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2008 DIGILAW 172 (CAL)

Sachin Bhupendra Desai v. UNION OF INDIA

2008-02-08

B.PRAKASH RAO, L.NARASIMHA REDDY

body2008
Judgment : ANIRUDDHA BOSE, J. (1.) THE petitioner is the sole proprietor of a firm engaged in the business of inter-alia, import and export of stamping foils. In this writ petition, the petitioner in substance challenges withholding of clearance of a consignment of stamping foils from China. The present writ petition is in fact the second round of litigation over this consignment. These goods originally reached the port of Kolkata in the first week of March, 2007 and at the time of clearance, it was revealed that there was an excess stock of 2.6 MT over and above the declared quantity. The petitioner attributes this to an error on the part of their overseas supplier and prayed for clearance of the goods on payment of full duty for the excess material. (2.) SUCH clearance was not permitted and the petitioner made an application before this Court under Article 226 of the Constitution of India being W.P. No. 676 of 2007 challenging the action of the Customs Authorities for not permitting the release of the goods on provisional assessment. This writ petition was disposed of by an order passed on 21st June 2007 with the following direction: "I am of the view that since there is a provision under the Customs act 1962 for provisional assessment of duty under Section 18, in the event, petitioner satisfies the Customs authorities for exercise of power under Section 18 for the purpose of provisional assessment of duty, the Customs authorities shall adjudicate the matter and decide the same in accordance with law. Provisional assessment shall be paid provided the Customs authorities are satisfied that sufficient case has been made out for exercise of power under Section 18. However, this exercise may be completed within a period of four weeks from the date of communication of this order to the Customs authorities. I make it clear that I have not many observation as regards the merits of the petitioners claim and it shall be open to the customs authorities to assess the strength of petitioners case on its own merits in accordance with law. And the petitioner shall also cooperate with the Customs authorities in this exercise. I make it clear that I have not many observation as regards the merits of the petitioners claim and it shall be open to the customs authorities to assess the strength of petitioners case on its own merits in accordance with law. And the petitioner shall also cooperate with the Customs authorities in this exercise. With these direction, the instant writ petition is disposed of." (3.) THE Customs Authorities by an order passed on 3rd August 2007 rejected the petitioners prayer for provisional assessment of goods and consequentially application of the petitioner for clearance of the goods on the basis of such provisional assessment stood also rejected. In this writ petition, however, the main relief prayed for is for a direction on the customs authorities to permit clearance of the subject-goods on making provisional assessment. The writ petition was filed on 21st August 2007. This order has not been made annexure to the writ petition, but was made available in course of hearing of the petition, and in the affidavit-in-opposition filed by the Customs authorities, a copy of the order is annexed. The order passed on 3rd August 2007, however, has not been challenged in this writ petition. (4.) MR. Chowdhury, learned counsel appearing for the petitioner, however, based his case primarily on the point that the petitioner had made out a case for mandatory direction on the Customs authorities requiring them to clear the goods on the basis of provisional assessment. Though the order rejecting the petitioners application for clearance of the consignment on provisional assessment has not been challenged in the writ petition, as a copy of the order has been brought on record by annexing it to the affidavit-in-opposition, I chose to examine the order. The scope of my examination was however, confined to test the same in the context of the submission advanced on behalf of the petitioner that in his case, there was no option on the part of the Customs authorities but to make provisional assessment of the consignment of the petitioner. The scope of my examination was however, confined to test the same in the context of the submission advanced on behalf of the petitioner that in his case, there was no option on the part of the Customs authorities but to make provisional assessment of the consignment of the petitioner. As it appears from the impugned order, summons in spite of being issued under section 108 of the Customs Act, the petitioner did not appear before the Customs authorities to record his statement and on the other hand the Customs authorities received a communication from his father that the petitioner was busy in some urgent work in Gujarat and the father of the petitioner requested the Customs Authorities to take necessary action on the basis of available documents and no other document was available with him. (5.) THE main ground on which the instant writ petition is resisted by the customs authorities is on availability of an alternative forum for challenging the impugned order, there being provision for filing of appeal before the commissioner (Appeals). It is also the case of the Customs authorities that the designated authority is vested with discretion under the statute to make provisional assessment, and the petitioner has no vested right to compel the authority to exercise such discretion in his favour. The case of the Customs authorities on facts, as made out in the affidavit-in-opposition is that on information received by them that the petitioner had been indulging in underinvoicing and thereby making misdeclaration of quantity and value of the goods the consignment was intercepted at the point of clearance from the dock. It was then excess quantum of goods was found to have been imported, beyond that what was declared. However, when asked to explain, the importer had admitted the mistake and produced a second set of documents being a new packing list which was not disclosed by the importer before the Special investigation Branch Officer. This is the case of the respondent authorities on fact. (6.) AS recorded in the order, a search wad conducted at the office and residential premises of the petitioner from which it is alleged that several incriminating documents