exhibit - A) issued under Section 124 of the Customs Act, 1962, by the Deputy Collector of Customs, Madras (Respondent No. 1) and a notice, dated 7-3-1979 (Exhibit-F) issued by the Traffic Manager, Madras Port Trust (Respondent No. 2), as being without jurisdiction and unjustified.
2. The petitioner is the President of the Muslim League Association. Bylanarasapura, Hoskote Taluk. He imported 100 bales of second-hand gift clothing from the United Kingdom. These goods were meant for distribution to the poor and needy persons without any distinction of caste, creed sex or race. In accordance with the notification issued by the Government of India in No. 142 (Cus.)/77, dated 16-7-1977 and a certificate issued by the Government of Karnataka to the effect that they were meant for such purpose, it was cleared without payment of any customs duty at Madras. The goods were cleared in December 1978 and transported from Madras to Bangalore on or about 23-12-1978. It transpires that there was some obstruction put forth by the Customs Authorities for the clearance of the goods and after considerable correspondence they were permitted to be cleared and in the meantime demurrage was liable to be paid on account of the fact that the goods were not cleared within the time premitted by the Port Authorities. However, the Port Authorities, in the circumstances of the case, collected only 25 per cent of the demurrage charges in accordance with the provisions in that behalf.
3. It transpires that the Customs Authorities had taken a guarantee in a sum of Rs. 20,100/- before premitting the goods to be cleared. The petitioner also paid harbour charges amounting to Rs. 11,887.10. The goods arrived in Bangalore on 4-1-1979 and were subsequently removed to Bylanarasapura, the place where the petitioner was residing.
4. From the show cause notice issued it transpires that about 5 gunny covered bales were recovered from the shop owned by Syed Abid Hussain at No. 40, Corporation Market, N.R. Road Cross, Bangalore. Some statements of certain persons appear to have been recorded in that behalf. On 11-1-1979 the Central Excise Authorities inspected the premises of the petitioner at Bylanarasapura and found 47 bales of goods being part of the goods that had been imported from the United Kingdom. According to the show cause notice the goods seized from the shop of Syed Abid Hussain were part of the 100 bales of goods imported and permitted to be cleared without payment of customs duty. The allegation is that the petitioner must have sold them to him and this was in violation of the purpose for which the goods were imported. An order under Section 110 of the Customs Act was issued to the petitioner in respect of 47 bales of goods found in his premises. The show cause notice was issued to the petitioner to show cause why the goods seized and detained by virtue of the order under Section 110 should not be confiscated as there is a contravention of the provisions of Section 111(d) and (o). The substance of the allegation against the petitioner is that though the goods had been imported on the representation that they were meant for being distributed to the poor and needy, they had been diverted from that purpose and unauthorisedly sold or otherwise disposed of.
5. The contention of the petitioner is that out of the goods imported he had distributed about 53 bales to the poor and needy in the presence of the President of the Village Panchayat and others before, 11-1-1979 and certificates to that effect have been produced collectively as per Annexture-E, and so far as the goods in his custody were concerned, they were meant to be distributed to the poor and needy, and he had a period of six months from the date of importation to so distribute and by virtue of the order made under Section 110 he had been unjustifiably prevented from so distributing and he had not diverted the goods to any purpose other than to the one they were intended for. His contention is that he had not sold any goods to Syed Abid Hussain or anyone else and merely because some gunny bags with markings were found in that person's shop, it could not be inferred that the petitioner had sold them to him and it might as well be that the seized goods from the shop of Syed Abid Hussain might have been acquired by him from the persons to whom the goods had been distributed. In these circumstances, the contention of the petitioner is that there has been no violation of any provision of the Customs Act and the notice Exhibit-A has been issued with a view to harass him, as according to the petitioner even at the initial stage, the Customs Authorities were putting forth obstructions and only on the petitioner approaching the higher authorities was he able to get the goods cleared, and even then not without giving the guarantee. The contention of the petitioner is that the show cause notice has been issued in the said background and cannot be said to be justified on the facts of the case.
6. Apparently, consequent on the appraisal of the issue of the show cause notice by the Customs Authorities. The second respondent also issued a notice contending that the demurrage charges had been waived to certain extent and in view of the notice issued by the Customs Authorities the remission of demurrage charges was not correct and demanding from the petitioner the charges that had been remitted. The contention of the petitioner is that there is no basis to make the demand as the purpose for which the goods were imported had not at all been violated and at any event, the second respondent was not entitled under any provision of law to claim any extra charges on the ground that some portion of the goods had been not applied for the purpose intended for.
7. Objection statements have been filed on behalf of both first and second respondents. The Tahsildar, Hoskote, has been impleaded as third respondent on the ground that though the petitioner requested him to supervise the distribution of the goods to the poor and needy and issue a certificate in that behalf, he had told the petitioner to distribute it in the presence of the President of the Village Panchayat and that he would issue the certificate after the distribution, but he has subsequently resiled from the position and postponed the issue of the certificate, apparently, at the instance of the Customs Authorities who had informed him of the issue of the show cause notice. The prayer against him is that he should be directed to issue the necessary certificates for having distributed the goods to the poor and needy and to issue further certificates as and when the distribution was made.
8. Shri U. L. Narayana Rao, learned Counsel for the first respondent, submitted that only a show cause notice had been issued and it was open to the petitioner to file his reply and allow the proceedings to go on and the filing of the writ petition and interference by this court at this stage is not justified. Shri J. Jeshtmal, learned Counsel for the petitioners, however, contended that, prima facie, there is no justification for the issue of the show cause notice on the facts on record and it is just and necessary that the writ as prayed for must be issued.
