JUDGMENT
Dalveer Bhandari, J.
1. The petitioner is approaching this Court not
because it is aggrieved by the order of the Tribunal
dated 20th August, 1999 but because the Tribunal could
not give the desired relief to the petitioner despite
its clear findings in its favor.
2. The petitioner imported one set of design
workstation with flat bed scanner, floppy disc, etc.
from M/s. Viable System Inc., USA. The breakup price
shown in the invoice was US $ 22,500.00 for hardware
and US $ 60,000.00 for software, which worked out at
Rs. 7,16,974.00 for hardware and Rs. 19,11,930.00 for
software. The officers of the Customs Department
raided the premises of the importer. One of the
documents seized was a proforma invoice dated 27.12.94.
It showed a total price of US # 82,500.00 and discount
of US $ 39,325.00. The breakup value of hardware and
software was not separately given. The Commissioner of
Customs by his order dated 31.5.1995 rejected the
discount of US $ 39,325.00 and enhanced the value of
the imported goods to US $ 1,21,825.00. It is not
disputed that these goods imported by the petitioner
were evaluated by the Customs of the value of
Rs. 34,65,000.00. These goods were confiscated by the
respondents.
3. The order passed by the Commissioner was
challenged before the Tribunal in appeal. Admittedly,
during the pendency of the appeal without obtaining the
permission of the appellate court the respondents
auctioned the goods of the petitioner.
4. The petitioner was not given any notice of
auction of his goods. The auction notice reads as
under:
“GRAND AUCTION SALE
In terms of directions of Govt.
of India the AIRPORTS AUTHORITY OF INDIA,
Delhi shall be auctioning accumulated
unclaimed/uncleared imported Air Cargo
landed on or before 31st March, 1997. The
huge accumulated stock consists of
Electronics, Computer Parts, T.V. Parts,
Photocopier Parts, Peretonial Dialisis
Equipment and other Medical/Dental items,
Chemical, Printed matter, Ready made
Garments, Spare Parts, Machinery, Leather
items and many other attractive items.”
5. The learned counsel for the petitioner submitted
that the respondents could not have auctioned the
confiscated goods. According to the rules and
provisions of the Act such auction is clearly violative
of the provisions of the Customs Act, 1962.
6. The learned counsel has submitted that Section
150 of the Customs Act has no application to this case
because that Section relates to goods which are not
confiscated. According to the learned counsel this
case is squarely covered by Section 126 of the Customs
Act. Section 126 reads as under:
“126. On confiscation, property to vest
in Central Government. -(1) When any goods
are confiscated under this Act, such
goods shall thereupon vest in the Central
Government.”
Therefore, according to the submission of the
learned counsel for the petitioner after confiscation,
the goods became the property of the Central
Government. During the pendency of the petitioner’s
appeal, without any permission of the court, the
confiscated goods were auctioned in a clandestine
manner by the respondents. The respondents are
obviously under an obligation to compensate the
petitioner for the grave loss which has been caused to
him. The goods were evaluated by the petitioner at
Rs. 19,11,930.00 and Rs. 7,16,974.00. The total amount
worked out to be Rs. 26,28,904.00. This is the
declaration of the petitioner though the respondents
have evaluated the value of confiscated goods at
Rs. 33.01 lakhs. While granting the order we deem it
proper to take the value of goods declared by the
petitioner otherwise it would be a case of unjust
enrichment. The petitioner has placed reliance on
Northern Plastics Ltd. v. Collector of Customs and
Central Excise, and Shilps Impex
v. Union of India , . In Shilps’
case (supra) their Lordships of the Hon’ble Supreme
Court observed that the petitioner became entitled to
get back what he has paid. In Northern Plastics’ case
(supra) the Hon’ble Supreme Court observed:
“It was contended by Mr. Dave that
the applicants are not liable to pay any
duty as the goods were not cleared by the
respondent and they were subsequently
confiscated and sold by the respondent
and, therefore, the applicants cannot be
said to have imported the goods. On the
other hand, it was contended by Mr. C.S.
Vaidyanathan, learned Additional Solicitor
General that the import of the goods was
by the applicants and as soon as the said
goods landed on the land mass of India
proper amount of duty, became payable
thereon. In our opinion, Mr. Vaidyanathan,
is right in his submission particularly,
when full impact has to be given to the
order passed by us declaring retention and
confiscation of the goods to be illegal.
