Punjab-Haryana High Court
M/S Manoj Kumar Sanjay Kumar vs Commissioner Of Customs And Another on 9 October, 2009
Author: Kanwaljit Singh Ahluwalia
Bench: T.S. Thakur, Kanwaljit Singh Ahluwalia
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
Civil Writ Petition No.18956 of 2006 (O&M)
Date of decision: 9th October, 2009
M/s Manoj Kumar Sanjay Kumar
... Petitioner
Versus
Commissioner of Customs and another
... Respondents
Civil Writ Petition No.1 of 2007
M/s Manoj Kumar Sanjay Kumar
... Petitioner
Versus
Additional Director General (Revenue Intelligence) and another
... Respondents
CORAM: HON'BLE MR. JUSTICE T.S. THAKUR
HON'BLE MR. JUSTICE KANWALJIT SINGH AHLUWALIA
Present: Mr. Jagmohan Bansal, Advocate for the petitioner.
Mr. Kamal Sehgal, Advocate for the respondents.
KANWALJIT SINGH AHLUWALIA, J.
Civil Misc. No. 12623 of 2009
The application is allowed, subject to all just exceptions. Civil Misc. No. 12624 of 2009 For the reasons stated in the application, the same is allowed and status report in the form of affidavit taken on record.
Civil Writ Petitions No. 18956 of 2006 & 1 of 2007 2 Civil Misc. No. 6015 of 2009 The application is allowed, subject to all just exceptions. Civil Misc. No. 6016 of 2009 For the reasons stated in the application, the same is allowed and status report in the form of affidavit taken on record. Civil Writ Petition No.18956 of 2006 By this common order, Civil Writ Petition No. 18956 of 2006 titled as 'M/s Manoj Kumar Sanjay Kumar v. Commissioner of Customs and another' and Civil Writ Petition No. 1 of 2007 titled as 'M/s Manoj Kumar Sanjay Kumar v. Additional Director General (Revenue Intelligence) and another' will be decided together.
Whether an importer, who is alleged to be guilty of mis- declaration of description of goods and under-valuing the invoices, can invoke extraordinary jurisdiction of this Court by filing a writ petition with a prayer that the authorities be directed to reimburse the cost of detention and demurrage charges during the pendency of proceedings before the appropriate authority, which has issued a show-cause-notice for imposing duty, penalty and confiscation of goods, especially when goods have been provisionally released, is a question which has been raised in the present writ petition.
Petitioner firm, a proprietorship concern, is engaged in the business of importing mixed fatty acid and mixed acid oil from Malaysia. According to the petitioner, the product in question is a bi-product of oleo chemical plant and from last one year, petitioner has been active in import of the product. This writ petition was filed with a prayer that a writ in the nature of mandamus be issued directing the respondents, i.e. the Commissioner of Customs, Inland Container Division (ICD), Tughlakabad, Civil Writ Petitions No. 18956 of 2006 & 1 of 2007 3 New Delhi and the Director General of Revenue Intelligence, New Delhi to immediately release goods imported by the petitioner, which were detained at Inland Container Division, Tughlakabad (hereinafter referred to as, 'ICD Tughlakabad').
The grievance of the petitioner is that in terms of section 46 of the Customs Act, 1962 (hereinafter referred to as, 'the Act'), petitioner submitted bills of entry seeking clearance of goods for home consumption, but the clearance of the goods was not granted as required under Section 47 of the Act. The case of the petitioner is that in October and November, 2006, 32 containers of the above said product were imported. 29 containers were of 'mixed acid oil', whereas 3 containers were of 'mixed fatty acid'. Out of the 29 containers of mixed acid oil, in the bills of entry filed, petitioner had declared value as 185 dollars per MT pertaining to 24 containers and for the rest of 5 containers, the value declared in the bills of entry was 170 dollars per MT. Whereas, qua 3 containers of mixed fatty acid, the value declared was 210 dollars per MT. Despite various visits of agent of the petitioner for release of the goods, the same were not released and petitioner has averred that on 15th November, 2006, he was orally informed that clearance of goods can only be permitted by the Department in case he agrees to pay the duty, taking the assessable value as 340 US dollars per MT. According to the petitioner, bills of entry were filed on 13th October, 2006, 28th October, 2006, 3rd November, 2006 and 6th November, 2006 respectively. The petitioner has further stated that non-release of 32 articles has fastened him with charges of Rs.2.00 lakh per day towards detention and demurrage. According to the petitioner, to avoid this cost towards demurrage, he agreed to pay the duty on higher rate of value and in compliance with the oral demand of the Department, petitioner had addressed a letter (Annexure P-1). It will apposite here to Civil Writ Petitions No. 18956 of 2006 & 1 of 2007 4 reproduce the contents of the letter addressed by the petitioner to the Additional Director (DRI), Headquarter, New Delhi:
"This is to inform you that our firm M/s Manoj Kumar Sanjay Kumar has imported 29 Containers Mixed Acid Oil and 3 container Mixed Fatty Acid from Malaysia.
