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SCA/3031/2011 10/ 10 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 3031 of 2011
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BABOO
RAM HARICHAND THROUGH PARTNER RAJESH SUBHASHCHANDRA - Petitioner(s)
Versus
UNION
OF INDIA & 4 - Respondent(s)
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Appearance :
MR
MIHIR JOSHI, SR. ADVOCATE with MR AMAR D MITHANI
for Petitioner
MR PS
CHAMPANERI for Respondent(s) : 1,
MR RJ OZA for Respondent(s) : 2
- 5.
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CORAM
:
HONOURABLE
MS.JUSTICE HARSHA DEVANI
and
HONOURABLE
MS.JUSTICE BELA TRIVEDI
Date
: 29/03/2011
ORAL
ORDER
(Per
: HONOURABLE MS.JUSTICE HARSHA DEVANI)
Mr.
R. J. Oza, learned Senior Standing Counsel tendered copies of
various communications as well as copy of an order of final
assessment of one of the Bills of Entry filed by the petitioner in
compliance with the order dated 28.3.2011 passed by this Court. The
same are taken on record.
Heard
Mr. Mihir Joshi, learned Senior Advocate with Mr. Amar Mithani,
learned advocate for the petitioner and Mr. R. J. Oza, learned
Senior Standing Counsel appearing on behalf of the respondents No.2
to 5.
Assailing
the seizure made vide seizure memo and panchnama both dated
7.2.1010, Mr. Joshi, learned counsel for the petitioner submitted
that the seizure is not warranted under the facts and circumstances
of the case. Referring to the provisions of section 110 of the
Customs Act, 1962 (the Act) it was submitted that under the said
provision the proper officer is empowered to seize any goods liable
to confiscation. Insofar as imported goods are concerned, the same
can be confiscated if the same fall under any of the categories
enumerated under section 111 of the Act and that the present case
does not fall within any of the categories enumerated of thereunder.
Inviting attention to the Bill of Entry for Home Consumption, at
Annexure R-III to the affidavit in reply filed on behalf of the
respondents No.2 and 3, it was submitted that the description and
the value of the goods have been correctly stated by the petitioner
and that, there is no misrepresentation made in the Bill of Entry.
It was urged that all that the petitioner has done is that it has
claimed the benefit of exemption under the DFIA licences on the
ground that Areca Nut which are the goods imported by the
petitioner, are covered by item No.12 (c) (i) of G-7 of the Standard
Input & Output Norms (SION) prescribed by the Director General
of Foreign Trade. It was submitted that merely making a claim
cannot be said to be a mis-declaration so as to fall within the
ambit of clause (m) of section 111 of the Act. As regards the
applicability of clause (o) of section 111 of the Act, it was
submitted that the said provision would be applicable in a case
where goods are exempted, subject to certain conditions and there is
non-observance of any condition, whereas in the present case, so far
the goods in question have not been exempted from duty so as to fall
within the purview of the said clause. According to the learned
counsel, there is no material for the respondent No.3 to have formed
a reason to believe that the subject goods were liable to
confiscation for the purpose of resorting to seizing the same under
the provisions of section 110 of the Act.
On
the other hand, Mr. R. J. Oza, learned Senior Standing Counsel
appearing on behalf of the respondents No.2 to 5 vehemently opposed
the petition. Inviting attention to the Bill of Entry annexed with
the affidavit-in-reply, it was submitted that the petitioner has
claimed the benefit of exemption under the Duty Free Import
Authorisation (DFIA) Scheme and has, accordingly, stated in the Bill
of Entry that it is totally exempted from the liability to pay any
duty. It was submitted that the said assertion in the Bill of Entry
would amount to mis-declaration inasmuch as, the goods imported by
the petitioner, viz., Beetle Nut/Areca Nut, do not fall under G-7 of
SION norms. It was accordingly submitted that any material
mis-declaration on the part of the importer would render the goods
liable to confiscation and can be seized under section 110 of the
Act and that the present case would be squarely covered by clauses
(m) and (o) of section 111 of the Act. It was submitted that once
the proper officer has been satisfied
that the conditions precedent for invoking section 110 of the Act
are satisfied, this Court in exercise of writ jurisdiction would not
interfere with the same. Reliance
was placed upon a decision of the Supreme Court in the case of State
of Gujarat v. Shri Mohanlal Jitamalji Porwal and another,
1987 (29) E.L.T. 483 (S.C.) for the proposition that if prima facie
there are grounds to justify the belief of the proper officer that
the seized goods were liable to confiscation, the courts have to
accept the officers belief whether the court of its own might or
might not have entertain the same belief. Courts should not sit in
appeal in regard to this question.
