JUDGMENT
G.D. Kamat, J.
1. This petition challenges two orders of the Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Bombay, the one dated 5.5.1986 and the other dated 28th July 1986 and prays for a further direction that the goods detained be released in terms of the adjudication order dated 3rd January 1984 made by the Collector of Customs and affirmed by the Customs, Excise and Gold (Control) Appellate Tribunal, West Regional Bench, Bombay, for short the Appellate Tribunal.
2. The essential controversy projected in this petition finally took a turn and therefore requires the narration of facts as otherwise what is projected in the petition may be lost sight of.
3. The first petitioner is a partnership firm of which petitioners Nos. 2 to 6 are its partners. The petitioner-firm is engaged in manufacturing jeans and garments which they sell in the local market and also export to overseas customers. As the holders of Letters of authority of Binod Mills Company Limited, M/s. Anna Exporters and M/s. Literate Wear, the petitioners imported Denim cloth used in the manufacture of Jeans trousers, the import licences having been duly obtained by those firms. Once the goods arrived and the clearing of the consignments were under process, one of the import licence holder M/s. Literate Wear withdrew the authority of the petitioners with the result, the clearance of the goods imported got blocked. The petitioners in their own right as the averment goes on their own import licence sought to clear the consignment which had already landed in India.
4. The Customs Department however, found that the petitioners could not clear the consignment of Denim cloth imported in the name of M/s. Literate Wear as their letter of authority had been withdrawn. The same could not also be permitted clearance because the petitioners obtained an endorsement on their import licence from the Import Control Exchange Department after the arrival of the goods. The Department came to hold that the endorsement on the licence of the petitioners was later in point of time than the landing of the goods in India and to that extent according to the Department, the goods were not brought under that import licence produced by the petitioners for clearance. The Collector of Customs therefore, by notice dated 14th December 1983 called upon the petitioners to show cause as to why the goods detained should not be confiscated under the provisions of the Customs Act for not having imported legally in India after obtaining an import licence as whatever licence obtained and produced was subsequent to the importation and further as to why they should not be penalised as provided for under Section 112 of the Customs Act, 1962. The petitioners duly showed cause by their say to the said show cause notice on 16.12.1983 and also sought a personal hearing before the Collector of Customs. By an order dated 3rd January 1984 bearing No. S/10-124/8 3-E, the Collector of Customs held that though the petitioners themselves ware then armed with an import licence in their own name but as the goods had already arrived in the country prior to the endorsement by the Import Control Exchange Department, the imported consignment cannot be permitted to be cleared by the petitioners. But however, the Collector of Customs came to the conclusion that there was no mala fide whatsoever on the part of the petitioners and since they are already armed with import licence of their own, he could take a lenient view and instead of confiscating the same ordered the consignment to be released on payment of redemption fine of Rs. 10,000/-. The Collector further refrained from imposing any personal penalty. The petitioners thereafter paid the necessary import duty as well as the redemption fine of Rs. 10,000/-.
5. The Central Board of Excise and Customs, New Delhi, for short the Board having become aware of the order passed by the Collector dated 3rd January 1984 felt that the order thus made was not a proper order and therefore, directed the Collector of Customs by an order dated 26.6.1984 under Section 129D of the Customs Act, 1962 to prefer an appeal before the Appellate Tribunal. The Collector of Customs filed an appeal before the Appellate Tribunal on or about 31st July 1984 vide Appeal No. CD. (BOM) A. No. 626 of 1984 which was disposed of by an order dated 30th August 1984 by the Appellate Tribunal In that the Appellate Tribunal observed that based on the directive given by the Board the Collector instituted the appeal but however, he has sought altogether different relief de hors the direction of the Board.
