ORDER
K.P. Sivasubramaniam, J.
1. The petitioner, who is engaged in the business of export of metals and metal scraps, has prayed for Mandamus to permit the reshipment of 8 containers for which bill of entry has been filed and being inspected by the first respondent hearing the container numbers an detailed in the writ petition in accordance with the petitioner’s representation dated 10.3.2003 and 26.3.2003 in W.P. No. 10670 of 2003.
2. In W.P. No. 10671 of 2003, the petitioner has made a similar prayer in espect of 7 containers for which bill of entry has not been filed bearing invoice numbers as detailed in the writ petition.
3. Heard both the learned counsel representing the petitioner and the first respondent Customs Department.
4. According to the petitioner, the goods in question were consigned by them to the second respondent from various Ports to Chennai and from Chennai which was intended to be re-exported elsewhere. The terms of arrangement between the petitioner and the importer SPK Impex, the second respondent, was on D.A basis, namely the petitioner would receive payment after the second respondent clears the documents and takes delivery of the consigned goods. The term for payment is usually 60 days. They had business with the second respondent for the past two years and till now there has been no problem.
5. The petitioner further contends that their metal scraps comprised of copper, brass, iron and steel and other worn-out materials. The second respondent extracts and refines copper and brass and re-export them to other countries. Whatever iron or steel remains, they will be sold in the local market with the approval of the Customs Department.
6. According to the petitioner, after the goods landed at Chennai Port, out of a total number of 15 containers, 8 were lying at the Customs Freight Station and necessary bills of entry have been filed with the customs. As regards remaining 7 containers, the bills of entry have not been filed and disputes have arisen between the first respondent and the second respondent. The first respondent is refusing permission to the second respondent to clear the goods from the warehouse. According to the petitioner, there is no illegality in the transaction of the petitioner and there is no allegation by the first respondent as against the petitioner of any violation of the provisions under the Customs Act. Therefore for no fault of the petitioner, the petitioner is made to incur damages and costs. The second respondent is also writing to the petitioner that they are not in a position to pay for the goods and to take delivery of the same and have also returned the documents to the petitioner. In the result, the petitioner is left without any alternative except to arrange for alternate buyer and to obtain reshipment of the goods either to USA or to any other alternate buyers throughout the world. The petitioner is now in the process of locating alternate buyers and seeks to be permitted to reship the goods back at his own costs. The first respondent has not responded to the request of the petitioner till date and as the reshipment is getting delayed, the petitioner is incurring loss and damages which are mounting. The demurrage charges are also very heavy.
The first respondent, the Customs Department has filed a counter contending that on information received from the Directorate of Revenue intelligence (DRI), Mumbai as regards the large scale diversion of metal scrap, cleared free of duty by availing benefits up to 100% Export Oriented Units. The Intelligence also indicated that the goods were being declared as “Mixed Metal Scrap” though predominantly copper or brass scrap were being imported. They were imported in excess quantity by suppressing in their records as regards the real values and content of the goods. The respondents were importing predominantly copper/brass scrap in the guise of “Mixed Metal Scrap” and for being diverted into local markets. It was found from the premises belonging to the second respondent that the bonded goods were not stocked as required. Registers were also not properly maintained. It is further stated that while stock taking was done, aluminium scrap, zinc scrap and plastic scrap were also found which were not shown in the production certificates. It is not necessary to deal with certain other details given in the counter-affidavit, which according to the respondents would all amount to gross violations of the provisions of the Customs Act and deliberate misuse in availing of benefits which are available only to 100% export oriented units. It is further stated that as per the statement of K. Swaminathan, Managing Partner of the second respondent in his voluntary statement recorded under Section 108 of Customs Act, 1962, he has stated that orders were placed over by his brother Ranganathan and that export receipts were also realised from the writ petitioner. Voluntary statements have also been obtained from some of the buyers which reveal that the second respondent had sold copper and brass scrap to them. Statements recorded from the employer of the second respondent also reveal high percentage of rubbish and waste of no commercial value as shown in the records which were not generated. Therefore, according to the information available to the first respondent, the export proceeds were realised by the petitioner and they in turn pay for the exports to the importers viz., the second respondent. The action of the respondents result in defrauding the Government of its valuable revenue and if goods are permitted to be re-exported at this crucial stage of investigation, it will hamper investigation process.
