Calcutta High Court
R.K. Exports & Ors vs The Commissioner Of Customs (Port) & Anr on 17 November, 2017
Author: Subrata Talukdar
Bench: Subrata Talukdar
ORDER SHEET
WP 632/2017
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
R.K. EXPORTS & ORS.
Versus
THE COMMISSIONER OF CUSTOMS (PORT) & ANR.
BEFORE:
The Hon'ble JUSTICE SUBRATA TALUKDAR
Date : 17th November, 2017.
Appearance:
Mr. Jayanta Kr. Mitra, Sr. Adv.
Mr. Pranab Kumar Datta, Sr. Adv.
Mr. Jaydip Kar, Sr. Adv.
Mr. Debabrata Saha Ray, Sr. Adv.
Mr. Mainak Bose, Adv.
Mr. Shakil Mohammed Akhter, Adv.
Mr. Prasenjit De, Adv.
...for the petitioners.
Mr. Somnath Ganguli, Adv.
Ms. Manasi Mukherjee, Adv.
...for the respondent nos. 1
Mr. Kaushik Dey, Adv.
Mr. Kaushik Maity, Adv.
...for the respondent no. 2 Both the WPs are taken up for consideration on succeeding dates on the ground that both the WPs involve common questions of facts and law.
WP 633 of 2017 (for short WP I) was decided by the earlier order of this Court dated 15th November, 2017 and, dismissed. The decision of this Court was founded on the premise that under the relevant provisions of the Customs Act, 1962 (for short the 1962 Act or the Customs Act), the provisions applicable 2 thereof contemplating a showcause notice connected to the provisional release of goods detained/seized can only operate at the level of the Adjudicating Authority (AA).
Therefore, this Court on being satisfied upon consideration of the materials placed, took the view in WP II that the adjudicatory level under the 1962 Act being yet to be reached, a prayer for provisional release of goods at this stage is not sustainable.
However, upon being called upon to adjudicate the next Writ Petition, i.e. WP 632 of 2017 (for short WP I), although chronologically earlier to WP II, Mr. Pranab Kumar Datta, Ld. Senior Counsel for the Petitioners took this Court again with re-emphasis on the alleged infringement of the law connected to the present facts. On behalf of the Respondents/Revenue/Customs/Directorate of Revenue Intelligence (for short DRI) Authorities, representation is put in by Mr. Kaushik Dey, Mr. Kaushik Maity and Mr.Somnath Ganguli, Ld. Counsel.
On an assessment of the submissions made by the parties, this Court is required to further place on record the following discussion.
First, WP I is filed on behalf of a partnership firm by the name of M/s. R. K. Exports (for short R.K.E.) affirmed by one of its partners, Sailendra Singh.
Second, the Bill of Entry (BE) is in the name of the Petitioner no. 1/R.K.E. Third, the examination of the goods imported by the Petitioner no. 1 reveal the following:-
"Compulsory Compliance Requirements = 1 3 Mandatory Compliance Requirements Examination Instruction (CTH) - 94054090 """""""". . * (I) SELF BALLASTED LED LAMPS FOR GENERAL SERVICES (II) FIXED GENERAL PURPOSE LED LUMNARIES PROBIHITED W.E.F. 14-8-15 UNREGISTERED REPAIRED/REFURBISHED/SECOND HAND ITEMS SHOULD NOT BE ALLOWED TO BE IMPORTED WITHOUT PRIOR PERMISSION FROM MEITY. CHECK REGSITRATION OF IMPORTER AND GOODS WITH BIS AND SELF DECLARATION ON THE GOODS THAT THEY CONFIRM TO (I) IS 16102 (PARTI) = 2012 & (II) IS 10322 (PART 5/SEC1) = 2012 RESPECTIVELY. SUBSTANDARD GOODS TO BE DEFORMED & DISPOSED OF AS SCRAP IN TERMS OF PARA 3 OF THE ORDER (AUTHORITY) : -*.* ELECTRONICS AND INFORMATION TECHNOLOGY GOODS (REQUIREMENTS FOR COMPULSORY REGISTRATION) ORDER 2012 DT. 7-11-2012 & 7-11-14 . ."""""". VERIFY THAT THE RATE OF IGST/GST COMPENSATION CESS HAS BEEN CORRECTLY LEVIED AND EXEMPTION, IF ANY, CORRECTLY CLAIMED"
Fourth, from Pg:39 of WP I it transpires that the Petitioner no. 3, Dharmendra Singh and, also a partner of the Petitioner no. 1, authorised one Mr. Manoj Kumar Gupta (MG), to import the items on behalf of the Petitioner no. 1. Such authorization, which is simply notarised on a non-judicial stamp paper, is dated 6th June, 2017 and the stamp paper itself appears to have been purchased on 19th April, 2017 (at Pg: 40 of WP I). From the purchased document of the vendor of the stamp paper as dated 19th April, 2017 bearing the serial number 263/243, the name of the customer is not entered and left blank.