Mr. C.S. Vaidyanathan, learned Additional
Solicitor General, however, further
submitted that value of the goods as shown
in the import documents was only Rs. 33.04
lacs and as the duty and the Warehousing
charges payable are more than the said
amount, the applicant is not entitled to
recover anything from the respondent.
What is over-looked by the learned Counsel
is the consequence of setting aside the
order of confiscation on the ground that
it was illegal. The applicant has become
entitled to the value of the goods as on
the date or time when the goods ought to
have been cleared by the respondent for
home consumption. If the value of the
goods in India after importation and
payment of duty, in January, 1989, was
Rs. 33.04 lacs only then the applicant, and
for that matter any sensible person, would
not have imported the goods at all. It
would be reasonable to presume that an
importer would have imported the goods of
the value of Rs. 33.04 lacs if its value in
Indian market at the relevant time was
more than CIS value of the goods plus the
duty payable thereon (Rs. 33.04 lacs +
47.07 lacs = Rs. 80.11 lacs.) It is also
not the stand of the respondent that such
goods were available in the Indian market
at that time at a lesser price. Therefore
it is now the obligation of the respondent
to return at least of Rs. 80.11 lacs – 47.07
lacs, the amount of duty payable thereon.
As the applicant has been deprived of the
use of the goods worth Rs. 33.04 lacs the
respondent is under a legal obligation now
to refund that amount to the applicant.
The respondent cannot now be permitted to
take the advantage of his own wrong and
contend that the value of the goods should
be determined only at Rs. 48.50 lacs
inclusive of its value and the amount of
duty payable thereon because they could be
sold at that price only. We also cannot
accept the contention of the learned
Counsel for the respondent that if the
applicant has suffered any loss as a
result of the wrongful act of the
respondent then he should file an action
in tort and his Court cannot order
payment of any amount in these
applications. No doubt it would be open
to the applicant to initiate such an
action if it feels that the loss suffered
by it is more than Rs. 33.04 lacks. Merely
because it is open to the applicant to
initiate such an action it would not be
just and proper to refuse the claim made in
these applications as in any case the
applicants is entitled to return of the
money value of the goods which were
illegally confiscated by the respondent.
Even though the applicant has claimed
interest @ 21% we do not think it proper
to award interest at such a high rate and
considering the facts and circumstances of
the case it would be in the interest of
justice if the respondent is directed to
return the amount of Rs. 33.04 lacs with
interest at the rate of 12% from 1.2.1989
till the date of payment as the Collector
by its order dated 31.1.1989 had held that
the goods were properly described and the
import was illegal.”
8. We are of the considered opinion that during the
pendency of the appeal confiscated goods could not have
been auctioned without the prior permission of the
appellate court.
9. From various judicial orders we gather that this
lapse is being repeated in a large number of cases,
therefore, we are constrained to observe that the
respondents have not been diligent in discharging their
duties. The respondents are directed to issue an
official circular within four weeks to all the
concerned officials that the confiscated goods which
are the subject matter of appeal before any Tribunal or
court shall not be auctioned or disposed of without
prior written permission or order from the concerned
Tribunal or the court.
10. After obtaining necessary permission if the
authorities decide to auction the goods, then
individual notice to the concerned parties is
imperative. We are clearly of the opinion that the
respondents have committed a serious blunder by
auctioning the goods which were subject matter of
appeal without prior permission of the concerned
appellate court. The petitioner has to be compensated
for this serious lapse of the respondents causing
immense financial loss to the petitioner.
11. We accordingly direct the respondents to refund
the amount of Rs. 26,28,940.00 declared as the value of
the confiscated goods to the petitioner forthwith. The
respondents are directed to return the said amount with
interest at the rate of nine percent per annum from
the date of unauthorised auction of the confiscated
goods, i.e., 21.5.1998.
12. Mr. Mohd, Haneef, the Superintendent of Customs,
(Disposal), AIR Cargo Unit, New Delhi gives undertaking
to this court that the amount will be paid within six
weeks from today.
13. No further directions are necessary in this
petition.
14. The writ petition is accordingly disposed of.