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2007 DIGILAW 1660 (PAT)

Md. Numan Alam v. Union Of India

2007-10-08

J.N.BHATT, MIHIR KUMAR JHA

body2007
Judgment Mihir Kumar Jha, J. 1. This appeal is directed against the order dated 30.4.2007 passed in C.W.J.C. no.12114 of 2006 whereby and whereunder the writ application filed by the appellant-writ petitioner seeking relief of release of seized goods by the custom authorities has been dismissed. 2. The fact in nutshell giving rise to this appeal is that on 12.6.2001 the authorities of Central Excise and Customs Department had apprehended a truck, bearing registration no. HR-38A-4049, with battery powder weighing 17500 kilograms suspected to be Zink Oxide/Zinc Sulphate which was being allegedly imported from Australia to Nepal through the border of India. The officials of the Customs Department headed by Joint Commissioner Customs, Patna, had made a preliminary enquiry and after being satisfied on a reasonable belief that the goods and the truck were liable for confiscation under sections 111 and 115 of the Customs Act, 1962 (hereinafter referred to as the Act) had initiated a proceeding against the petitioner and after affording an opportunity of hearing to appellant by issuing a show cause notice dated 3.12.2001 had also passed a final order on 15.7.2003 under section 122 of the Customs Act directing confiscation of the aforesaid seized goods in terms of Section 111 (b) of the Customs Act. The said order of the Joint Commissioner, Customs, Patna, was assailed by the appellant-writ petitioner in Appeal no. 225/CUS/Appeal/2004 which also was dismissed by a reasoned order dated 21.9.2004. The appellant-writ petitioner thereafter had also moved the Customs Excise and Service Tax Appellate Tribunal, Kolkata, Eastern Regional Bench, and the Tribunal also by its order dated 2.6.2005 had dismissed the case of the appellant-writ petitioner for default and/or non-prosecution. 3. It appears that after the disposal of the case of appellant-writ petitioner by the Tribunal that the confiscated goods were auction sold and delivered to the successful auction purchaser on 4.8.2005. The appellant-writ petitioner however had filed an application in the Tribunal for restoration of his application which was restored. When there was another default on behalf of the appellant-writ petitioner the Tribunal again dismissed his application by an order dated 6.1.2006. The appellant-writ petitioner had again filed an application for restoration of his application but this time the Tribunal refused to restore the application by an order dated (Sic) holding the writ petitioner-appellant to be a habitual defaulter. 4. When there was another default on behalf of the appellant-writ petitioner the Tribunal again dismissed his application by an order dated 6.1.2006. The appellant-writ petitioner had again filed an application for restoration of his application but this time the Tribunal refused to restore the application by an order dated (Sic) holding the writ petitioner-appellant to be a habitual defaulter. 4. It is the case of the appellant-writ petitioner that after the Tribunal had refused to restore his application, he had sought the implementation of the order dated 15.7.2003 by which the Joint Commissioner, Customs, Patna, while passing the order of confiscation of the seized goods had given an option to the petitioner under section 125 of the Customs Act to redeem the seized goods on payment of redemption fine of Rs.75,000/- in lieu of confiscation. It is the case of the writ petitioner-appellant that when his representation dated 15.5.2006 and 8.8.2006 did not bear any fruitful result, he had filed the writ application on 9.10.2006 for the solitary relief for a direction to the respondent to release the seized goods in his favour after accepting the redemption fine and the penalty. 5. In the counter-affidavit filed by the respondents-authorities of the Customs Department it was explained that in terms of the order dated 22.7.2003 the writ petitioner-appellant had to exercise option within one month of the issue of the order and as the order of confiscation of goods dated 15.7.2003 was issued on 22.7.2003, the writ petitioner-appellant had to avail such offer redeeming the seized goods on payment of redemption fine in lieu of confiscation by 21.8.2003 but the writ petitioner-appellant failed to avail such offer and thereafter he had no right to either claim redemption of seized goods or its return on payment of the redemption fine and penalty. It was explained in the counter-affidavit that as the appellant-writ petitioner failed to exercise the option within the prescribed time limit despite service of a separate notice dated 21.7.2003 on him, the authorities after the dismissal of the application by the Tribunal on 2.6.2005 had auctioned the goods and delivered the same in favour of the auction purchaser on 4.8.2005. It was explained in the counter-affidavit that as the appellant-writ petitioner failed to exercise the option within the prescribed time limit despite service of a separate notice dated 21.7.2003 on him, the authorities after the dismissal of the application by the Tribunal on 2.6.2005 had auctioned the goods and delivered the same in favour of the auction purchaser on 4.8.2005. In reply to the counter-affidavit the writ petitioner-appellant did not dispute the fact but his plea was that he was required to be given another notice after disposal of the appeal by the Tribunal before the confiscated goods seized by the customs authority could have been auction sold. 6. The learned single Judge having considered the rival contention of both the parties had dismissed the writ application by the impugned order under appeal wherein it has been held that the seized goods had vested in the Central Government under section 125 of the Customs Act and the appellant-writ petitioner having failed to exercise his option to retain the seized goods within the prescribed period of one month had no right to claim