6. It is common ground that the Board had directed the Collector to prefer an appeal to the Appellate Tribunal for seeking enhancement of the redemption fine based on the market value of the denim cloth and for imposition of personal penalty. But the Collector in his appeal prayed for an order for quashing his own order dated 3.1.1984 and for remand of the proceedings for de novo examination. The Appellate Tribunal was not amenable to the reliefs prayed for by the Collector as the Tribunal held that the prayers were extraneous to the directions given to the Collector by the Board and therefore beyond his powers. The Collector of Customs in his appeal had sought the remand of the proceedings on the ground that insofar as the endorsement on the licence produced by the petitioners for importation of denim cloth, forgery had been committed by the petitioners. But however, it must be seen that the Appellate Tribunal was not impressed with the discovery by the Collector about the forgery relating to the endorsement on the import licence. For that matter, the Appellate Tribunal held that this was a subject which is discovered later by the Collector and therefore, this subsequent fact could not be the subject matter which could be agitated before the Appellate Tribunal. The Appellate Tribunal in other words held that the Tribunal would go only into the matter as it stood before the Collector and not go into any other considerations which might have been discovered or transpired later. The Tribunal however, did not rest there. It went little further to hold that the Collector is the appropriate authority to impose penalties as also to use its discretion in the matter of confiscation as also awarding fine in lieu of confiscation. The Tribunal therefore felt that once the Collector has imposed a penalty of Rs. 10,000/- in lieu of confiscation of goods that too on the ground that there were bona fides on the part of the petitioners, the Tribunal refused to interfere any more with the orders of the Collector of Customs dated 3.1.1984. Another observation made by the Appellate Tribunal was to the effect that as long as the petitioners had been armed with an import licence the Collector had fallen into the error and wrongly viewed the case According to the Tribunal there was no infraction of the Customs Act merely because importation had been earlier and the endorsement on the licence was later and therefore the petitioners could have been let off as if they were the importers of the goods. But however, the Tribunal felt that as there was neither an appeal nor cross-appeal by the importers themselves, it could not help the petitioners in any manner.
7. The story insofar as the petitioners are concerned is as if they never took delivery of the goods from the Department and based on what is mentioned above it is their case that on or about 7.2.1986 on behalf of the Customs Department, an application was made to the Court of Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Bombay mentioning therein that the textiles thus imported are lying in the Customs Warehouse and they are likely to fade away in colour and as a result whereof, there would be fall in the value of the goods. Besides, it was contended that the storing facilities in the Customs Warehouse were short and therefore, prayed for an order to the Magistrate for disposing of the said imported denim cloth after keeping representative sample. A say on this application was obtained from the petitioners who brought to the notice of the Magistrate how and under what circumstances the goods were imported and got cleared by them and finally made a prayer that the same be returned to them so that the manufacture of jeans could be commenced. After hearing both the sides on 5th of May 1986, the following order was passed:
Heard both the sides. The property in question is a cloth worth Rs. 3 lakhs. It is to be auctioned by the Dept. and I am informed that the accused is entitled to offer his bid. The Ld. Customs Prosecutor submitted that the Dept. has no objection if the property is ordered to be returned to accused on his giving a bank guarantee of Rs. 21/2 lakhs. I, therefore, direct that the cloth in question to return to the accused after retaining samples of the same, on accused offering bank guarantee in sum of Rs. 21/2 lakhs. As the property is liable to deterioration in value, I permit the accused to manufacture Jeans from the cloth and sell the same way in the way he could legally do, under the terms of licence.
A little later, on 28th July 1986 another order was passed which is to this effect:
If the accused fails to furnish bank guarantee on or before 6th of August 1986, the property is ordered to be disposed off by Dept. on auctioning it after retaining the sample of it. The Dept. will keep the sale proceeds separately.
From both these orders it transpires that the Customs Department gave no objection for the return of the goods to the petitioners provided they give a bank guarantee for an amount of Rs. 2.5 lakhs and by the second order, the Magistrate compelled the petitioners to bring bank guarantee on or before 6th August 1986 as otherwise he gave an option to the Department to auction the goods after retaining a sample thereof as also the sale proceeds separately.
