JUDGMENT
Ruma Pal, J.
1. This is an application, filed by the respondent No. 3, for
modification of an order, passed by this Court on 30th June, 1993. The order
sought to be modified was passed at the suggestion of the parties and provided
for release of the goods imported by the writ petitioners subject to the writ
petitioners making payment of the admitted Duty, further payment of 20% of
the difference of Duty as provisionally fixed and the admitted Duty in cash and
executing a P.D. Bond in terms of the Provisional Assessment Rules. Upon
compliance of these conditions the goods were to be released to the writ
petitioners within 72 hours. Directions were also given for participation in the
adjudication proceedings before the Customs Authorities.
2. The goods in question were Fax Machines which had arrived at the
Port of Calcutta in July, 1992. On 12th August, 1992 the goods were seized
under Section 110 of the Customs Act, 1962 (hereinafter referred to as ‘the said
Act’). It is undisputed that the writ petitioners prayed for warehousing of the
goods pending investigation under Section 49 of the said Act, and this was
permitted. On 10th February, 1993 an order was issued by the Customs
Authorities under Section 110(2) of the said Act. By this order the time to issue
a Show Cause Notice under Section 124 of the said Act was extended for a
period of 6 months. The order under Section 110(2) of the said Act was received
by the writ petitioners on 15th February, 1993. The writ petitioners made a
representation to the respondent-Authorities on 27th February, 1993 claiming
release of the goods in question seized under Section 110 of the said Act
inasmuch as the period of 6 months had expired from the date of the seizure.
The writ petitioners also contended that no extension of time could be granted
for the purpose of issuing a Show Cause Notice under Section 124 of the said
Act without giving the writ petitioners an opportunity of being heard. Reliance
was placed by the writ petitioners on various judicial decisions both of the
Supreme Court and this Court. On 19th March, 1993 the writ petitioners’
representation was heard. The writ petitioners submitted a written submission
both on that date as well as on 10th April, 1993. The written submission
reiterated the stand taken by the writ petitioners earlier in their representation
dated 27th February, 1993 more elaborately. On 6th May, 1993 the writ
petitioners wrote a letter to the Customs Authorities without prejudice to their
rights and contentions, praying for release of the imported goods upon the writ
petitioners paying the admitted Duty as well as depositing the difference in
cash between the demand as raised by the Customs Authorities and the Duty
claimed as payable by the writ petitioners. It does not appear that any reply
was given to this letter. The writ petitioners reiterated their offer by another
letter dated 20th May, 1993. This letter was also written without prejudice to the
writ petitioners’ rights and contentions.
3. In view of the inaction on the part of the respondent-Authorities in
releasing the goods to the writ petitioners, the writ petitioners filed a writ
application before this Court on 17th June, 1993 upon notice to the respondentAuthorities. In the writ petition the writ petitioners sought for release of the
goods in question under Section 110(2) of the said Act on the ground that there
had been no valid extension of the period of 6 months provided under the
Statute for initiating proceedings under Section 124 of the said Act. On 17th
June, 1993 the respondent-Authorities appeared and prayed for time to obtain
instructions in the matter. The matter was accordingly adjourned till 22nd June,
1993. It may be noted that the entire purpose of giving notice to the Authorities
before an application is moved under Article 226 of the Constitution of India is
for the Authorities to instruct their Counsel adequately before the matter is
heard by this Court. Nevertheless, the Court granted time to the respondents
till 22nd June, 1993. On that date it was submitted on behalf of the respondent Authorities that they wished to file an affidavit in the matter. Directions were
accordingly given for filing of affidavits and the matter was adjourned till 30th
June, 1993. It may be noted that no affidavit-in-opposition was filed by the
respondent-Authorities on the date specified or at all. In the normal course,
therefore, the Court would have proceeded on the basis of the uncontroverted
allegations of fact made in the writ petition.
4. Be that as it may, the parties negotiated with each other and on 30th
June, 1993 suggested the form of order which has been referred to above. The
respondent-Authorities, therefore, had adequate opportunity to consider the
facts of the case and to instruct their Counsel correctly as to the case of the writ
petitioners.
