THE HONOURABLE MS v. The Joint Commissioner of Customs

1BEFORE THE MADURAI BENCH OF MADRAS HIGH COURTDATED: 20.06.2011CORAM:THE HONOURABLE MS.JUSTICE K.SUGUNAANDTHE HONOURABLE MR.JUSTICE A.ARUMUGHASWAMYW.A.(MD).No.375 of 2011B.C.Hariharan : Appellant/Writ PetitionerVs.1.The Joint Commissioner of Customs, Office of the Commissioner of Customs & Central Excise, No.1, Williams Road, Cantonment, Trichy 620 001.2.The Commissioner of Customs & Central Excise, No.1, Williams Road, Cantonment, Trichy 620 001. : Respondents/RespondentsPRAYER: Writ Appeal is filed under Clause 15 of the Letters Patent againstthe Order dated 28.01.2011 made in W.P.(MD).No.3135 of 2010 on the file ofthis Court. Prayer in WP(MD)No.3135 of 2010: Petition filed under Article 226 of theConstitution of India, praying for the issuance of a writ of certiorarifiedmandamus, calling for the records in and connected withC.No.VIII/17/29/1998-customs Legal dated 01.12.2009 on the file of therespondent, quash the same and consequently direct the respondent to returnto the petitioner the entire sale proceeds of the auctioned Silver Ingotswith interest at appropriate rates from the date of sale of the impugnedsilver ingots.For Appellant: Mr.B.Kumar Senior Counsel For Mr.B.Sathish KumarFor Respondents: Mr.B.Vijay Karthikeyan Senior Standing CounselJUDGMENT[Judgment of the Court was delivered BY K.SUGUNA, J]This Writ Appeal is filed as against the order dated 28.01.2011 passedin W.P.(MD).No.3135 of 2010.2. The facts leading to this case are as follows:-(i). On 14.03.1993, the residential premises of the appellant wassearched by the officers of the Customs Preventive Unit, Salem. In the saidsearch, six gunny bags containing silver ingots of foreign originapproximately weighing 30 Kgs each were seized. The second respondentherein, by order dated 19.12.1994, had absolutely confiscated the seizedgoods. (ii). Aggrieved by the said order, the appellant had filed an appealbefore the Customs, Excise, Gold Control Appellate Tribunal, Chennai. Byorder dated 08.11.1996, the Tribunal had confirmed the order ofconfiscation passed by the second respondent and reduced the penalty. https://hcservices.ecourts.gov.in/hcservices/ 2Challenging the order of the first respondent dated 08.11.1996 and theorder passed by the second respondent dated 19.12.1994, the appellant hadfiled W.P.No.14948 of 1998. The learned Single Judge of this Court, byorder dated 25.10.2006, had disposed of the said Writ Petition. In theoperative portion of the order passed in the said Writ Petition, thelearned Single Judge had held as follows:-"..... I am of the view that the same view which has beentaken by the Kolkata Tribunal in Hiralal Bhagat v. Commissionerof Customs, 2003 (154) ELT 124, can be taken in this case also,in view of the policy of the Central Government on liberalizationof importation of silver and gold ingots, but having regard tothe submission that the silver ingots confiscated from thepetitioner are not available, which fact is not disputed by thelearned counsel for the petitioner, I am of the view that thisWrit Petition can be disposed of by directing the respondents toconsider the case of the petitioner for imposition of redemptionfine in lieu of total confiscation, if the silver ingots seizedfrom the petitioner are still available with the Department, inthe sense that the order of the authorities has been confirmed,but modified to the extent that in respect of total confiscation,the petitioner's case can be considered for levying redemptionfine in addition to the penalty imposed and confirmed." (iii). Subsequent to the said order dated 25.10.2006, the firstrespondent, by order dated 01.12.2009, had rejected the request of theappellant seeking return of the goods on the ground that the seized goodswere not available, since the same were already disposed of. Challengingthe said order dated 01.12.2009, the appellant had filed W.P.(MD).No.3135of 2010. The learned Single Judge of this Court, by order dated 28.01.2011,had dismissed the said Writ Petition. As against the said order, thepresent Writ Appeal is filed.3. According to the learned Senior Counsel appearing for the appellant,as per the order dated 25.10.2006 passed in W.P.No.14948 of 1998, the totalconfiscation order was modified and a direction was issued to therespondents to consider the case of the appellant for levying redemptionfine in addition to the penalty imposed. According to the learned SeniorCounsel for the appellant, since the confiscated goods were alreadydisposed of, the sale proceeds, after deducting the redemption fine andpenalty, may be returned to the appellant. In support of his contention,the learned Senior Counsel has relied on the following Judgments:-(i). Northern Plastics Ltd. v. Collector of Customs and Central Excisereported in 1999 (113) ELT 3 SC, at Paragraph Nos.7 and 9, which read asfollows:-"7. As the order of confiscation of goods was held to be badthe goods were required to be returned to the owner thereof. Asthe order of confiscation was declared as illegal by this Courton the ground that there was no mis-declaration of the goods andthat the applicant was entitled to import those goods on theO.G.L., the confiscated goods, if they had not been disposed of,would have been required to be released in favour of theapplicant and the applicant could have claimed damages for thedamage