8. Mr. C.S. Kotwal, the learned Counsel appearing for the petitioners has contended before me and not without justification that insofar as the impugned orders are concerned, the Magistrate has clearly acted without jurisdiction in imposing the condition on the petitioners that the goods could be released in their favour by the Customs Department only on their furnishing a bank guarantee in the amount of Rs. 2.5 lakhs. In this connection he contends that the Adjudicating Authority under the Customs Act is the Collector of Customs and the final authority is the Appellate Tribunal, In as much as the Collector’s order dated 3.1.1984 has been affirmed by the Tribunal, the title in the goods clearly passed on to the petitioners and that way already became the property of the petitioners once the customs duties have been admittedly paid and for that matter, the redemption fine of Rs. 10,000/-. He further points out that when the department files a criminal case before the competent Magistrate even though the Magistrate is entitled to convict the offender, the Magistrate has no control over the goods imported and that therefore the Magistrate cannot under the law impose any condition requiring the petitioners to furnish a bank guarantee. He also urges that once adjudicating authorities under the Act, have decided the matter finally, the Magistrate has no right to impose a condition of furnishing a bank guarantee and in any event the order of furnishing a bank guarantee for that amount is onerous and that way not justified from the facts and circumstances of the case. In any event it is urged that the subsequent order dated 28th July 1986 giving authority to the department of Customs to auction the goods in the event the petitioners fail to provide bank guarantee on or before 6th of August 1986 is in excess of his jurisdiction and therefore, the same is liable to be quashed and struck down. He also made a grievance that it is not so easy to obtain bank guarantee as no bank gives bank guarantee unless an equivalent amount is deposited and that way, he contends that if the petitioners are made to deposit an amount of Rs. 2.5 lakhs it will be a big financial burden on the petitioners which will naturally affect their business.
9. In so far as the story of the petitioners in the petition is concerned, there is no difficulty at all and it could be held that once the Customs Department had allowed them to clear the goods and they had complied with the order of the Collector of payment not only of the importation duty but even the redemption fine of Rs. 10,000/- and once the appeal filed by the Collector is dismissed by the Appellate Tribunal, there is no occasion for the Metropolitan Magistrate to have called upon the petitioners to furnish a bank guarantee and that too for such a large amount and the challenge therefore, in so far as the petitioners are concerned is very formidable. But however, the things are not that smooth. As the time of the hearing Mr. Gupte appearing for the Collector of Customs surprised the Court by saying that soon after the order made by the Appellate Tribunal and once all the dues were paid by the petitioners the goods were in fact released on 2nd February, 1984 and the petitioners took away the goods. That the goods were re-seized by the Customs Department from the hands of the Carrier at Delhi as the goods were found to have been sold to a party in Delhi which was in violation of the import licence granted in favour of the petitioners as also for the reason that forgery was detected. Once this disclosure was made, I called upon Mr. Gupte to file an affidavit in this behalf. An affidavit on behalf of the Department is filed on 23rd September 1986 in which it has been clearly stated that the petitioners were given possession of the goods on 2nd February 1984 vide B/E 1827/142 and Cash No. 346. Once this material came on record the petitioners sought leave to file an affidavit in rejoinder. In the affidavit-in-rejoinder the petitioners clearly admitted that they had taken delivery of the goods on payment of Customs Duty and redemption fine. They further stated that the goods were consigned to M/s, Avis International Pvt. Ltd. but were re-apprehended at New Delhi. They however denied that they had sold the denim cloth to that Company, It is further mentioned in their affidavit that M/s. Avis International Pvt. Ltd. is a Company which manufactures jeans and the petitioners wanted to get jeans manufactured by that Company and not that the goods had been sold to them. According to the petitioners the action of re-seizing the goods is illegal and high handed. I am however, not concerned with the later part of the affairs. The fact remains that after the customs clearance, the goods were taken in delivery of by the petitioners and to that extent, it must be seen that under the legal position, the transaction in the matter of importation of denim cloth vis-a-vis the licence of the petitioners clearance, payment of duties and payment of redemption fine is all over.
10. On behalf of the Collector of Customs, it is contended by Mr. Gupte that though the power of disposal and otherwise control over the goods lies with the Collector of Customs, the fact remains that a criminal complaint has been filed against the petitioners and therefore, the order is required to be made by the Metropolitan Magistrate under Section 451 of the Code of Criminal Procedure. If on consideration of the matter, the Metropolitan Magistrate made the impugned order requiring the petitioners to give a bank guarantee to take away the goods, there cannot be any complaint in respect thereof.
11. In the matter of the complaint that is pending before the Metropolitan Magistrate it is urged that the petitioners are yet to answer the charges under the Customs Act and in relation to the alleged forgery regarding the endosement on the import licence and therefore, in fitness of things, the Magistrate would be competent to pass an order under Section 451 of the Criminal Procedure Code pending the trial. He also brought to my notice that the goods were seized at Delhi on 14.2.1984 and even a show cause notice under Section 122 of the Customs Act has been freshly given to the petitioners as to why the goods ought not to be confiscated.