Fifth, the goods having been detained/seized in September 2017, notwithstanding the clear provisions in the 1962 Act, the owner of the goods, i.e. the Petitioner no. 1/Partnership Firm represented by either or both the Petitioner nos. 2 and 3/its partners were required to take the necessary steps qua the 4 Revenue/Customs/DRI respondents for claiming the provisional release of the goods u/s 110A of the 1962 Act.
Sixth, however, this Court notices that on 23rd October, 2017 the said authorised person, MG, filed a representation before the DRI authority admitting, inter alia, that the goods being under DRI investigation "may take some time to attain its finality". Therefore, on behalf of Petitioner no 1/Firm the prayer is made by the said authorised representative to "de-stuff" the detained/seized consignment to a Customs Bonded Warehouse for the Petitioner no. 1/Firm to be spared of demurrage/detention charges etc. Seventh, the correspondence dated 23rd October, 2017 appears to have been preceded by the correspondence dated 20th September, 2017, again from MG, seeking "de-stuffing/warehousing" of the consignments.
Eighth, both the letters dated 23rd October, 2017 and 20th September, 2017 (supra) are again preceded by a correspondence dated 13th October, 2017 by the Petitioner no. 3/partner addressed to the concerned DRI officer authorizing MG to represent the Petitioner no. 1/Firm in proceedings before the Respondents/Customs/DRI authorities.
And finally, the culminating point of the above noted series of steps is reached through a communication dated 3rd October, 2017, addressed on behalf of Petitioner no. 1 by MG demanding the provisional release of the goods.
Relying on a Circular of the Department of Revenue, Central Board of Excise & Customs (Anti-Smuggling Unit), being the Circular no. 35/2017 dated 16th August, 2017, Mr. Datta argues that the provisional release of the subject 5 goods has by now coalesced into a right in favour of the Petitioners. Mr. Datta argues that the provisional release of the said imported goods is a rule under Circular no. 35/2017 read in the light of its controlling section, viz. section 110A of the 1962 Act. It is therefore incumbent on the Respondents/Authorities to provisionally release the goods barring the exceptions made out under Item No. 2
(i) to (iv) of Circular no. 35(supra).
Ld. Senior Counsel submits that since September 2017, the Respondents/Authorities have not informed the Petitioners of any progress in the so-called investigation following the detention/seizure of the subject goods. It is argued on the authority of unreported orders of the High Court at Kerala and this Hon'ble Court In Re : The Proprietor vs The Commissioner of Customs dated 21st July, 2011 and Tushar Kanti Das vs Commissioner of Customs (Port) and Others dated 3rd January, 2013, as produced before this Court that since the subject goods do not classify as prohibited goods the only controversy surrounds their valuation, quantity etc. which can be equally addressed by allowing a provisional release.
On behalf of the Respondents/Authorities, Mr.Kaushik Dey, Ld. Counsel with equal emphasis points out that although the Respondents/Authorities have, to start with under the Statute, a minimum period of six months to complete the investigation, subject to the extension of such period by a further three months by the Commissioner, Customs as allowed section 110A of the 1962 Act, the Petitioners have moved this Court in hot haste to secure the provisional release of the subject goods.
6
Mr. Dey points out with sufficient anguish that the Petitioners are not cooperating with the investigation at all. Although section 110A read with its sister section, viz. section 124 of the 1962 Act, contemplates the provisional release, if permissible, to the owner of the goods in issue, it is far from being satisfactorily explained that MG has any connection to the goods except, in his avatar of a notarized agent of the petitioner No.1/firm.
It is interesting to note that although the law requires the owner to complete the formalities connected to the provisional release of the detained/seized goods, the visibility of MG in the foreground of the investigation may not be considered to be enough since the investigation involves more than a mere arithmetical calculation of quantity, valuation etc., notwithstanding the non-prohibitory nature of the subject goods as claimed by the petitioners.
Mr. Dey, therefore, on the strength of the materials placed, submits that the investigation or, in other words, the expression "reason to believe" is not confined to mere assessment of misdeclaration of quantity, value etc. but, also the entirety of the operation behind the import which, prima facie, surfaced to the knowledge of the Respondents.
Having heard the parties and considering the materials placed, this Court arrives at the following findings.