5. After the order dated 30th June, 1993 was passed the writ petitioners
applied to the respondent-Authorities for the purpose of executing the necessary Bond. This was not made available to the writ petitioners. Ultimately, the
Bond was made available to the writ petitioners through their Clearing Agent.
The Bond was filled in and submitted. But the goods in question were, however, not released to the writ petitioners. An undated letter was made over to
the writ petitioners by which the Customs Authorities have complained about
the alleged defects in the Bond as submitted by the writ petitioners. The writ
petitioners were accordingly asked to re-submit the Bond duly executed. It is to
be emphasized that even till this date there was no whisper of the order dated
30th June, 1993 not having been passed upon instructions properly given and
understood by the Counsel for the Customs Authorities. On 21st July, 1993 the
learned Advocate for the writ petitioners served a Notice on the respondent-Authorities threatening them with proceedings in contempt for their non-compliance with the direction in the order dated 30th June, 1993. On 22nd July, 1993
this application was made for modification of the order dated 30th June, 1993.
6. The Customs Authorities have contended that in fact, the writ
petitioners had suppressed from this Court the fact that on 28th January, 1993
the Collector had made provisional assessment and ordered release of the
imported goods subject to certain conditions which had been agreed to by the
writ petitioners. It was further stated that the writ petitioners had suppressed
the letters dated 6th May, 1993 and 20th May, 1993, written by them to the
Customs Authorities, offering to deposit the entire cash amount which would
represent the difference in Duty between the Customs’ demand and the writ
petitioners’ declaration. It is stated that these letters were not drawn to the
attention of their learned Counsel before the order dated 30th June, 1993 was
passed.
7. Secondly, it was stated that under Section 18 of the said Act, read
with Clause 4 of the Customs (Provisional Duty and Assessment) Regulations,
1963, the deposit of 20% of the Duty claimed was merely to obtain provisional
assessment and that under Clause 4, the Collector had the power to direct
further deposit by way of security in addition to the deposit of 20% and
execution of a Bond.
8. Thirdly, it was stated that the Customs Authorities had recently come
to learn the fact which showed that the writ petitioner No. 1 was a front
Company with no assets which were capable of meeting the demand of the
Customs in the event the writ petitioners were ultimately unsuccessful in the
adjudication proceedings.
9. Fourthly, it was stated that in any event the writ petitioners had no
right to the return of the goods in question assessed because, in fact, the seizure
had been withdrawn when the writ petitioners were permitted to warehouse
the goods under Section 49 of the said Act and that, as such, there was no
question of any time limit being placed on the right of the Customs Authorities
to issue a Notice under Section 124 of the said Act. It was further submitted that
in any event under Section 110(2) of the said Act even if there was a subsisting
seizure, the writ petitioners would not be entitled to the return of the goods in
question because the Section provides for return of the goods to the person
from whom they were seized. In this case the writ petitioners were never in
possession of the goods in question and as such, could not claim that the goods
should be returned to them.
10. Finally, it was stated that the order dated 30th June, 1993 should be
modified by allowing final adjudication to be made and directing release of the
goods only subject to payment of the Duty as found.
11. The writ petitioners have opposed this application and have stated
that the order, sought to be modified, was, in fact, a consent order and could
not be varied except by consent. The writ petitioners have relied upon several
decisions in this regard including the decisions in the case of M.A. Cunningham
Sircar v. Fred Stephens, , and in the case of Rajunder
Narain Rao and Anr. v. Bijai Govind Singh, reported in 1837 (II) Moore’s Indian
Appeals, 181.
12. Secondly, it is contended by the writ petitioners that there was, in
fact, a seizure all along and that this was borne out from the fact that the
Customs Authorities had never at any stage of the proceeding either when the
writ petitioners had made a representation on 27th February, 1993, or during
the hearing on 19th March, 1993 or at any time subsequent thereto, contended
that there was no seizure of any portion.