including duplicate packing list of earlier import bills were recovered under section 108 of the Act. This is the case of the respondent authorities on fact. (6.) AS recorded in the order, a search wad conducted at the office and residential premises of the petitioner from which it is alleged that several incriminating documents including duplicate packing list of earlier import bills were recovered under section 108 of the Act. Summons were issued six times, thrice prior to the date on which the order of this Court was passed, and there summons thereafter, to the petitioner to explain the source of documents received from his possession and for clarifying other related aspects of the case, but the petitioner did not respond and never appeared before the Customs authorities. (7.) THE case of the respondents is that the prayer for provisional assessment can be considered only when the conditions stipulated in Section 18 of the Act are satisfied. From the order passed under the provisions of Section 18 of the customs Act 1962, I find that the designated officer, being the Deputy commissioner of Customs has rejected the petitioners application mainly on two counts. Firstly, he has held that the importer has not furnished full information for assessment of duty, and the importer has not co-operated with the Customs authorities ever since the mis-declaration of quantity and value of the goods was detected. The other ground on which the application for provisional assessment has been refused is that the importer was in possession of two packing lists indicating different quantities for the same consignment. The department was not informed of this fact at the time of filing of the bill of entry. As per the order, such non-disclosure constitutes violation of the provisions of Section 46 (4) of the Act. Since the right of an importer to obtain release of goods upon making provisional assessment under Section 18 is without prejudice to the provisions of Section 46, it was observed in the order that the provision of Section 18 is not applicable in the present case. (8.) THE Customs authorities contested the proceeding by filing affidavit-inopposition. In their affidavit, the order passed rejecting the petitioners application has been annexed. Objection has been raised as regards maintainability of this writ petition on the ground of there being provision for appeal against the order passed on 3rd August 2007. (8.) THE Customs authorities contested the proceeding by filing affidavit-inopposition. In their affidavit, the order passed rejecting the petitioners application has been annexed. Objection has been raised as regards maintainability of this writ petition on the ground of there being provision for appeal against the order passed on 3rd August 2007. It has also been pleaded in this affidavit that the petitioner (being referred therein in its firm name, M/s mahavir International) had imported identical goods from the identical supplier earlier declaring four times higher value than what was declared in the consignment which is the subject of the present proceeding. Upon detection of the discrepancies, six summons were issued under Section 108 of the Customs act, but the importer chose not to respond to the same, and the investigation could not be completed. Learned counsel for the Customs authorities has also brought to my notice that by an order under Section 110 (I) of the Customs Act, 1962 passed on 14th August 2007, the Manager of Balmer Lawrie, Container freight Station (where the goods are lying now) have been directed not to remove, part with or otherwise deal with the goods except without the prior permission of the Examiner, Special Investigation Branch, as he has reason to believe that the goods are liable for confiscation. (9.) NO affidavit has been filed by the writ petitioner in response to the affidavit-in-opposition filed on behalf of the respondents. The prayers made in the writ peti tion do not include prayer for quashing or cancellation of the order passed on 3rd August 2007, though in the writ petition there are pleadings to the effect that the impugned order ought to be set aside, being ex-facie illegal. (10.) MR. Chowdhury appearing for the petitioner has relied on a Circular dated 3rd March 2004 issued by the customs authorities and the text of this circular is reproduced below:- (11.) MR. Chowdhury has also relied on two authorities, being a decision of the honble Supreme Court in the case of Gyan Chand and Ors. Vs. State of Punjab reported in 1983 (13) ELT 1365 (SC) and a decision of the Honble High Court of madras in the case of Manickam Enterprises Vs. Commissioner of Customs trichi reported in 2002 (140 ELT. 16 (Mad). Relying on these authorities, Mr. Vs. State of Punjab reported in 1983 (13) ELT 1365 (SC) and a decision of the Honble High Court of madras in the case of Manickam Enterprises Vs. Commissioner of Customs trichi reported in 2002 (140 ELT. 16 (Mad). Relying on these authorities, Mr. Chowdhury has submitted that the authorities ought to have considered the prayer for provisional assessment on the basis of materials available with them as the petitioner had no further document which he could produce. His case is that sub-section 4 of Section 46 in the instant case was not applicable as the declaration given by the petitioner could not be said to have been a false declaration. He relied on the decision of the Honble High Court of Madras in the case of Manickam Enterprises (supra), and in particular referred to the following observations of the Honble Court:-"when a statute provides for provisional assessment, the same has to be done in the manner provided in the Act and not according to the whims and fancies of the Department. As per Section 18 of the customs Act, which provides for pending the production of such documents furnishing of such information or completion of such test enquiry, the goods be assessed provisionally if the exporter or importer, as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any. " (12.) I have considered the rival submissions. The direction of this Court as contained in the order passed on 21st June 2007, was that in the event the petitioner satisfied the Customs authorities for exercise of their jurisdiction or power under Section 18 for the purpose of provisional assessment of duty, the customs authorities should adjudicate the matter and decide the same in accordance with law. This order cannot be construed to be a mandatory direction for release of goods upon making provisional assessment. (13.) SO