Ramesh Ranganathan, J.
1. In W.P. No. 6610 of 2005 the petitioner seeks refund of Rs. 44,95,629/-, with interest at 24% per annum and costs, and for return of the bank guarantees furnished by them for Rs. 49.80 lakhs, consequent to the order of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Branch, Bangalore, (hereinafter referred to as CESTAT), dated 2.11.2004.
2. CEA No. 42 of 2005, is preferred by the Deputy Commissioner of Customs, against the very same order passed by the CESTAT, in Appeal No. C/st/90 and 103/ 2004 in C/213 and 235/2004, dated 2.11.2004. As it was contended that the Deputy Commissioner of Customs did not have the authority to prefer an appeal to this Court, against the order of CESTAT, the appeal in C.E.A(SR) No. 2340 of 2005 is preferred by the Commissioner of Customs.
3. The writ petition and both the appeals are based on the same order, of the CESTAT dated 2.11.2004, and are therefore disposed of by a common order. Reference to parties shall, hereinafter, be made as they are arrayed in the writ petition.
4. Facts, to the extent necessary, are that the petitioner, a limited company engaged in the manufacture and sale of edible oils, imports crude oil and clears the goods on payment of customs duty either in cash or by adjustment against duty exemption pass books (hereinafter referred to as DEPB Scrips). These DEPB Scrips are said to be freely transferable, easily bought and sold in the open market, to be used for payment of customs duty, in lieu of cash.
5. It is the case of the petitioner that they filed Ex-Bond bills of entry, through their C & F agents, M/s DSN and Company, Kakinada, for clearance of imported goods, they had furnished DEPB Scrips towards discharge of customs duty liability and that these Bills of Entry were assessed and goods cleared on payment of duty partly by way of DEPB Scrips. The Special Investigation and Intelligence Branch (Import) is said to have conducted investigation, in respect of these DEPB Licences/Scrips, and as discrepancies were found, on comparison with the records of the Customs Department, a show cause notice was issued to the petitioner. The petitioner contends that their request, for supply of documents relied on in the show cause notice and for cross-examination of several departmental officers, was rejected and that the 1st respondent, in violation of Principles of Natural Justice, had passed the order dated 27.2.2004 holding that the DEPB Scrips were not genuinely issued by the competent authority and were not valid for payment of duty.
6. The 1st respondent, under Section 28(1) of the Customs Act, called upon the petitioner to pay the customs duty of Rs. 1,98,78,418/-. Consequent thereto the fixed deposit receipts, lodged with the 2nd respondent, (which the petitioner claims was in respect of an independent transaction), were encashed for a sum of Rs. 44,95,629/- and adjusted towards the dues assessed by the 1st respondent. Aggrieved by the order of the 1st respondent, dated 27.2.2004, the petitioner preferred an appeal to the CESTAT, and filed W.P. No. 9658 of 2004, before this Court seeking stay pending appeal. This Court, by order dated 16.6.2004, while granting stay of the order of the 2nd respondent, for a period of one month, directed the CESTAT to decide the stay application. On 2-11-2004, the CESTAT set aside the order of the 1st respondent, dated 27.2.2004, and remanded the matter for his de novo consideration in the light of the directions given by it. The petitioner sought refund of Rs. 44,95,629/-, (which had earlier been encashed by the 2nd respondent on 16.3.2004, based on the order of the 1st respondent), and to return the bank guarantees in aggregate for a value of Rs. 49.80 lakhs, since the order of the 1st respondent dated 27.2.2004 had been set aside by the CESTAT. The 2nd respondent, vide letter dated 8.12.2004, asked the petitioner to submit their application for refund, of the encashed F.D.Rs, in the prescribed format and on the petitioner complying with the request, the 2nd respondent, vide proceedings dated 9.3.2005, informed them that as the matter had been remanded for de novo consideration, in the light of the directions given by CESTAT, the refund claim would be considered after the fresh de novo enquiry by the 1st respondent. Hence this writ petition.
7. Aggrieved by the order of the CESTAT dated 2-11-2004, whereby the order of the 1st respondent dated 27.2.2004 was set aside for violation of Principles of Natural Justice, C.E.A. No. 42 of 2005 and C.E.A. (S.R.) No. 2340 of 2005 have been filed by the respondents.