13. According to the writ petitioner the seizure order was passed under
proviso of Section 110(1) and was a prohibitory order which continued to
subsist even when the goods were warehoused under Section 49 of the said
Act. As far as the letters dated 6th May, 1993 and 20th May, 1993 are concerned,
the writ petitioners have submitted that the letters were written without
prejudice and in any event not accepted by the Customs Authorities and,
therefore, the writ-petitioners were not bound by them.
14. On the question of the order of the Collector dated 28th January,
1993 it is stated that the order was passed within the period of six months when
the right of the writ petitioners under Section 110(2) had not accrued to them.
Once the right had accrued, the position which obtained when the order dated
28th January, 1993 was passed no longer existed. The writ-petitioners said that
the respondent authorities were deliberately harassing the petitioners. The
machines in question were electronic machines and had already remained in
the warehouse for over 9 months. The petitioners have alleged that the previous consignment of the petitioners was cleared on 18th June, 1992, that is one
month prior to the consignment in question on the declared value.
15. It is further submitted that the respondents authorities are in contempt of this Court as they have violated the order dated 30th June, 1993. It is
urged that the respondents authorities should not be heard unless they purge
themselves of the contempt.
16. Finally, it is submitted that Rule 4 of the 1963 Regulations did not
amount to giving a power to the respondents authorities to require the deposit
of security over and above the 20% referred to in Regulation 1 and that the
power under Regulation 4 was restricted to the powers referred to in
Regulation 3.
17. In my view the application of the respondents authorities is liable to
be dismissed on the simple ground that the order dated 30th June, 1993 cannot
be recalled in the facts and circumstances of the case. The order was passed
after the Customs Authorities had every opportunity of going through the
records in instructing their Counsel. If they had not done so they cannot be
permitted to approach the Court and obtain relief on facts which should have
been known to them even when the writ application was moved on 17th June,
1993. The facts relating to the difference in duty, all appear from telex messages
received by the Customs Authorities in 1992 itself. They were, therefore, fully
aware of the nature of the claim and the basis on which they were seeking to
raise a demand against the petitioner. There was no fact subsequent to the
order dated 30th June, 1993 which could warrant the Court in reviewing its
order dated 30th June, 1993. The only stand taken by the respondent authorities
is in paragraph 10 of the application where it is said that “the Customs
Authorities recently come to learn the facts to which they reasonably apprehended that if the subject goods are released to the writ petitioners…the
Government revenue would be totally lost.” In that paragraph it has been
stated that the writ petitioner is a front company of one M/s. Indian Telecom
Limited. No particulars have been given as to when the Customs Authorities
came to learn these alleged facts and how they come to learn the facts. It is not
as if the petitioners had imported goods for the first time or that the respondents authorities had no way of knowing the solvency or background of the
writ petitioner. The respondents had been dealing with the writ petitioners for
the last 9 months. No document whatsoever has been annexed with the application in support of the so called ‘recent’ knowledge. The Court does not
find this averment of the Customs Authorities acceptable. Furthermore, the
order was in fact passed by consent. It is not the Customs Authorities’ case that
the consent was obtained by inducement on the part of the petitioners.
18. From the facts of the case it appears that the Customs Authorities
with their eyes wide open conducted this litigation. At the highest it may be
said that the officers of the Customs Department had been negligent in placing
the relevant facts before their Counsel. To allow the order dated 30th June, 1993
to be recalled in such circumstances would be to place a premium on the
negligence of the Government officers and to introduce an element of uncertainty in litigation which is concluded by consent of the Counsel who have
been duly appointed to conduct the matter.
19. It is made clear that I do not consider it necessary to go into the
other points raised by the Customs Authorities or the writ petitioner but I have
recorded the same for any further action.
20. Accordingly, for the reasons stated the application is dismissed with
costs.
21. The assurance is given by the Counsel for the writ petitioners that
he would not seek release of the goods pending disposal of the respondents’
application for modification upto 6th August, 1993, is discharged.