return of the goods even on payment of the amount of fine and penalty. The writ court in this regard had also recorded a finding that the appellant-writ petitioner could not have taken a plea that the auction held after expiry of the period suffered from any jurisdictional error or even in violation of the rule of natural justice or in violation of the provision of Customs Act. 7. Learned counsel for the appellant-writ petitioner while assailing the impugned order dated 30.4.2007 passed by the learned single Judge had submitted that the authorities/officials of the Customs Department were duty bound to await the result of his application filed before the Tribunal and the decision to auction sale the seized goods on 2.6.2005 and this consequential auction sale of the seized goods as well as its delivery of the confiscated goods in favour of the auction purchaser on 4.8.2005 was premature because the Tribunal had dismissed this application of the appellant-writ petitioner only on 10.3.2006. It was also sought to be canvassed on behalf of the appellant-writ petitioner that even if the order of confiscation as upheld by the Tribunal was correct, the authorities of Customs Department could not have denied the right of the appellant-writ petitioner to retain the confiscated goods on payment of the amount of fine and penalty, order of confiscation came to be passed against the appellant-writ petitioner, the delivery of the confiscated goods on payment of redemption fine and penalty was his right as he was entitled to claim and possession of the confiscated goods. 8. Learned counsel appearing for the respondents-Union of India and the officials of the Customs Department on the other hand had submitted that on 9.10.2006 when the writ application had been filed it had already become infructuous inasmuch as much before, the date of filing of the writ application, the confiscated goods were already auction sold on 2.6.2005 and its possession was also given to the auction purchaser on 4.8.2005 and as such both the prayer sought in the writ application had become obsolete and infructuous. Learned counsel for the respondents in this connection had also submitted that the prayer of the appellant-writ petitioner in the writ application seeking a direction for release of the seized goods had already become infructuous because the seized goods were already auction sold and also delivered to the auction purchaser almost one year earlier prior to filing of the writ application. It was also submitted that the writ application was itself maintainable because of the changed circumstances moreso when the appellant writ petitioner having acquired knowledge of the auction sale of the seized goods had not assailed the decision of such auction sale nor had even made the auction purchaser a party to the writ application. It was also submitted that the writ application was itself maintainable because of the changed circumstances moreso when the appellant writ petitioner having acquired knowledge of the auction sale of the seized goods had not assailed the decision of such auction sale nor had even made the auction purchaser a party to the writ application. The counsel for the respondents defending the action of auction sale had submitted that irrespective of the pendency of the statutory application before the Tribunal, the Customs authority could not have waited endlessly for exercise of option by the appellant-writ petitioner for redeeming the confiscated goods because in terms of the order passed under section 125 of the Act, the authority while confiscating the goods had given a fixed time limit of one month from the date of the issue of the order and since appellant-writ petitioner did not even choose to intimate the authority that he did not intend to redeem the confiscated goods, the resultant action of putting the confiscated goods on auction sale and that too after the dismissal of the application by the Tribunal cannot be faulted under the scheme of the Act. 9. Having appreciated the aforementioned submissions of both the parties we are of the opinion that there is considerable force in the submission of the learned counsel for the respondents. From the scheme which has been set out in the Customs Act it is absolutely clear that once the competent authority takes a decision for confiscation of goods, they in terms of section 125 of the Act stand vested in the Central Government and the officers adjudging confiscation is authorised to take and hold possession of the confiscated goods. 10. in this regard the provision of section 125 of the Act need to be noticed which reads as follows: 125. 10. in this regard the provision of section 125 of the Act need to be noticed which reads as follows: 125. "Option to lay fine in lieu of confiscation- (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exporation where of is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit: Provided that, without prejudice to the provisions of the proviso to subsection (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. (2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1) the owner of such goods or the person referred to in sub-section (1) shall, in addition, be liable to any duty and charges payable in respect of such goods" 11. It thus becomes apparent under section 125 of the Act an officer adjudging confiscation of any goods has the discretion of giving the owner of goods an option to pay in lieu of confiscation, such fine as he thinks fit but there is nothing in the Act to support submission of the counsel for the appellant-writ petitioner that once such discretion for referring the confiscated goods is given to the owner on specified terms and conditions within the fixed time frame, the officer concerned has to wait endlessly for exercise of such option by the owner of goods. In the present case, the Joint Commissioner, Customs by his order dated 15.7.2003 had passed an order confiscating the seized goods and the operative portion of the order reads as follows: "Accordingly in exercise of power conferred upon me under section 122 of Customs Act, 1962 , I order for confiscation of the seized goods, under section 111(b) of Customs Act, 1962 , however offer an option to the owner of the goods under section 125 of Customs Act, 1962 to redeem the seized goods on payment of redemption fine of Rs. 75,000/- in lieu of confiscation. This option is to be exercised within one month of issue of the order. However, the release of goods to be done on payment of penalty amounts to the notice." 