We have came to know the said containers have been stopped ICD TKD for examination.
As per Invoices, the value of the consignment has been declared at USD 185 of Mixed Acid Oil and USD 210 for Mixed Fatty Acid but now market value of Mixed Acid Oil is USD 340 and Mixed Fatty Acid is USD 420.
We are ready to pay duty on this value, we don't want any show cause notice for this. We are incurring huge demurrage charges, clearing may be expedited."
The petitioner has relied upon section 17 of the Act and has stated that it was incumbent upon the concerned officer to examine, test and assess the duty without any undue delay. The petitioner has urged that if section 17 is read in conjunction with section 47 of the Act, goods being imported were required for home consumption, an order permitting clearance of the goods ought to have been passed immediately, as examination of the goods was carried and sample was drawn, especially when no order regarding detention of seizure of goods was passed by the competent officer.
The case set out by the petitioner is that this Court had earlier directed the respondents to prescribe the procedure for clearance of goods expeditiously, so that the importer is saved from losses and does not incur recurring expenses of detention and demurrage charges. It is stated that in pursuance of the orders passed by this Court, Chief Commissioner of Customs on 22nd August, 2006 had issued directions that goods should be cleared within three days from the date of filing of bills of Civil Writ Petitions No. 18956 of 2006 & 1 of 2007 5 entry. The instructions issued to this effect have been annexed as Annexure P-2. To fortify this submission, it has been submitted that with effect from 13th July, 2006, the Government had inserted sub-section (5) to section 17 of the Act to save the importer from delay in clearance of the goods. It is submitted that it is mandatory for the concerned officer under sub-section (1), (2) and (5) of section 17 of the Act to pass a speaking order within 15 days from the date of assessment, whenever there is a dispute regarding valuation. To support this contention, the petitioner has also referred to Chapter 16 of the Manual of Central Board of Excise and Customs and has stated that where the importer has not declared a correct assessable value, the dispute being purely of valuation, the imported material should not be detained simply on valuation or classification disputes.
In response to the writ petition, a counter affidavit has been submitted by the Assistant Director General, DRI, New Delhi, in which he raised a preliminary objection that the petitioner is not entitled to invoke territorial jurisdiction of this Court. It has been stated that the goods were imported at Delhi, bills of entry were filed at Delhi and clearance of goods was also sought at Delhi and simply because office of the petitioner falls within the jurisdiction of this Court, this Court cannot assume territorial jurisdiction. It has further been submitted that the Department of Revenue Intelligence, on a definite information, is investigating into the scam by nine firms, which indulge in import of Palm Stearin and Crude Palm Oil in the guise of mixed acid oil/ mixed fatty oil, which are not freely importable. It is stated that apart from the mis-declaration in description as per the preliminary estimates of the Department, there is evasion of duty amounting to Rs.30-40 crores on the part of the firms, whose conduct is being scanned. In the counter-affidavit, it is pleaded that palm stearin can Civil Writ Petitions No. 18956 of 2006 & 1 of 2007 6 only be imported, subject to the condition specified in the public notice issued in this regard and the imported item was a health hazard under the PFA Act. The information so received was forwarded to the Commissioner of Customs, ICD Tughlakabad, New Delhi on 13th October, 2006. In the information, it was suggested that the sample of goods be taken and same be got tested from Port Health Authorities and other Govt./reputed authorities, including Sri Ram Institute of Science and Technology, New Delhi. The Department had issued an alert and in pursuance thereof, Customs authorities had drawn the samples. The panchnama was drawn at the spot on 22nd November, 2006 and on 23rd November, 2006, Manoj Kumar, proprietor of the petitioner firm made a voluntary statement under Section 108 of the Act and admitted that the firm had imported Palm Fatty Acid Distillate by mis-declaring it as Mixed Fatty Acid and similarly imported Mixed Acid Oil which was a product of Crude Palm Oil and was under-valued. The petitioner used to submit under-valued invoices, showing less value.
