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2023 DIGILAW 536 (BOM)

Ador Welding Limited v. Union Of India

2023-02-20

G.S.PATEL, NEELA GOKHALE

body2023
JUDGMENT Gs Patel, J. - There is an Affidavit in Reply. Rule, returnable forthwith. 2. The Petition challenges a communication dated 26th August 2022 by which the 3rd Respondent rejected the Petitioner's application for compounding under the Bureau of Indian Standards (BIS) Rules 2018 ('the BIS Rules') framed under the Bureau of Indian Standards Act 2016 ('the BIS Act'). 3. The facts are not contentious. The Petitioner manufactures welding equipment and welding automation solutions. Where applicable, i.e., for domestic sales, the Petitioner says that it complies with standards set by the Bureau of Indian Standards ('BIS'). 4. The Petitioner has a manufacturing unit at Silvassa and a warehouse at Bhiwandi. The Petitioner imports welding wires- Flux Cored Wire E71T-1C Diameter 1.2mm. These go through an in-house quality check and then they are sold directly as imported goods. 5. Before the Flux Cored (Tubular) Electrodes (Quality Control) Order 2021 issued on 12th March 2021, these goods did not require a BIS certification. That order came into effect from 1st September 2021. 6. On a complaint that the Petitioner was importing these goods by misusing a BIS standard or not adhering to a BIS standard, the Scientist 'E' of the BIS by a letter of 22nd March 2022 authorised an investigation and search of the Bhiwandi warehouse. A search and seizure operation followed on 23rd February 2022. A total of 17703 goods were seized on that date. 7. By 9th March 2022, the Petitioner filed an application for composition of the offence under sub-rule (2) of Rule 50 of the BIS Rules with the 3rd Respondent. This application sought a release of the goods after compounding was allowed. 8. A copy of order in question is at pages 18 to 19 of the compilation given to us. The relevant Rules are also compiled at pages 14 to 17 of that volume. Rule 50 is specifically in relation to compounding of offences. There is no dispute that this was a first alleged offence. The procedure requires an opportunity and the stating of reasons. The proviso says that compounding cannot be granted for the asking. The last proviso of sub-rule 4 of Rule 50 says that no compounding is to be allowed where there are 'apparent contradictions, inconsistencies or incompleteness' in the application. 9. The procedure requires an opportunity and the stating of reasons. The proviso says that compounding cannot be granted for the asking. The last proviso of sub-rule 4 of Rule 50 says that no compounding is to be allowed where there are 'apparent contradictions, inconsistencies or incompleteness' in the application. 9. The Petition goes on to say that the Petitioner's Chartered Accountant certified the assessable value of the goods to be INR 3,35,83,210/- and certified details of the imports made by the Petitioner. All details were provided. The 3rd Respondent sought further details. These were also furnished. A Video Conferencing hearing took place on 9th June 2022. The Petitioner submitted that Flux Cored Wire is a generic name. The 2021 Quality Control Order is for a specific type of Flux Cored Wire namely, Tubular Flux Cored Wire conforming to IS-15769:2008 specification and not universally applicable to all Flux Cored Wires. The Customs Authorities have in fact withheld certain trans-shipments because of this generic name but these were allowed to be released. 10. By an email of 14th June 2022, the Petitioner submitted further details. There was no further action. The Petitioner sent reminders on 14th and 21st July 2022. Then on 23rd July 2022, the Petitioner sought permission to export the goods, i.e., not release them in Indian market. To this also there was no reply and a reminder had to be sent on 9th August 2022. The only response was the impugned order of 26th August 2022. A copy is at Exhibit 'A'. 11. It makes for the most curious reading. It contains absolutely no reasons. It has a recitation of the history and certain figures. Presumably the finding, or what is supposed to pass for it, is to be found in paragraph 10. This, in sub-paragraphs (i) to (vii) only recites what has happened. Sub-paragraph (iv) overstates an undisputed fact that the seized material does not bear the BIS standard mark. Of course it does not. If it did, this entire Petition and everything before it would be unnecessary. It also says that the goods have been imported from outside India by a manufacturer who does not have BIS certification. This is said to be in violation of the Quality Control Order. Of course it does not. If it did, this entire Petition and everything before it would be unnecessary. It also says that the goods have been imported from outside India by a manufacturer who does not have BIS certification. This is said to be in violation of the Quality Control Order. If the goods are to be imported from one country and exported to another, it is difficult to see where the question of an Indian BIS specification would arise. The next statement is that the seized goods are the property of the BIS and cannot be released. Then sub-paragraph (vii) says generally that the release would violate the BIS Act. Why this would be a violation of the Act and in what manner is unclear and is not stated in the impugned order. 12. Sub-paragraph (viii) at page 27 is worth reproducing in full. This is what it says: "(viii) Accordingly, the application dated 09.03.2022 for composition of offence received from M/s Ador Welding Limited is rejected as per Rule 50(4) of BIS Rules, 2018, on the grounds of contradictions and inconsistencies in the case." 13. This is only an invocation like a chant of Rule 50(4), second proviso. No contradiction or inconsistency appears on the face of the record. 14. Instead, it is sought to be argued that we must, from some other documents annexed to the Affidavit in Reply filed in response to this Petition, discern and extract some reasons for the order, some contradiction or some inconsistency. This violates every known canon of administrative law. The argument that under Section 32, the seized goods are the property of the BIS has only to be stated to be rejected. Sub-section (4) says that any property may be 'forfeited' to the Bureau but that only happens if a Court so directs. That is also a discretionary order. We do not understand how the 3rd Respondent has leapfrogged the entire litigation mechanism although there is a prosecution, and simply assumed that there is an order under Section 32(4). No order has ever been made under Section 32(4). This means that the finding returned in sub-paragraph (x) of the impugned order is factually and demonstrably incorrect. 15. We are unable to find anything in the impugned order that would persuade us to uphold it. 16. No order has ever been made under Section 32(4). This means that the finding returned in sub-paragraph (x) of the impugned order is factually and demonstrably incorrect. 15. We are unable to find anything in the impugned order that would persuade us to uphold it. 16. If an impugned administrative action gives reasons, then those reasons must appear in the impugned order itself. They cannot be a subject matter of conjecture, speculation or surmise. If they do, they fall afoul, amongst other things, of Article 14 of the Constitution of India and of the principles of unreasonableness and arbitrariness. Such orders are equally susceptible to an application of the test of Wednesbury unreasonableness. This is irrationality in decision-making and it is never supported. 17. Accordingly, the Petition succeeds and Rule is made absolute in terms of prayer clauses (a) and (b) which read thus: "(a) issue a writ of Certiorari or writ in the nature of Certiorari, or any other appropriate writ, order or direction under Article 226 of the Constitution of India, calling for the records of the case of the Petitioner and after going into the legality and validity thereof, be pleased to quash and set aside impugned order dated 26.08.2022 passed by Respondent No. 3; (b) issue writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India, ordering and directing the Respondents, their officers, subordinate servants and agents to forthwith; (i) grant composition application filed by the Petitioner; and (ii) permit the Petitioner to export goods seized under seizure memo dated 23.02.2022." 18. The impugned order is quashed and set aside. The goods are to be released to the Petitioners for export within one week from today. All concerned will act on an authenticated copy of this order. 19. It goes without saying that if the Petitioners seek to release these goods into the Indian market, they will have to comply with all requirements under the BIS Act. 20. In the facts and circumstances of the case, there will be no order as to costs. 21. This order will not come in the way of the prosecution that has already being initiated. That may proceed on merits.