to the goods and loss caused to it as a result of illegalretention of the goods by the respondent. We have referred toabove how the applicant was prevented by the respondent and theHindustan Photo Films from redeeming/obtaining those goods. The https://hcservices.ecourts.gov.in/hcservices/ 3goods having been sold away the respondent is now not in aposition to return the goods to the applicant. As this situationhas been brought about by the respondent by his own acts hecannot now escape from the liability of returning to theapplicant the money value of the said goods. If withoutchallenging the first order passed on 31.1.1989 and the interimorder passed by the Gujarat High Court in favour of the applicanton 27.4.1989 the respondent had returned the goods on the termsand conditions imposed by the Gujarat High Court then he wouldnot have landed himself in this situation. It should have beenrealised by the respondent while challenging the said orders andretaining the goods in his possession that the goods were ofperishable nature and that they required air conditionedaccommodation. Having made all attempts to prevent the release ofgoods in favour of the applicant the respondent cannot nowcontend that the applicant and not he was really responsible fordeterioration of the goods and the consequent less realisation ofprice.9. It was contended by Mr. Dave that the applicants are notliable to pay any duty as the goods were not cleared by therespondent and they were subsequently confiscated and sold by therespondent and, therefore, the applicants cannot be said to haveimported the goods. On the other hand, it was contended by Mr.C.S. Vaidyanathan, learned Additional Solicitor General that theimport of the goods was by the applicants and as soon as the saidgoods landed on the land mass of India proper amount of dutybecame payable thereon. In our opinion, Mr. Vaidyanathan is rightin his submission particularly when full impact has to be givento the order passed by us declaring retention and confiscation ofthe goods to be illegal. Mr. C.S. Vaidynathan, learned AdditionalSolicitor General, however, further submitted that value of thegoods as shown in the import documents was only Rs. 33.04 lacsand as the duty and the Warehousing charges payable are more thanthe said amount the applicant is not entitled to recover anythingfrom the respondent. What is over-looked by the learned Counselis the consequence of setting aside the order of confiscation onthe ground that it was illegal. The applicant has become entitledto the value of the goods as on the date or time when the goodsought to have been cleared by the respondent for homeconsumption. If the value of the goods in India after importationand payment of duty, in January 1989, was Rs. 33.04 lacs onlythen the applicant, and for that matter any sensible person wouldnot have imported the goods at all. It would be reasonable topresume that an importer would have imported the goods of thevalue of Rs. 33.04 lacs if its value in Indian market at therelevant time was more than CIS value of the goods plus the dutypayable thereon (Rs. 33.04 lacs + 47.07 lacs = Rs. 80.11 lacs).It is also not the stand of the respondent that such goods wereavailable in the Indian market at that time at a lesser price.Therefore, it is now the obligation of the respondent to returnat least Rs. 80.11 lacs - 47.07 lacs, the amount of duty payablethereon. As the applicant has been deprived of the use of thegoods worth Rs. 33.04 lacs the respondent is under a legalobligation now to refund that amount to the applicant. Therespondent cannot now be permitted to take the advantage of hisown wrong and contend that the value of the goods should bedetermined only are Rs. 48.50 lacs inclusive of its value and the https://hcservices.ecourts.gov.in/hcservices/ 4amount of duty payable thereon because they could be sold at thatprice only. We also cannot accept the contention of the learnedCounsel for the respondent that if the applicant has suffered anyloss as a result of the wrongful act of the respondent then heshould file an action in tort and this Court cannot order paymentof any amount in these applications. No doubt it would be open tothe applicant to initiate such an action if it feels that theloss suffered by it is more than Rs. 33.04 lacs. Merely becauseit is open to the applicant to initiate such an action it wouldnot be just and proper to refuse the claim made in theseapplications as in any case the applicant is entitled to returnof the money value of the goods which were illegally confiscatedby the respondent. Even though the applicant has claimed interest@ 21% we do not think it proper to award interest at such a highrate and considering the facts and circumstances of the case itwould be in the interest of justice if the respondent is directedto return the amount of Rs. 33.04 lacs with interest at the rateof 12% from 1.2.1989 till the date of payment as the Collector byits order dated 31.1.1989 had held that the goods were properlydescribed and the import was legal."