Case of the Department is that Manoj Kumar, proprietor of the petitioner firm had volunteered to deposit the duty evaded by him and submitted demand draft of Rs.11,32,385/- towards partial discharge of his duty liability. Depicting the conduct of the petitioner, respondents would say that there was no undue delay on the part of the respondents to release the goods.
The Assistant Director of Revenue Intelligence filed an additional affidavit on 18th January, 2007, in which it was stated that all the samples drawn from the seized cargo of the petitioner have been got tested. According to the test report, there was mis-declaration in terms of description and value pertaining to 29 containers out of 32 containers imported by the petitioner firm. In respect of remaining 3 containers, there Civil Writ Petitions No. 18956 of 2006 & 1 of 2007 7 was a mis-declaration in terms of value. On 27th December, 2006, the Commissioner of Customs, ICD Tughlakabad was requested to release the seized goods provisionally and finally the petitioner had obtained provisional clearance of all seized goods on 5th January, 2007.
We have heard counsel for the parties. It is not disputed that after completion of the investigation, a show cause notice dated 8th May, 2009 was issued by the Additional Director General, DRI, New Delhi demanding customs duty amounting to Rs.20,41,899/- along with confiscation of goods and imposition of penalty.
Mr. Jagmohan Bansal appearing for the petitioner, has urged that there was no justification with the respondent to detain the imported goods from 13th October, 2006 to 2nd December, 2006. Once the bills of entry were submitted, immediately goods were to be examined and tested, and due to inaction on the part of the respondents, petitioner has been saddled with demurrage charges, which amounts to Rs.2.00 lakh per day, therefore this Court should order that the demurrage charges be reimbursed to the petitioner. Learned counsel submitted that the samples sent by the Department were not tested by the concerned laboratory at the earliest and therefore, delay has occurred and the petitioner should be compensated.
Mr. Kamal Sehgal appearing for the Department of Revenue Intelligence has urged that a definite information was received from the intelligence sources that the petitioner was importing Palm Stearin and Crude Palm Oil and import of these items was banned. Learned counsel has further urged that this information was, later proved true. Therefore, no indulgence should be shown to the petitioner.
At this stage, we shall refrain ourselves from adjudging the merits of the claims and the counter-claims made by the parties to the writ Civil Writ Petitions No. 18956 of 2006 & 1 of 2007 8 petition. Suffice it to say, a show cause notice has been served upon the petitioner firm. The firm has got ample opportunity to prove its innocence before the concerned authorities. There is inbuilt mechanism under the Act for redressal of the grievance of the petitioner firm. In case petitioner fails to convince the concerned authorities, it has legal remedy to prove its point. There is no bar to the petitioner to urge before the authorities that the firm has suffered losses by paying demurrage and detention charges and it should be compensated.
The view formulated by us is in consonance with the observations made by Hon'ble Apex Court in 'Silbans International v. Collector of Customs' 2002 (146) E.L.T. 495 (S.C.). Their Lordships held as under:
"In our opinion the High Court has rightly held that the writ petition filed by the appellant seeking the relief in respect of grant of detention certificate was not maintainable in the facts and circumstances of this case especially when the appellant has already cleared the goods from the warehouse by paying the demurrage charges. The High Court was also right in taking the view that appellant may seek other remedy available under law. We do not find any infirmity in the impugned judgment of the High Court."
However, in case it is held that the conduct of the petitioner firm is visited by fraud and forgery, by mis-declaration of the goods, in the bills of entry and in the guise of goods declared, it has indulged in importing banned substance, petitioner firm will not be entitled to take advantage of the wrong committed by it. Hence, the prayer made in present petition is not accepted and the writ petition is dismissed, with no order as to the costs.
Civil Writ Petitions No. 18956 of 2006 & 1 of 2007 9 There is another aspect of this writ petition, which requires our attention.
This writ petition was filed on 29th November, 2006. A Coordinate Bench, on 8th December, 2006 took notice of the fact that bills of entry were filed on 13th October, 2006, no decision was taken, even though a period of two months had elapsed. The Court, in order to cure the delay caused, expressed its opinion that mechanism for taking expeditious decision is to be evolved so that the goods detained do not deteriorate in value and the importer is not made to pay heavy demurrage charges. On 13th December, 2006, Ms. Parveen Mahajan, Additional Director General, Directorate of Revenue Intelligence, New Delhi appeared and this Court recorded the following order:
"... ... ... It remains undisputed that in the present case the samples taken on 31.10.2006 have still not been tested, though a period of about 7 weeks has gone by and it is expected to take two weeks further time. Once there is jurisdiction to seize goods on any suspicion, there is a corresponding obligation to take quick decision. Exercise of power of seizure of any goods in the absence of a quick decision, without any responsibility is prima facie not permissible in view of Articles 14 and 19 of the Constitution of India. Ms.Mahajan submitted that there being only two Laboratories available for conducting the tests, the delay is inevitable. She assured the Court that decision to streamline the working on this aspect will be quickly taken within a week and reported to this Court on the next date of hearing ... ... ..."