Inviting
attention Note: 3 below SION norms, it was submitted that
Supplementary Vegetable Tanning Agents, are allowed to be imported
on actual user condition and that the petitioner not being an actual
user, is even otherwise not entitled to import the said goods under
the DFIA Scheme. The learned counsel further submitted that in the
light of the relief claimed by the petitioner, whereby the
petitioner seeks a direction to the respondents to pass assessment
orders in respect of the Bills of Entry filed by it, the respondents
have finalized the assessment and have quantified the duty and as
such, the petitioner is now liable to pay the duty under the said
orders of final assessment, and if at all the petitioner is
aggrieved by the final assessments, it is open to the petitioner to
avail of statutory remedy available under the Act. It was also
submitted that once the goods have been seized in exercise of powers
under section 110 of the Act, the remedy available to the petitioner
is to make an application for provisional release of goods seized
pending adjudication to the Commissioner of Customs under section
110A of the Act. It was submitted that in the circumstances, at this
stage, the petitioner is not entitled to grant of any interim
relief.
This
Court has considered the rival submissions advanced by the learned
counsel for the respective parties on the question of grant of
interim relief. In the present case the subject goods; viz.
consignments of Areca nut have been seized by the respondent No.3 in
exercise of powers under section 110 of the Act, as according to him
the goods are liable to confiscation under section 111(m) and (o) of
the Act. Section 111 of the Act lays down the categories of goods
which are liable to confiscation. Clause (m) thereof is attracted
if any goods which do not correspond in respect of value or in any
other particular with the entry made under the Act or in the case of
baggage with the declaration made under section 77 in respect
thereof or in the case of goods under transshipment, with the
declaration for transshipment referred to in the proviso to
sub-section (1) of section 54.
In
the present case, a perusal of the Bill of Entry annexed along with
the affidavit-in-reply indicates that the petitioner has described
the subject goods as Beetle Nut Industrial Grade and has also
indicated the Tariff Heading under which the same are classifiable.
In any case, it is not the case of the respondents that the value or
any other particular in relation to the goods imported by the
petitioner do not correspond to the entry made under the Act. The
case of the respondents is that by claiming the benefit of DFIA
licenses in respect of Areca Nut, which according to the respondents
is not covered by the DFIA licence, the petitioner has made a
mis-declaration in the Bills of Entry submitted by it.
Thus,
according to the respondents the claim of the petitioner that it is
entitled to exemption from payment of customs
duty under the DFIA licence in respect of the subject goods imported
by it amounts to mis-declaration so as to fall within the ambit of
clause (m) of section 111 of the Act. In this regard, it may be
pertinent to refer to the decision of the Supreme Court in the case
of Northern
Plastic Ltd. v. Collector of Customs & Central Excise,
(1998) 6 SCC 443, wherein, the Supreme Court has held that whether
the assessee is entitled to the benefit of exemption under a
particular notification or not, was a matter of belief of the
assessee and not a matter of “any other particular” with
respect to the goods. The Court held that while dealing with such a
claim in respect of payment of customs duty, when a declaration is
in the nature of a claim made on the basis of the belief entertained
by the assessee it cannot be said to be a mis-declaration as
contemplated by section 111(m) of the Act.
