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2001 DIGILAW 1025 (PAT)

Sharda Plastic Industries v. Union Of India

2001-11-09

CHANDRAMAULI KR.PRASAD

body2001
Judgment 1. This application has been filed for issuance of writ in the nature of mandamus or any other appropriate writ, order or direction commanding the respondents to handover 200 ks. of polythene shopping bags seized by the respondents on 25.2.1999 or to refund them the price of the aforesaid seized goods which was assessed at Rs. 20,000/-, at the time of its seizure along with interest thereon. 2. Shorn of unnecessary details, facts giving rise to the present writ application, are that petitioner No. 1 is a factory manufacturing polythene bags and is a licensed importer of plastic goods. Petitioner No. 2 is the manager. On 25.2.1999, ten sacks containing 200 kilograms of polythene shopping bags were seized by the authorities of Customs Department from the roof of the bus in course of preventive checking. This was seized purportedly on the ground that the polythene shipping bags are contraband goods under Section 110 of the Customs Act. 1962 as it violated the Government of India, Ministry of Finances Notification No. 9/Cis/96 dated 22.1.1996 issued under Section 11 of the Customs Act. 1962 read with Section 3 of the Foreign Trade (Development and Regulation) Act, 1992. At the time of seizure, its value was assessed at Rs. 20, 000/-and at that time, neither petitioner No. 2 nor any representative of the petitioner was available and when he came to know about the seizure, an application was filed claiming ownership of the aforesaid goods. 3. A confiscation proceeding was initiated by the Deputy Commissioner, Customs and the adjudicating authority i.e. Deputy Commissioner, Customs (Preventive Division), by order dated 16.12.1999, directed for confiscation of the goods and imposed a penalty of Rs. 40,000/- each on the petitioners. 4. Aggrieved by the same, petitioners preferred appeal before the Commissioner (Appeals), Customs and Central Excise which was registered as Appeal No. 144-145/Pat/Cus/Appeal/ 2000. The appellate authority, by order dated 27.4.2000, set aside the order of the adjudicating authority confiscating the aforesaid goods as also the penalty. In the meanwhile, the goods in question was sold to National Consumer Cooperative Federation on 14th of January. 2000 for Rs. 7000/-. 5. After the order of the adjudicating authority was set aside by the appellate authority, petitioners filed application for release of the seized goods and it is the grievance of the petitioners that although they filed successive applications, but the confiscated goods were not released. 2000 for Rs. 7000/-. 5. After the order of the adjudicating authority was set aside by the appellate authority, petitioners filed application for release of the seized goods and it is the grievance of the petitioners that although they filed successive applications, but the confiscated goods were not released. However, an order was issued by the officers of the Custom Department for payment of a sum of Rs. 7000 to the petitioners as the goods seized from them was sold for that amount. 6. Mr. Sanjay Kumar Sinha, learned counsel appearing on behalf of the petitioners contends that at the time goods were seized, its value was assessed at Rs. 20.000/- and as the order of confiscation has been set aside by the appellate authority, petitioners shall be entitled to receive the aforesaid amount. He submits that the respondents ought not to have sold the goods without notice to he petitioners and. in case, said fact would have been brought to their notice, they would have either objected to the sale of the seized goods or price for which the same were to be sold. He points out that in similar circumstances, this Court had directed for payment of the price of the goods as was assessed at the time of its seizure in Cr WJC No. 37 of 2000 M/s. Sharda Plastic Industries and another V/s. The Union of India and others, by order dated 26.2.2000. 7. Mr. Rakesh Kumar, learned Additional Standing Counsel for the Central Government, however, submits that the goods were directed to be confiscated by order dated 16.12.1999 and the said order was set aside by the appellate authority on 27.4.2000, but before that, the goods were sold on 14.1.2000 and as such, no notice was necessary to be given to the petitioner. He points out that after the order of confiscation the goods became the property of the Central Government, which would be evident from Section 126 of the Customs Act. which inter alia, provides that when any goods are confiscated under the Act, such goods shall thereupon vest in the Central Government. 8. Having appreciated the rival submissions. I do not find any substance in the submission of Sri Kumar. Section 126 of the Customs Act, which is relevant for the purpose reads as follows : "126. which inter alia, provides that when any goods are confiscated under the Act, such goods shall thereupon vest in the Central Government. 8. Having appreciated the rival submissions. I do not find any substance in the submission of Sri Kumar. Section 126 of the Customs Act, which is relevant for the purpose reads as follows : "126. On confiscation, property to vest in Central Government (1) When any goods are confiscated under this Act, such goods shall thereupon vest in the Central Government. (2) The officer adjudging confiscation shall take and hold possession of the confiscated goods." 