On 21st December, 2006, this Court was assured that in pursuance of the observations made by this Court, a circular dated 20th December, 2006 was issued by the Ministry of Finance, Department of Civil Writ Petitions No. 18956 of 2006 & 1 of 2007 10 Revenue (Central Board of Excise and Customs) for expeditious clearance of imported cargo, where testing of sample is necessary before clearance. The official present in the Court informed that the delay takes place on account of shortage of storage space, shortage of equipment in the laboratory and shortage of manpower. An assurance was also given that deficiencies will be monitored and necessary remedial measures will be taken. The Department has submitted various status reports. In the affidavit dated 18th January, 2007, it was submitted that for upgradation of Central Revenue Chemical Laboratories and for purchase of necessary equipment and for testing of various samples, required for different commodities, a modernization programme has been chalked out and the Ministry of Finance has granted sanction of Rs.3.57 crores and the Department, to meet the shortage of manpower, had decided to fill up the vacancies. On 12th May, 2009, in the status report submitted in the form of affidavit, the Deputy Director (Revenue Intelligence), New Delhi submitted that commercial bids received for purchase of equipment have been scrutinized and a meeting of the Technical Evaluation Committee has been requisitioned. To meet the shortage of staff, the post of Director (Revenue Laboratories) has been filled up, two posts of Joint Director (NFSG) are likely to be filled within a short time and for filling up 12 posts of Chemical Examiner Grade I on adhoc basis, permission of the Ministry has been sought. All the thirty promotional posts of Chemical Examiner Grade II have been filled up on regular basis by way of promotions, however, two posts of SC category and one post of ST category are lying vacant for non-eligibility of candidates. Remaining 14 posts of Chemical Examiner Grade II, to be filled through direct recruitment, have been advertised and further action is being taken by Union Public Service Commission. Similarly, 39 posts of Chemical Assistant Grade II, to be Civil Writ Petitions No. 18956 of 2006 & 1 of 2007 11 filled through direct recruitment, have been advertised and recruitment is likely to be completed. The Department further stated that the time lag for testing the samples has been reduced. Now, most of the samples are analyzed and report is submitted within one month, and even in case of some samples, after testing, the report is submitted within 15 days. There is a marked improvement in testing and disposal of samples. In the affidavit dated 27th July, 2009, it was submitted that Technical Evaluation Committee had recommended acceptance of bids for three items and administrative approval is awaited. This status report also give details regarding recruitment and promotion of the staff required for running the laboratories.
We are satisfied that the Department has taken active steps to reduce the period of testing of the samples and submission of reports, which was a major factor for causing delay in settlement of the dispute. Therefore, no further directions are required to be issued.
As stated earlier, this writ petition is dismissed without any order as to the costs.
Civil Writ Petition No. 1 of 2007 This petition was filed on 2nd January, 2007 for release of 32 containers, description of which has been given in Civil Writ Petition No. 18956 of 2006. Counsel for the parties are in agreement that the facts and law noticed in that writ petition and the decision thereof shall also resolve the controversy raised in the present petition, especially when the goods have been released provisionally on 5th January, 2007 as the only relief of release of goods was sought in this petition and therefore, no separate orders are required to be passed. Counsel for the petitioner has further submitted that bank guarantee was furnished by the petitioner and the Civil Writ Petitions No. 18956 of 2006 & 1 of 2007 12 same may be encashed, so that petitioner is saved from any further complications.
We permit the petitioner to file an application before the respondents for encashment of the bank guarantee. In case such an application is filed, the respondents will encash the bank guarantee, subject to its adjustment as per procedure prescribed.
For the reasons stated above and the fact that the show- cause notice was served upon the petitioner, we are of the view that no interference is warranted. Hence, present writ petition is also dismissed.
Dismissed. No costs.
[T. S. THAKUR] [KANWALJIT SINGH AHLUWALIA]
CHIEF JUSTICE JUDGE
October 9, 2009
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