In
the facts of the present case, in the opinion of the Court, prima
facie, all that the petitioner has done is that it has made a claim
that it is entitled to exemption of duty in respect of the goods
imported by it under the DFIA Scheme on the ground that Areca Nut
would stand covered
under item No.12 (c)(i) of the group G-7 of the Standard Inputs and
Output Norms (SION). Insofar as other particulars are concerned,
there does not appear to be any dispute as regards their
correctness. In the circumstances, prima facie, in the light of the
aforesaid decision of the Supreme Court in the case of Northern
Plastic Ltd. v. Collector of Customs & Central Excise,
(supra), it appears that the provisions of clause (m) of section 111
of the Act would not be attracted in the present case.
Insofar
as invocation of clause (o) of section 111 of the Act is concerned,
the same provides that any goods exempted, subject to any condition,
from duty or any prohibition in respect of the import thereof under
the Act or any other law for the time being in force, in respect of
which the condition is not observed, would be liable to
confiscation. In the facts of the present case, according to the
respondents the subject goods are not exempt from customs duty,
which is also borne out from the fact that the subject goods have
been finally assessed by levying appropriate rate of duty applicable
to such goods if they are not entitled to exemption under the DFIA
licence. Thus, if the goods are not exempted goods, there would be
no question of the goods being subject to any condition. The said
provision would apply in a case where the goods are exempted subject
to certain conditions and thereafter, there is non-observance of the
said conditions. In the facts of the present case, that not being
the position, the said clause would not be applicable to the goods
in question. In the circumstances, prima facie, the provisions
of section 111 of the Act would not be attracted in the facts and
circumstances of the present case. Consequently, it cannot be said
that there is any material on the basis of which the proper officer
could form the requisite belief that the subject goods are liable to
seizure under section 110 of the Act. The decision of the Supreme
Court in the case of State
of Gujarat v. Shri Mohanlal Jitamalji Porwal and another,
(supra) does
not carry the case of the respondents any further inasmuch as the
said decision would be applicable in case where prima facie there
are grounds to justify the belief of the proper officer that the
seized goods were liable to confiscation, in which case the court
has to accept the officers belief and not in a case like the present
one where there are no grounds to justify the belief of the proper
officer that the seized goods are liable to confiscation.
In
the light of the aforesaid observations, the Court is of the view
that the petitioner is entitled to the grant of interim relief in
the following terms:
The
seizure memo as well as the panchnama both dated 7.2.2011 (Annexure
“A” collectively, to the petition) are hereby suspended
and the petitioner is permitted to clear the subject goods subject
to the following conditions:
(i) The
petitioner shall pay fifty per cent of the customs duty assessable
under the orders of final assessment on the basis of
non-applicability of DFIA Scheme and to the extent of remaining
fifty per cent, the petitioner shall furnish a bank guarantee to be
issued in favour of the President of India through the Commissioner
of Customs, Kandla. The petitioner shall furnish Bonds to the extent
of the value of the goods seized, which shall enure till final
adjudication, if any, made by the authorities, failing which, the
same shall stand discharged.
(ii) The
aforesaid payment, furnishing of bank guarantee and bonds shall be
without prejudice to the rights and contentions of the petitioner
and the same shall abide by further orders that may be passed in the
present proceedings.
(iii) Upon
compliance of the aforesaid condition, the concerned respondent
shall forthwith return the DFIA licences and Transfer Release
Advices lying with the said respondent to the petitioner.
Mr.
Joshi, learned counsel for the petitioner submits that upon receipt
of the assessment orders, the petitioner would take steps for making
necessary amendments in the petition.
On
request made by Mr. R. J. Oza, learned Senior Standing Counsel, the
matter is adjourned to 11.4.2011 to enable him to file affidavit
in-reply on behalf of the customs authorities.
It
is clarified that the aforesaid order has been passed without
prejudice to the rights and contentions of the respective parties.
Direct
Service is permitted.
[HARSHA
DEVANI, J.]
[BELA
TRIVEDI, J.]
parmar*
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