9. From a reading of the show cause notice, Exhibit-A, it is clear that the only tangible material to suspect or infer that any goods imported without payment of customs duty had been diverted from the original purpose intended, is the alleged seizure of the 5 bales of goods from the shop of Syed Abid Hussain. So far as the 47 bales of cloth found in the residence of the petitioner are concerned it cannot at all be said that there is any kind of disposal contrary to the original purpose. From the material on record it is clear that the petitioner had 6 months time to distribute the goods to the poor and needy. This is the period allowed under the notification of the Government of India, dated 16-7-1977 which has been produced on behalf of the first respondent as Exhibit R-1. The goods had arrived in Bangalore only on 4-1-1979 and there was ample time for the petitioner to distribute the goods to the poor and needy. According to the petitioner, he had distributed about 53 bales. The certificates issued as per Exhibit-E series support this contention. There has been no specific averment in respect of this distribution apart from stating that the revenue authorities had told the Customs Authorities that to their knowledge there was no distribution, within a period of 15 days prior to 11-1-1979. Respondent No. 3 who has been impleaded as party has not filed any counter-affidavit and has not denied the averments made by the petitioner in this behalf. It cannot therefore be said that there has been any contravention so far as 53 bales that have already been distributed and the 47 bales found in the possession of the petitioner on 11-1-1979 are concerned. These 2 quantities when added come to 100 bales. But, according to respondent No. 1 about 5 bales of goods were found in the shop of Syed Abid Hussain. The question whether these 5 bales had been sold by the petitioner as alleged by the first respondent is a matter which has got to be enquired into by the Authorities concerned and cannot be decided in these proceedings. But so far as the rest of the quantities of goods imported is concerned it cannot at all be said that there was any contravention on the part of the petitioner or that there was a diversion of the goods from the purpose for which they had been imported. The show cause notice issued is patently premature and unjustified in so far as the 47 bales found in the possession of the petitioner are concerned, and without any supportable basis so far as the goods that had already been distributed by petitioner, excluding the 5 bales found in the shop of Syed Abid Hussain, are concerned. In these circumstances, it is just and necessary that this court should interfere and afford relief to the petitioner.
10. So far as the demand made by the second respondent in the counter-affidavit filed is concerned, reliance is sought to be placed on the provisions of Sections 42, 43, 52, 59, 61 and 63 of the Major Port Trusts Act, 1963 (Central Act, 38 of 1963) to claim the demurrage charges that had been waived. None of these provisions enable making such a demand. If at all, Section 56 of the said Act makes provisions in regard to the charges short levied or erroneously refunded. In the instant case there is no question of any amount being refunded erroneously. It cannot also be said that there is any short levy of charges. What had been collected from the petitioner was the charges properly leviable and on account of the particular circumstances of the case there was a remission of demurrages payable. It cannot be said that there was a short levy which could be claimed later. "The goods had been cleared after payment of the charges which alone would entitle the petitioner to remove the goods from the Port area. Assuming that there was some kind of mis-application in regard to the propose for which the goods had been imported, that would not entitle the Port Authorities to claim the demurrage charges that have been waved. There is no specific provision in the Act conferring any such right to the Port Authorities. The claim is clearly not supported by any of the provisions of the Major Port Trust, Act. Accordingly, the notice of demand is hereby quashed."
11. So far as the first respondent is concerned, further proceedings pursuant to Exhibit-A in regard to 47 bales of goods found in the premises of the petitioner and the rest of the quantity of the goods imported, except to the extent of 5 bales seized from the shop premises of Syed Abid Hussain, would be without any basis and untenable. Claim for payment of duty in respect of the goods in the possession of the petitioner and the other goods claimed to have been distributed except in regard to 5 bales aforementioned, is also untenable and therefore notice, Exhibit-A, except in so far as 5 bales of goods seized from the shop of Syed Abid Hussain is hereby quashed. The first respondent shall be at liberty to proceed with the enquiry in so far as 5 bales of goods seized from the shop of Syed Abid Hussain is concerned and the petitioner shall put forth his contentions before the concerned Authorities. So far as the quantity of 5 bales of goods is concerned the entire matter is left open, it being made clear that the petitioner shall be at liberty to agitate the matter after the conclusion of the enquiry in regard to the 5 bales, in accordance with law.
12. In the show cause notice, a claim for penalty under Section 112 of the Customs Act is also made. It appears that "the act alleged against the petitioner would not come within the ambit of the provisions of Section 112. If at all, the allegations against the petitioner, so far as the goods seized from the shop of Syed Abid Hussain are concerned, may come within the ambit of the provisions of Section 117 of the Customs Act. Therefore, the notice seeking to impose a penalty under Section 112 is also quashed."
13. The petitioner has reiterated that the 47 bales of goods are for the purpose of distribution to the poor and needy and he was always prepared to so distribute. In my opinion, a direction in this behalf has necessarily to be issued to the third respondent. The Customs Authorities shall revoke the order made under Section 110 of the Customs Act in so far as the 47 bales of goods are concerned immediately and the third respondent shall supervise the distribution of these goods to the poor and needy as contemplated under the Government of India notification of 1977, either personally by himself or in the presence of other revenue officers, and in due course issue a certificate after the distribution is over. As the original period of six months has already expired, it is hereby directed that the distribution shall be completed within a period of three months from today.
14. After the dictation of the above judgment on the 19th of this month, and before it could be signed after being typed, Shri Jeshtmal, learned Counsel for the petitioner, made a motion that there should be a specific direction in regard to the sum of Rs. 20,100/- which had been given as guarantee and which the first respondent has now called from the Canara Bank and kept in deposit in the customs treasury. In my opinion, a direction in this behalf is necessary. The first respondent shall return the said amount to the petitioner after the receipt of the report in regard to the distribution of 47 bales of goods as indicated earlier.