7. Mr. Srinath Sridevan, appearing for the petitioner contends that while in the case of 8 containers for which bills of entry have been already filed, the process of import may be complete, but at any rate in the case of 7 containers for which bills of entry have not been filed, no import having taken place, the Customs Department has no jurisdiction to invoke the provisions of the Customs Act. Moreover, the petitioner cannot be held guilty for any commissions or omissions of the second respondent and no allegations have been made against the petitioner. The petitioner cannot be made to suffer for any irregularity alleged to have been committed by the second respondent.
8. Learned counsel also relies on the judgment of the Supreme Court in Garden Silk Mills Limited v. Union of India, in support of his contention that the import of goods would be completed only when the bill of entry for home consumption is filed. Therefore, at least in the case of 7 containers in respect of which bills of entry have not been filed, the petitioners would be entitled to the relief of permission to re-export.
9. Per contra, learned counsel appearing for the first respondent contends that when once the goods arrive at the territorial waters, the Customs Authorities have the power to confiscate improperly imported goods. He also reiterated the stand taken by the Department in the counter as regards the commissions and omissions of the petitioner and respondent would contend that there is sufficient information to hold the petitioner also guilty of concerted action alongwith the second respondent. The investigation was being proceeded with and at this stage, the request of the petitioner cannot be acceded to.
10. I have considered the submissions of learned counsel for the petitioner, especially in the context of his submission that the 7 containers for which bills of entry have not been filed, import is not completed and therefore, the customs will have no right to make any claim over the said consignment. I am unable to accept the said contention of the learned counsel, the judgment which was relied on by the learned counsel for the petitioner in does not help him. It is true that the Supreme Court has observed in paragraph 16 of the judgment, that import of goods into India would commence when it crosses into the territorial waters and would be completed once the goods become part of the mass of goods within the country, and the taxable event being reached at the time when the goods reach the customs barriers and the bill of entry for home consumption is filed. The observations of the Supreme Court is contained in a complex sentence containing also the expression “and the bill of entry for home consumption is filed”. The observations of the Supreme Court should be read as a whole and it has been clearly pointed out that import of goods commence when the same crosses into the territorial waters. Filing of bill of entry is only one of the requisite follow up action. A reading of Section 111(d) would make it clear that goods are liable for confiscation, if any goods which are imported or even attempted to be imported or brought within the Indian Customs Waters for the purpose of being imported contrary to any prohibition imposed by or under the Act. Therefore, when once the goods enter into Customs frontier and the Indian territorial Waters, the Customs Department has the power to subject them to any action under the provisions of the Act and for confiscation as contemplated under Section 111. Therefore, I am unable to sustain the contention of the learned counsel for the petitioner that in the case of goods for which bills of entry have not been filed, customs department cannot have any control over the same.
11. Further reliance is placed on the judgment of the Calcutta High Court in Taiping International v. Collector of Customs, 1997 (89) ELT 457, Reference is made to the observation that where bill of entry have not been filed by the importer, Tribunal cannot hold the importer guilty of the charge of misdeclaration. That case arose after the adjudication proceedings and also on the basis of finding that there was no allegation against the foreign supplier in the show cause notice and also that the foreign supplier was not held guilty by the adjudicating authority. In the present case, the process of investigation itself is not over and, therefore, no reliance can be placed on the said judgment.
12. With the result, I am unable to find any point in favour of the petitioner and no such relief can be granted even before completion of adjudication proceedings. The writ petitions are therefore dismissed.
13. However, having regard to the nature of the goods involved which are said to be perishable in course of time, the respondents are directed to complete their investigation within four weeks and if thereafter necessary, complete adjudication proceedings within a period of eight weeks thereafter. The petitioner is directed to co-operate with the enquiry failing which the time limit cannot be enforced. No costs. Consequently, connected WPMP Nos. 13483 and 13484 of 2003 are also dismissed.
K.P. Sivasubramaniam, J.
After the orders have been delivered learned counsel for the petitioner expresses difficulties as regards the manner of testing which is sought to be adopted by the first respondent. Therefore, the petitioner seeks liberty to submit a representation to the first respondent for submitting visual composition and in order to submit the testing for any Customs approved laboratories. The petitioner is permitted to give such a representation and the first respondent is directed to consider the same and pass appropriate orders forthwith enabling the petitioner to co-operate with the process of investigation at the earliest.
