BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 28/01/2011 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.(MD)No.3135 of 2010 B.C.Hariharan ... Petitioner Vs 1.The Joint Commissioner of Customs O/o. The Commissioner of Customs and Central Excise, No.1, Williams Road, Cantonment, Trichy 620 001. 2.The Commissioner of Customs and Central Excise, No.1, Williams Road, Cantonment, Trichy 620 001. ...Respondents PRAYER Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of certiorarified mandamus, calling for the records in and connected with C.No.VIII/17/29/1998-Customs Legal dated 01.12.2009 on the file of the respondent, quash the same and consequently direct the respondent to return to the petitioner the entire sale proceeds of the auctioned Silver Ingots with interest at appropriate rates from the date of sale of the impugned Silver Ingots. !For Petitioner ... Mr.R.Yashod Vardhan,S.C. For Mr.B.Satish Sundar ^For Respondents... Mr.B.Vijay Karthikeyan For R1 and R2 :ORDER
The petitioner has filed the present writ petition, seeking to challenge
an order dated 01.12.2009 wherein and by which, the second respondent held that
his claim for release of sale proceeds cannot be considered.
2. In the writ petition on behalf of the respondents, Mr.B.Vijay
Karthikeyan took notice and had also filed a counter affidavit on behalf of the
respondents dated 24.03.2010.
3. Heard the arguments of Mr.R.Yashod Vardhan, learned Senior Counsel
appearing for Mr.B.Satish Sundar, learned counsel for the petitioner.
4. The facts leading to the filing of the case are as follows:
On 14.03.1993, the residential premises of the petitioner was searched by
the Officers of the Customs Preventive Unit, Salem. From the kitchen of his
house, 6 gunny bags containing silver ingots were recovered and seized. It was
recorded in a Mahazar. The petitioner produced two baggage receipts issued by
Calicut Airport covering those ingots. The officers nevertheless seized the
ingots on the ground that the numbers and marking found in the ingots did not
tally with the numbers in the baggage receipts. A show cause notice was issued
to the petitioner and also to one Kunjutty. A proposal for confiscation of the
silver ingots as well as the penalty were also made on 24.08.1993. The
petitioner sent a reply dated 15.09.1993. It was claimed by him that the silver
ingots were purchased from importers who have duly imported it under the
baggages on payment of duty. On 10.11.1993, a further reply was submitted by
the petitioner through his consultant with evidence of requisite import duty. A
personal hearing was held on 05.08.1994. The cross examination of witnesses as
well as officers were also made.
5. On 19.12.1994, an Order-in-Original (O.I.C) was passed by the second
respondent Commissioner of Customs. He made an absolute confiscation of the 6
silver bars under Section 111(d) of the Customs Act 1962 r/w Section 3(3) of the
Foreign Trade (Development and Regulation) Act, 1992. A penalty of Rs.1 lakh
was levied under Section 112 of the Customs Act.
6. The petitioner filed an appeal to the Customs, Excise and Gold
(Control) Appellate Tribunal (CEGAT), Madras vide his appeal dated 20.03.1995.
The Tribunal on 04.07.1995 directed the petitioner to deposit a sum of
Rs.25,000/- as a condition precedent in terms of 129(E) of the Customs Act. The
petitioner accordingly deposited a sum of Rs.25,000/- on 22.08.1995. The
Tribunal by its order dated 08.11.1996 confirmed the order of confiscation
passed by the second respondent but reduced the penalty.
7. The respondent informed the petitioner that on 25.03.1998 the silver
bars under seizure were sent to Chennai Customs House for disposal. On
20.05.1998, the reference application was also disposed of.
8. The petitioner filed W.P.No.14948 of 1998 before this Court challenging
the order of the Tribunal. On 25.10.2006, this Court directed the respondents to
extend the option of redemption in respect of the seized silver ingots if
available with the department. The petitioner on 02.03.2007 sent a letter to
the second respondent. Written submissions were also made on 14.09.2009 followed
with a letter dated 25.09.2009 through his counsel seeking for a personal
hearing. However the respondent on 01.12.2009 rejected the petitioner’s case.
9. The contentions raised by the petitioner was that the respondent should
not have disposed of the silver ingots especially when the matter was subjudice
and the order of absolute confiscation by the adjudicating authority was set
aside by this Court in W.P.No.14948 of 1998 and that order had reached its
finality. Therefore, there would have been no impediment on the part of the
respondent to allow redemption of the seized goods made or in the alternative
disburse the sale proceeds less the statutory charges. The disposal of the
silver ingots without intimation to the petitioner was untenable and violative
of Section 48 of the Customs Act. Despite the departmental instructions, even
during the pendency of the writ petition, it was sold in the year 1998.
Therefore, the respondents should have returned the sale proceeds of the
disbursed silver ingots which he is legally entitled to.
10. The sheet anchor of the petitioner’s case was based on the order
passed by this Court in W.P.No.14948 of 1998 dated 25.10.2006. In that case, in
Paragraphs 3 and 6 it was observed as follows:-
3. Learned counsel for the petitioner places reliance on the judgments of
various Tribunals in the cases of Gundesh Raju v. Commissioner of Customs,
Bangalore 1998 (98) ELT 121; Hiralal Bhagat v. Commissioner of Customs, Patna,
2003 (154) ELT 124; and Ram Kumar Agarwal v. Commissioner of Customs, 2003 (160)
ELT 186 to contend that in view of the liberalization policy of the Central
Government with regard to importation of gold and silver, the total confiscation
is uncalled for. The liberalization policy has been adopted from the year 1992-
93 onwards. This is a case on which the petitioner was found in possession of
the ingots, which were recovered in the year 1993. Hence, same treatment, which
has been given to the petitioners in the above referred to cases, has to be
given to this petitioner as well.