(ii). Collector of Customs, Madras v. Meena A.Bharwani reported in 2006(194) ELT 273 Madras, at Paragraph No.6, which reads as follows:-"The material facts leading to the order of the Tribunal areundisputed. The confiscated gold jewellery had been disposed ofin July, 1980 and the diamond jewellery also was sold in July,1983 and, afterwards, the second respondent on 25-7-1983 hadreceived a letter from the Tribunal enclosing a copy of thegrounds of appeal. The respondents have duly informed theGovernment of India as well as the Tribunal about the disposal ofthe jewelleries. The Central Board confirmed the order ofconfiscation by its order, dated 6-3-1980 and the petitioner didnot take steps to file a revision immediately and had kept quiet.It is needless to say that a party, who is seeking redress in acourt of law or a quasi judicial authority, ought to be vigilantin protecting his rights. The petitioner was not vigilant andallowed the jewelleries to be disposed of. As per the records,the jewelleries were disposed of according to rules and the saleproceeds was Rs.34,439.35. The Tribunal ought to have passed anappropriate order taking note of the disposal of the jewelleriesby the respondents. Instead, the Tribunal has ordered to allowthe confiscated jewelleries to be cleared on payment of fine ofRs.7500/- in lieu of confiscation and they have further orderedthe reduction of personal penalty to Rs.1500/- from Rs.6000/-. Inso far as the order pertaining to the reduction of penalty isconcerned, admittedly the respondents have refunded the balanceamount of Rs.4500/- to the petitioner. In so far as the orderrelating to return of confiscated jewelleries on payment of afine of Rs.7500/- in lieu of confiscation is concerned, thejewelleries no longer exist and only sale price of Rs.34,439.35was with the respondents. The respondents could have deducted thefine of Rs.7500/- from the sale price and could have returned thesum of Rs.26,939.35 as sale proceeds of the jewelleries to thepetitioner as per the order of the Tribunal. They did not do so.Instead, the second respondent demanded a duty at the rate of120% amounting to Rs.35,160/- along with redemption fine ofRs.7500/- from the petitioner. The Tribunal in its order did notimpose any duty as claimed by the second respondent. The learned https://hcservices.ecourts.gov.in/hcservices/ 5counsel for the appellants/respondents contended that thepetitioner is liable for the payment of the duty apart from thefine and penalty levied on her as per Section 125(2) of theCustoms Act. As already seen, the petitioner has preferred arevision against the order of the Board in the appeal and afteradjudication, the Tribunal has passed final order. Therespondents are bound by the order passed by the Tribunal. TheTribunal did not impose any duty on the petitioner and in suchcircumstance, the respondents cannot impose a duty at the rate of120% in addition to the redemption fine. Any such imposition ifmade would amount to varying the order of the Tribunal, which isnot permissible in law. The contention of the appellants cannever be accepted. The respondents are bound to refund thebalance sale price of Rs.26,939.35 and the petitioner is entitledto that amount along with interest at the rate of 12% per annum.We agree with the reasonings of the learned Single Judge inentirety."4. It is the further submission of the learned Senior Counsel for theappellant that once the total confiscation has been modified, the seizedgoods will automatically become the goods of the appellant. Under suchcircumstances, the appellant is entitled for return of the goods and in theabsence of those goods, the sale proceeds, after deducting the redemptionfine and penalty, may be returned to the appellant. Basing on this, thelearned Senior Counsel for the appellant has prayed for allowing of theWrit Appeal.5. On the other hand, it is the stand of the learned Senior StandingCounsel appearing for the respondents that as per the order of the learnedSingle Judge dated 25.10.2006 passed in W.P.No.14948 of 1998, the case ofthe appellant for levying redemption fine has to be considered only in theevent of availability of the seized goods. However, those goods werealready disposed of in the year 1998, and therefore, the question ofconsidering the claim of the appellant for payment of redemption fine doesnot arise at all. According to the learned Senior Standing Counsel, in theCustoms Act, 1962 also, there is no provision for the redemption of thesale proceeds. Therefore, in the absence of any statutory provision, thequestion of consideration of the claim of the appellant for payment ofredemption fine does not arise at all. 6. Apart from the above, according to the learned Senior StandingCounsel for the respondents, from the nature of the seized goods, theauthority concerned came to the conclusion that the seized goods aresmuggled goods. Under such circumstances, the question of disbursement ofsale proceeds or the return of the goods does not arise at all. Accordingto the learned Senior Standing Counsel, as far as the Judgment reported in2006 (194) ELT 273 Madras is concerned, it relates to Jewels seized from apassenger. As far as the Judgment of the Hon'ble Supreme Court reported in1999 (113) ELT 3 SC is concerned, in the said Judgment, the totalconfiscation was set aside, consequently, the entire seized goods werereturned.7. According to the learned Senior Standing Counsel for therespondents, as far as the case in hand is concerned, the totalconfiscation was not set aside, consequently, the question of disbursementof sale proceeds or the return of the goods does not arise at all,especially when the seized goods are not available with the respondents