9. A plain reading of the aforesaid provision makes it clear that when goods are confiscated under the Act. such goods shall vest in the Central Government but in my opinion this shall be subject to the order of the appellate authority and the superior authority or the court. 10. As stated earlier, the polythene bags were seized on 26.2.1999 and the adjudicating authority, by order dated 16.12.1999, directed for its confiscation. At the time when the goods were seized. respondents authority itself assessed the value of the seized goods to be Rs. 20,000. The appeal preferred by the petitioners was allowed by the appellate authority by order dated 27.4.2000 and it had set aside the order of the adjudicating authority. It has been averred by the petitioners that no such notice was given to them and this fact has not been controverted by the respondents. Mr. Sinha contends that before selling the goods at a price less than its value assessed at the time of its seizure, it was incumbent upon the respondent to give notice to the petitioners. Mr. Kumar, however, submits that in a case when goods have been confiscated, no notice is required to be given to the owner and it is only in those cases where goods have not been confiscated that notice under Section 150 of the Customs Act shall be necessary. Section 150 of the Act reads as follows : "150. Procedure for sale of goods and application of sale proceeds. (1) Where any goods not being confiscated goods are to be sold under any provisions of this Act, they shall, after notice to the owner thereof, be sold by public auction or by tender or with the consent of the owner in any other manner. Procedure for sale of goods and application of sale proceeds. (1) Where any goods not being confiscated goods are to be sold under any provisions of this Act, they shall, after notice to the owner thereof, be sold by public auction or by tender or with the consent of the owner in any other manner. (2) The proceeds of any such sale shall be applied (a) firstly to the payment of the expenses of the sale; (b) next to the payment of the freight and other charges, if any, payable in respect of the goods sold, to the carrier, if notice of such charges has been given to the person having custody of the goods; (c) next to the payment of the duty, if any, on the goods sold; (d) next to the payment of the charges in respect of the goods sold due to the person having custody of the goods; (e) next to the payment of any amount due from the owner of the goods to the Central Government under the provisions of this Act or any other law relating to customs, and the balance, if any, shall be paid to the owner of the goods." 11. Section 150 of the Act provides for procedure for sale of any goods not being confiscated and it provides for giving notice to the owner. As observed earlier, the order of confiscation is subject to the decision of the appellate authority and the superior court and vesting of goods to the Central Government under Section 126 of the Act is subject to appeal and order passed by the superior court. 12. I am of the opinion that the authority shall be obliged to give notice to the owner, in a case when appeal or proceeding is pending against the order of adjudicating authority. This may not have specifically been provided under Section 150 of the Act but this flows from the scheme of the Act. 13. In the present case, petitioner had preferred appeal against the order of confiscation and three months prior to the final order passed by the respondent-authority, sold the goods on 14.1.2000. In my opinion, had the petitioners informed about the same, they would have objected to the price for which the goods were sold. 13. In the present case, petitioner had preferred appeal against the order of confiscation and three months prior to the final order passed by the respondent-authority, sold the goods on 14.1.2000. In my opinion, had the petitioners informed about the same, they would have objected to the price for which the goods were sold. In such circumstances, I am of the opinion that the petitioners shall be entitled to receive the price of the goods, as assessed at the time of seizure. The view of which I have taken finds support from the order of this court dated 26.4.2000 passed in CWJC No. 37 of 2000, M/s. Sharda Plastic Industries and another v. Union of India & others, in which it has been observed as follows : "The respondent No. 3 Assistant Commissioner, Customs (Preventive Division) Muzaffarpur is directed to immediately release the seized polythene bags or if they have been auctioned/sold or destroyed, the amount which was assessed in respect of those polythene bags at the time of seizure with interest at the rate of 6% per annum reckoned from the date of quashing of the seizure and confiscation proceeding by the concerned authorities." 14. In the result, the application is allowed. Respondents are directed to pay to the petitioners a sum of Rs. 20,000/-- with interest at the rate of 6% per annum reckoned from 27.2.2000, le. the date on which the appellate authority set aside the order of the adjudicating authority. In the facts and circumstances of the case, there shall be no order as to costs.