12. I order for confiscation of the seized truck under section 115(2) of Customs Act, 1962 . However, since the truck has been released provisionally on bond, on deposition of cash security of Rs. 25,000/-. I offer an option under section 125 of Customs Act 1962 to redeem the seized truck on payment of redemption fine of Rs. 25,000/-. 13. I impose penalty, shown against the names mentioned below, under section 112 of Customs Act 1962. Notice No. Names Identity Amount of Penalty 1 Sri Praveen Kumar Driver 10,000/- 2 Sri Narendra Kumar Khalasi 5,000/- 3 Sri Rajiv Kr. Thakur Agent of the owner 15,000/- 4 Sri Numan Pal Owner of the goods 25,000/- 5 Sri Surendra Pal Owner of the truck 10,000/- 6 Sri Ashok Kr. Singh Partner of Transport Co. 10,000/- 14. From the said order it is clear that such an option in terms of section 125 of the Act had to be exercised within one month of the issue of the order which admittedly was issued by registered post vide letter no. 2687 dated 22.7.2003 (Annexure-1) to the writ application. There is no averment in the writ application that the writ petitioner had even informed the authority of filing of the appeal or that he intended to avail the option even after expiry of one month. In that view of the matter, when the goods stood confiscated under section 125 of the Act and vested in the Central Government, the officer adjudging confiscation was authorised by law to take and hold possession of the confiscated goods and also to take consequential action for its auction in ac- cordance with the provisions of the Act n and Rules made thereunder. Learned single Judge has correctly held that after vesting of the confiscated goods in the Central Government, the writ petitioner-appellant lost his entitlement for retaining the seized articles specially when he had failed to avail the option given to him in the order dated 15.7.2003. It may be noted that in the present case the proceedings have been taken under the Customs Act and the seized property had been confiscated. It may be noted that in the present case the proceedings have been taken under the Customs Act and the seized property had been confiscated. Such confiscated goods/property had stood vested in the Central Government on 15.7.2003 itself. The appellant-writ petitioner could not have claimed the return of the seized confiscated goods without challenging the confiscation proceeding. Admittedly, the writ petitioner-appellant challenged the confiscation proceeding and the orders passed thereunder, which as noted above, were rejected by the statutory forums. In that view of the matter, when the Legislature enacting the Customs Act has empowered the customs authorities to adjudicate the proceeding and after observing formalities direct confiscation, the appellant-writ petitioner cannot raise a challenge to such order after expiry of more than three years. It is apparent from the scheme of the Act that when such an order of confiscation is made, the goods automatically vest in the Central Government. The Act and the Rules made thereunder also clearly provide that adjudication officer is entitled to take and hold possession of the confiscated goods on behalf of the Central Government. In such view of the matter, the auction sale of the seized confiscated goods cannot be said to be illegal specially when the authorities had auctioned those goods only after dismissal of the application of the appellant-writ petitioner by Tribunal on 2.6.2005. The appellant-writ petitioner in fact after auction sale of the seized confiscated goods and its delivery of possession in favour of successful auction purchaser on 4.8.2005 could not have been restored the possession of the seized confiscated goods as prayed in the writ petition filed after more than one year i.e. on 9.10.2006. The writ application in fact was fit to be dismissed on the ground alone. We therefore find no reason to interfere with the order passed by the learned single Judge and accordingly this appeal must be dismissed. 15. Before parting with, we would however record our approval to the observation made by the learned single Judge as with regard to the manner of holding auction. We hope and trust that the customs authority in future shall be careful in holding auction. It is really a cause of concern that the articles confiscated at the time of seizure of a value of Rs. 3,50,000/- had been auction sold for a paltry sum of Rs. 402/- only. We hope and trust that the customs authority in future shall be careful in holding auction. It is really a cause of concern that the articles confiscated at the time of seizure of a value of Rs. 3,50,000/- had been auction sold for a paltry sum of Rs. 402/- only. In absence of any explanation as to how the goods lost the value to such an extent, it has been rightly observed by the learned single Judge that there must be some rational between the value of the seized articles at the time of seizure and the price on which it is auction sold. In absence of the pleadings on either side as to how the value of the goods diminished to this extent, we would not like to make any further comment save and except to reiter-ate the observation of the learned single udge that in future the respondents in similar matter must maintain transparency and if any articles are auctioned sold at a very low price, the reason for the same must be recorded. 16. We accordingly affirm the judg-ment of the learned single Judge and dismiss the appeal. However there would be no order as to costs.