6. Having regard to the above disputed fact and also the judgments relied on by
the learned counsel for the petitioner, I am of the view that the same view
which has been taken by the Kolkata Tribunal in Hiralal Bhagat v. Commissioner
of Customs, 2003 (154) ELT 124, can be taken in this case also, in view of the
policy of the Central Government on liberalization of importation of silver and
gold ingots, but having regard to the submission that the silver ingots
confiscated from the petitioner are not available, which fact is disputed by the
learned counsel for the petitioner, I am of the view that this writ petition can
be disposed of by directing the respondents to consider the case of the
petitioner for imposition of redemption find in lieu of total confiscation, if
the silver ingots seized from the petitioner are still available with the
Department, in the 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.”
(Emphasis added)
11. Opposing the request of the petitioner, in the counter affidavit, it
was stated that the case of the petitioner cannot be countenanced. The order
passed by the second respondent was confirmed by the CEGAT, Madras and the
Tribunal only reduced the penalty from Rs.1 lakh to Rs.50,000/-. This Court had
merely directed the consideration of the case of the petitioner for imposition
of fine in lieu of total confiscation if the silver ingots seized from the
petitioner are still available with the department in the sense that in lieu of
total confiscation the department can consider levying redemption fine in
addition to penalty imposed and confirmed. Hence, the order of this Court cannot
be considered as a direction to return either the seized ingots or to pay the
amount in lieu of the seized goods.
12. Under Section 110(1A) of the Customs Act, 1962 the notified goods
seized by the department can be disposed of by the department immediately after
the seizure and the silver bars are the notified commodity under Section 110(1A)
of the Act. Having regard to the constraint involved in storage of high valued
goods and considering the liquidity to exchequer, the silver ingots were
disposed of. The order of this Court for release of the impugned goods on
redemption fine was subject to availability of the goods. Since the imported
goods are not available with the Department, the question of exercising the
option as directed by this Court will not arise. Hence the department is not in
a position to release the sale proceeds since the CEGOT had upheld the final
order passed by the Department on 8.11.1996 and the Tribunal’s order was not set
aside. It was pointed out that this Court while passing order relied upon the
judgment of Kolkatta Tribunal in the case of Hiralal Bhagat v. Commissioner of
Customs. There the Tribunal held since the seized goods were not available and
due to liberalization such goods are not barred from being brought in,
permission was granted to the aggrieved party to redeem the same on payment of
redemption fine and duty.
13. Reliance was placed by the petitioner upon the judgment of the Supreme
Court in Hargovind Das K.Joshi v. Collector of Customs reported in 1992
(61)E.L.T.172 (S.C.), where it was held that that the option of redemption fine
should have been given by the authorities. The respondents have not done so.
14. The learned Senior Counsel further relied upon a judgment of the
Supreme Court in Northern Plastics Ltd. v. Collector of Customs and Central
Excise reported in 1999 (113) E.L.T.3 (S.C.) as well as this Court in the case
of Collector of Customs, Madras v. Meena A.Bharwani reported in 2006 (194)
E.L.T. 273 (Mad.). After referring to those judgments, he contended that in the
absence of availability of silver ingots, the respondents are duty bound to
disburse the sale proceeds of the seized silver ingots or the market value of
the goods.
15. In Paragraph 7 of the Northern Plastics Ltd’s case (cited supra), the
Supreme Court observed as follows:-
“7. As the order of confiscation of goods was held to be bad the goods were
required to be returned to the owner thereof. As the order of confiscation was
declared as illegal by this Court on the ground that there was mis-declaration
of the goods and that the applicant was entitled to import those goods on the
O.G.L., the confiscated goods, if they had not been disposed of, would have been
required to be released in favour of the applicant and the applicant could have
claimed damages for the damage to the goods and loss caused to it as a result of
illegal retention of the goods by the respondent. We have referred to above how
the applicant was prevented by the respondent and the Hindustan Photo Films from
redeeming/obtaining those goods. The goods having been sold away the respondent
is now not in a position to return the goods to the applicant. As this situation
has been brought about by the respondent by his own acts he cannot now escape
from the liability of returning to the applicant the money value of the said
goods. If without challenging the first order passed on 31.1.1989 and the
interim order passed by the Gujarat High Court in favour of the applicant on
27.04.1989 the respondent had returned the goods on the terms and conditions
imposed by the Gujarat High Court then he would not have landed himself in this
situation. It should have been realised by the respondent while challenging the
said orders and retaining the goods in his possession that the goods were of
perishable nature and that they required air conditioned accommodation. Having
made all attempts to prevent the release of goods in favour of the applicant the
respondent cannot now contend that the applicant and not he was really
responsible for deterioration of the goods and the consequent less realisation
of price.”
16. There is no quarrel with the proposition of law laid down by the
Supreme Court in that judgment. But in the present case, the petitioner had lost
his case before the CEGAT, Chennai and even this Court had only made a direction
subject to the availability of the goods. Therefore, the prayer made by the
petitioner cannot be countenanced by this Court. Hence, the writ petition
stands dismissed. No costs.
svki
To
1.The Joint Commissioner of Customs
O/o. The Commissioner of Customs
and Central Excise,
No.1, Williams Road, Cantonment,
Trichy 620 001.
2.The Commissioner of Customs and
Central Excise,
No.1, Williams Road, Cantonment,
Trichy 620 001.