far as the present writ petition is concerned I do not find any attempt has been made by the petitioner to satisfy the Customs Authorities as regards subsistence of a case for exercise of their power under Section 18 of the Act. Sufficient opportunity was given to the petitioner to appear before the Customs authorities and in fact he was summoned under Section 108 of the Act on two occasions after the order was passed by this Court. Sufficient opportunity was given to the petitioner to appear before the Customs authorities and in fact he was summoned under Section 108 of the Act on two occasions after the order was passed by this Court. As it appears from pleadings, the Customs Authorities were informed by the father of the petitioner that he was asked by his son to intimate to the Customs Authorities to take necessary action as per the Honble Courts order as no other document was available with him. The case of the petitioner in this writ petition, which is sought to be made out by mr. Chowdhury is that the provisional assessment can be claimed as a matter of right. (14.) I, am, however, unable to accept this argument. Three conditions have been laid down in sub-section (1) of Section 18 of the Customs Act, and on satisfaction of any one of these conditions the Customs authorities have been vested with the discretion to make provisional assessment. The two conditions which are relevant for the present proceeding are specified in sub clauses (a) and (c) of sub-section (1) of Section 18 of the Act, which are reproduced below: (a) Where the proper officer is satisfied that an importer or exporter is unable to produce any document or furnish any information necessary for the assessment of duty on the imported goods or the export goods, as the case may be; or (b). . . . . . . . . . . . (c) Where the importer or the exporter has produced all the necessary documents and furnished full information for the assessment of duty but the proper officer deems it necessary to make further enquiry for assessing the duty;. . . . . . . . . . " (15.) BOTH these sub-clauses contemplate conducting of some investigation or examination on the part of the Customs authorities before such authorities exercise their discretion in favour of making provisional assessment. In the present case, the concerned authority has recorded that he has reason to believe that the importer had not furnished all relevant documents and/or full information. From the facts of the present case, as pleaded in the affidavit-in opposition, I am satisfied that there was sufficient material before the Customs authorities at the least for giving rise to a doubt as regards the complete disclosure of the documents and/or information by the petitioner. From the facts of the present case, as pleaded in the affidavit-in opposition, I am satisfied that there was sufficient material before the Customs authorities at the least for giving rise to a doubt as regards the complete disclosure of the documents and/or information by the petitioner. The petitioner did not present himself before the hearing officer, and the response of the father of the petitioner was rather evasive in nature. Thus, the concerned officer did not have the opportunity to clear such doubts. (16.) IN the instant matter, I am examining the case of the petitioner in exercise of jurisdiction under Article 226 of the Constitution of India. The scope of interference in the present case is thus restricted and the legality action of the customs authorities can be tested on limited grounds, being breach of principles of natural justice, ex-facie violation of law and perversity in the order or action complained against. (17.) THERE is no complain of violation of the principles of natural justice in the present case. The thrust of the petitioners argument is that he is entitled to have the goods provisionally assessed as a matter of course. In support of this submission, reliance was placed on the decision of the Honble High Court of madras in the case of Manickam Enterprises (supra), and the circular dated 3rd march 2004. The decision in the case of Manickam Enterprises (supra) is not an authority for the proposition that when imported goods, importation of which is not prohibited or restricted are seized, their clearance on provisional assessment is an absolute right. The notification referred to by the petitioner also does not prescribe provisional assessment in such absolute terms. I have already held that the conditions stipulated in Section 18 (1) of the Act would have to be satisfied before the Customs authorities decide to make provisional assessment in terms of the aforesaid provision. A notification issued under the statute in any event cannot override the provisions of the Act. (18.) THE learned counsel for the petitioner had relied on a decision of a constitution bench of the Honble Supreme Court in the case of Gyan Chand and ors. (supra). This decision, however deals with the scope and meaning of "seizure" and the burden of proof in respect of goods seized under the provisions of the Sea Customs Act, 1878. (18.) THE learned counsel for the petitioner had relied on a decision of a constitution bench of the Honble Supreme Court in the case of Gyan Chand and ors. (supra). This decision, however deals with the scope and meaning of "seizure" and the burden of proof in respect of goods seized under the provisions of the Sea Customs Act, 1878. This authority does not come in aid of the petitioner in any manner. (19.) THUS, I do not find the decision of the Customs authorities to be either ex-facie illegal, or perverse, in not making provisional assessment in the case of the petitioner. Admittedly, there is provision for appeal against the order passed on 3rd August 2005, and the legality of this order is also not under challenge. (20.) THE learned counsel for the petitioners also submitted, in course of hearing that the subject goods could be directed to be released under the provisions of section 110 (1a) of the Act. But there is no pleading or prayer to that effect in the writ petition. Thus, I decline to take cognizance of such prayer made orally at the time of hearing. If such a course is open to the petitioner for obtaining release of the goods, the petitioner will have to apply before the appropriate authority for such purpose. Under these circumstances, I find no reason to interfere with the action of the customs authorities in the present writ petition. The writ petition accordingly, shall stand dismissed, without any order as to cost.