12. Mr. Kotwal on behalf of the petitioners made a grievance that the action of the Customs Department is not bona fide and it is borne by mala des. He mentions that though this Court had directed the Collector of Customs to file an affidavit by 19th of September 1986, the affidavit has been filed on 23rd September 1986 and in that a statement has been made that a show cause notice for adjudication proceedings has been given to the petitioners and that notice is dated 22nd September 1986. Mr. Kotwal naturally shows this to point out that the purported show cause notice is clearly an after-thought and after the direction by this Court to file an affidavit which was deliberately delayed only in the meantime to issue the show cause notice. He also further points out that ex facie the show cause notice is illegal as it is beyond the limitation prescribed under the very provisions of the Customs Act. In that he mentions that the show cause notice is required to be given within six months and that period could be extended by another six months for the reasons to be recorded in writing by the Collector. He therefore, says that in as much as the importation took place in the year 1983, the show cause notice is clearly barred by the provision set out in the very statute.
13. It is not possible for this Court to either adjudicate in respect of this show cause notice dated 22nd September 1986 nor in respect of the seizure of the goods at New Delhi which according to Mr. Kotwal is illegal because there is no such challenge in the petition. On the contrary, the fact remains that there is not even a whisper in the petition that after the payment of importation duty and redemption fine, the goods had been released and that the goods were taken delivery of by the petitioners pursuant to the: orders of the Collector and Tribunal or that they were seized at Delhi. Despite this position was made clear, the petitioners have not chosen to seek any amendment to the petition. Even a suggestion by the Court that the petition could be withdrawn and a fresh petition claiming all comprehensive reliefs has not been accepted by the petitioners. What therefore, remains before me is whether the impugned orders made by the Metropolitan Magistrate are at all illegal. In this connection, the challenge being limited, as mentioned earlier, it must be stated that the transaction of importation of goods of denim cloth was long over, once the goods were delivered to the petitioners on 2.2.1984. Now that the Collector of Customs says that the goods are re-seized on entirely different grounds namely, forgery regarding endorsement on the import licence and that they are said to be wrongfully sold to some party in Delhi which facts are entirely extraneous to the fact of importation and delivery of goods and unfortunately, this action is not challenged in the present petition. Therefore, I am afraid that I am unable to interfere with the orders of the Metropolitan Magistrate because he is now seized of the criminal case including the charges of forgery against the petitioners whether or not the action of the Customs Department in seizing the goods again is illegal. The fact remains that the complaint is pending with the Metropolitan Magistrate and that action of the Collector of Customs is not challenged in the present petition. If the petitioners want to take away the goods and the Magistrate has required of them to furnish bank guarantee to take away the goods, there i3 no error whatsoever. It is no doubt true that some prejudice will be caused to the petitioners in furnishing bank guarantee in the sum of Rs. 2.5 lakhs if they want to take away the goods seized by the Customs Department on 14.2.1984. But the fact remains that they are at liberty to take those goods and it is not that they are prevented by the order of the Magistrate from taking away the goods. If the petitioners were to file a petition challenging subsequent actions seeking all comprehensive prayers including the seizure of 14.2.1984 together with the issuance of the second notice dated 22.9.1986 perhaps such petition would have stood at a different level. But however, the petitioners have chosen not to challenge the subsequent actions for reasons best known to them though the present petition is filed much after the seizure. For the reasons stated above, I am unable to interfere with the impugned orders. The only concession justified is that if the petitioners desire to furnish bank guarantee, they can do so and for that matter I enlarge the time upto 5.12 1986 and to that extent the impugned order dated 28.7.1986 stands modified. At this stage, Mr. Kotwal, the learned Counsel for the petitioners sought stay of the impugned orders of the Magistrate on the ground that they may prefer a Special Leave Petition to the Supreme Court. The impugned orders are stayed for a period of six weeks and the Collector of Customs not to auction the goods in question during this period. The petition is therefore, dismissed subject as aforementioned and rule is accordingly discharged. There shall, however, be no order as to costs.