(A) That admittedly Section 110 of the 1962 Act permits the "proper officer"
upon having "reason to believe" to seize the subject goods which may be liable to confiscation.7
(B) The proviso to Section 110(1) also permits the proper officer not to seize the goods, if not practicable to do so but, directs the owner of the goods not to remove, part with or otherwise deal with the goods except with the prior permission of such officer.
(C) That the order of detention of the goods dated 26th September, 2017, as issued to the Manager, CFS, Phonex Logistics Pvt. Ltd., viz. the manager of the godown where the goods are lying shows, to the mind of this Court, fulfillment of the terms of Section 110(1) of the 1962 Act. The proper officer has, inter alia, stated that "it is not practicable to seize such goods".
(D) Section 110A reads as follows:-
"110A. Provisional release of goods, documents and things seized pending adjudication Any goods, documents or things seized under section 110, may, pending the order of the [adjudicating authority], be released to the owner on taking a bond from him in the proper form with such security and conditions as the [adjudicating authority] may require."
(E) Section 110A therefore predicates the provisional release of the goods in issue subject to the satisfaction of the AA in favour of the owner. To the mind of this Court, the operative provisions of section 110A concern the bond, security deposit etc. which lie solely within the domain of the AA qua the owner of the goods. Therefore, to the further mind of this Court, the conditions attached to the provisional release, being a function of the AA 8 alone, the expression "pending the order of the adjudicating authority"
cannot be stretched to bring within its fold the functions at the stage of the Investigating Authority (IA).
(F) In other words, this Court cannot bring itself into agreement with the submissions of Ld. Counsel for the Petitioners that the words "pending the order of the adjudicating authority" would ipso facto mean and imply the power to provisionally release the goods at the stage prior to the AA. The view of this Court is strengthened on a bare reading of Section 110A which permits only the authority in the nature of the AA and, not (emphasis added) the IA, in lieu of the AA, to pass orders connected to provisional release.
(G) This Court has further reason to find merit in the submissions of Ld. Counsel for the Revenue/Respondents that the expression "reason to believe" in Section 110 of the 1962 Act cannot be confined to a mere mechanical or arithmetical examination of value, quantity etc. The expression "reason to believe", if also read in the light of the provisions of Section 110A (supra), places an onus on the owner to present himself before the AA to secure the provisional release of the goods and, does not, in any view the matter, contemplate the IA to assume the mantle of the AA.
Jurisdictionally speaking, neither MG has the authority to seek provisional release nor, the IA assume jurisdiction the task of granting a provisional release.
9(H) This Court is, therefore, also of the view, that the role of the owner in securing the provisional release under section 110A cannot be fulfilled in the alternate by presenting MG, the notarized representative. Noticing further that MG has waded into the waters in June 2017 on a backdated stamp paper of April 2017 presumably anticipating problems with the import which took place 3 months later in September 2017, this Court cannot be oblivious, on a look at the inventory document produced by Mr. Dey, that on the date of the inventory of the goods on 26th September, 2017, the initials of the owner of the goods are found in presence of the proper officer, witnessed by the manager of M/s. Phonex. The owner is since then staying away from the investigation.
(I) Therefore, this Court finds sufficient reason to grant the necessary measure of space and time in favour of the Revenue/Respondents, as permitted by the statute, to investigate. It does strike the mind of this Court that the argument of Mr. Dey deserves to be justifiably meritoriously considered that, in a misdeclaration of such volume and value, it is imperative for the IA to come to a conclusion of identities/individuals connected to the import exercise before the owner is permitted to whisk away the goods from the purview of the investigation.
In the backdrop of the above discussion, this Court discovers that the Petitioners have adopted a nuanced procedure to set up a claim for provisional release which has followed close on the heels of the prayer for 10 destuffing/warehousing of the goods. The provisional release is being claimed at the stage of investigation without even the minimum gestation period permitted to the IA as contemplated by statute. This Court must notice that the investigation commenced only in September 2017 and, till date, after signing the inventory in September 2017, the whereabouts of the owner are not known. Therefore, this Court must additionally mention that the judicial authorities of the Hon'ble High Courts at Madras and Punjab and Haryana respectively In Re:
Malabar Diamond Gallery Pvt. Ltd. vs The Additional Director General dated 28 July, 2016 and, In Re: M/s Century Metal Recycling Pvt. Ltd. & Anr. vs Union of India & Others dated 31st October, 2008, do not squarely fit into the facts of the present case.
In the backdrop of the above discussion, the prayer for provisional release stands refused at this stage.
WP 632 of 2017 therefore stands dismissed at this stage without inviting affidavits.
Allegations made in the writ petition are deemed to be denied. Urgent Xerox certified photocopies of this judgement, if applied for, be given to the parties upon compliance of all requisite formalities.
(SUBRATA TALUKDAR, J.) sd/