https://hcservices.ecourts.gov.in/hcservices/ 6department. That apart, according to the learned Senior Standing Counsel,since the wordings used in the order dated 25.10.2006 passed inW.P.No.14948 of 1998 are "to consider the case of the petitioner forimposition of redemption fine in lieu of total confiscation, if the silveringots seized from the appellant are still available with the Department,in the sense that the order of the authorities has been confirmed, butmodified to the extent that in respect of total confiscation, thepetitioner's case can be considered for levying redemption fine in additionto the penalty imposed and confirmed", question of considering the claim ofthe appellant for payment of redemption fine does not arise at all. Basingon this, the learned Senior Standing Counsel for the respondents has soughtfor dismissal of the Writ Appeal.8. We have considered the above submissions made by the respectivelearned counsel. 9. The issue in question is as to whether the order of the firstrespondent dated 01.12.2009 is valid or not. As per the said order, theconfiscated goods cannot be returned to the appellant, since the same werealready disposed of. The argument of the learned Senior Standing Counselfor the respondents that the seized goods are smuggled goods, consequently,question of return of the seized goods does not arise at all, will not holdgood, in view of the finding given by the learned Single Judge in the orderdated 25.10.2006 passed in W.P.No.14948 of 1998 wherein, in the operativeportion, which has been referred to above, the learned Single of this Courthad directed the respondents to consider the case of the appellant forimposition of redemption fine in lieu of total confiscation, if the silveringots seized from the appellant are still available with the respondentsdepartment, in the sense that the order of the authorities has beenconfirmed, but modified to the extent that in respect of totalconfiscation, the case of the appellant can be considered for levyingredemption fine in addition to the penalty imposed and confirmed. 10. When the order of the Tribunal has been modified in respect of thetotal confiscation, we are of the opinion that the claim of the appellantcan be considered for levying redemption fine in addition to the penaltyimposed and confirmed. The said order dated 25.10.2006 has reached itsfinality and even according to the learned Senior Standing Counsel for therespondents, as against the said order, no appeal has been filed. As perthe said order dated 25.10.2006, the total confiscation order was modifiedand the respondents were directed to consider the claim of the appellantfor payment of redemption fine. As rightly pointed out by the learnedSenior Counsel for the appellant, once the total confiscation has beenmodified, certainly, the seized goods will become the goods of a person,from whom the same have been seized or it will become the goods of theowner. 11. The argument of the learned Senior Standing Counsel for therespondents that only in the event of availability of the seized goods, asper the earlier order dated 25.10.2006, the claim of the appellant forpayment of redemption fine has to be considered cannot be allowed to stand,in view of the wordings used in the said order dated 25.10.2006, which havebeen extracted above. Besides, according to the learned Senior StandingCounsel for the respondents, as far as the quantum of the redemption fineis concerned, the same can be quantified only if the goods are available.As far as the case in hand is concerned, since already the goods weredisposed of, the respondents department cannot quantify the redemption https://hcservices.ecourts.gov.in/hcservices/ 7fine, consequently, the request of the appellant cannot be considered. Thesaid argument will not hold good, for the reason that even according to theSenior Standing Counsel for the respondents, the goods were already sold inan auction. In the auction notice, certainly, the quality of the goods andthe quantum of the goods would have been mentioned. Basing on the same,certainly, the redemption fine can be quantified. It is not the case of therespondents also that basing on the above, it is not possible for therespondents department to quantify the redemption fine, and therefore,based on the above technicalities, the valuable right of the appellantcannot be taken away. Under such circumstances, as rightly pointed out bythe learned Senior Counsel for the appellant, the appellant is entitled forthe sale proceeds, after deducting the redemption fine and penalty, if any. 12. For the foregoing reasons, the order dated 28.01.2011 passed inW.P.(MD).No.3135 of 2010 is set aside and the Writ Appeal is allowed. Therespondents are directed to return the sale proceeds, after deducting theredemption fine as well as penalty, if any to be imposed, within a periodof three months from the date of receipt of a copy of this order. No costs. Sd/-Assistant Registrar (Crl.side)/True copy/Sub Assistant Registrar(C.S) To1.The Joint Commissioner of Customs, Office of the Commissioner of Customs & Central Excise, No.1, Williams Road, Cantonment, Trichy 620 001.2.The Commissioner of Customs & Central Excise, No.1, Williams Road, Cantonment, Trichy 620 001.+1. CC to Mr.B.Vijay Karthikeyan, Advocate, SR.No. 19136NBJUDGMENT MADE INW.A.(MD).No.375 of 201120.06.2011TR : 14.07.2011 : 7p/4c