8. It is the case of the respondents, in the writ petition, that the petitioner had first filed three warehouse bills of entry for import of 4978.714 MT of edible grade Crude Palmolein and had executed Provisional Duty Bonds under Section 18 of the Customs Act undertaking to pay the differential duty between the finally assessed and provisionally assessed duty and also to pay fine and penalty, if any, for contravention of the conditions. Subsequently the petitioner filed 9 Ex bond bills of entry, besides others, for clearance of Crude Palmolein and had claimed benefit under Notification No. 45/ 2002-Cus dated 22.4.2002, producing DEPB Scrips. It is stated that the bills of entry were provisionally assessed and the goods were cleared by the petitioner, in terms of the notification dated 22.4.2004, making part payment of customs duty through DEPB Scrips. It is also stated that the petitioner had deposited FDRs for Rs. 43,74,010/-towards differential duty, between Refined, Bleached and Deodorised (RBD) Palmolein and Crude Palmolein, on imports made by them from time to time, that the investigation conducted by the Intelligence Branch revealed that the DEPB Scrips/Licences were not valid for discharge of duty liability, that payment of duty through forged DEPB Scrips was as if duty had not been paid at all for the goods imported under the relevant bills of entry, that a Show-cause notice dated 11.12.2003 was therefore issued by the 1st respondent, under Section 28(1) of the Customs Act, calling upon the petitioner to pay customs duty of Rs. 1,98,78,418/- along with interest and that the 1st respondent, by order dated 27.2.2004, confirmed the duty of Rs. 1,98,78,418/- relating to the forged DEPB Scrips and imposed a penalty of Rs. 5,00,000/-. Consequent thereto the fixed deposit receipts, for maturity value of Rs. 44,95,629/-, are said to have been appropriated towards the duty payable by the petitioner, in the interest of protecting Government revenue, since there was no dispute regarding the forged nature of DEPB Scrips which, in effect, meant that the petitioner had cleared imported goods without payment of duty. The said amount of Rs. 44,95,629/-, covered by the FDRs, were adjusted towards payment of duty, under Section 142 of the Customs Act. Respondents contend that, as the imported goods are required to be cleared only on payment of customs duty and as customs duty paid by way of DEPB Scrips, which were subsequently found to be forged, amounted to Customs duty not having been paid at all, the petitioner was required to make payment to the extent of the forged DEPB Scrips and this requirement of payment of Customs duty, for the amount covered under the forged DEPB Scrips, was irrespective of their involvement in the fraud. It is stated that the petitioner had furnished bank guarantees for a sum of Rs. 39.8 lakhs only, (and not Rs. 49.8 lakhs), as security for the bond executed under Section 59(1) of Customs Act towards duties and interest payable on imported Crude Palmolein stored in the warehouse tanks, these bank guarantees are required to be kept alive as long as the warehouse licence granted to the petitioner, under Section 58 of the Customs Act, is in force and that, as on 1.4.2005, a quantity of 3888.384 MT of non duty paid edible oil was available in the warehouse tanks of the petitioner. It is contended that the CESTAT, by order dated 2.11.2004, had not directed refund of the FDRs or for release of the bank guarantees, that the matter is now under de novo consideration of the 1st respondent and that, by virtue of the remand, the assessment had come back to the original stage i.e., the provisional stage. It is stated that for provisional assessment, under Section 18 of the Customs Act, the importer is required to furnish provisional duty bond with bank guarantees to cover the differential duty and the FDRs, appropriated by the department, for a maturity value of Rs. 44,95,629/-, became the cash security for the provisional assessment, till it is finalized in the de novo proceedings by the 1st respondent. Reference is made to the petitioner's request to CESTAT not to adjudicate the appeal till the CBI completed its investigation of the forged DEPB documents, which, in effect, meant that they intended to have the assessment proceedings deferred indefinitely, seek refund of the amount covered under the FDRs and for return of the bank guarantees, and thereby avoid payment of customs duty of Rs. 1,98,78,418/-. Reference is also made to Section 142 of the Customs Act to contend that the department was well within its rights to recover dues from any money, owing to such person, which may be under the control of the proper officer of the Customs Department. It is contended that refund, of the appropriated FDR amount of Rs. 44,95,629/-, cannot be made at this stage when the assessment is deemed to be provisional, the earlier provisional order having revived consequent on the final order of the Commissioner having been set aside by the CESTAT and the matter remanded for his de novo consideration. It is further stated that the petitioner had not only used forged DEPB Scrips for payment of customs duty of Rs. 1,98,78,418/-, but had also obtained 14 more such DEPB Scrips from Saha Traders, New Delhi and had used them for discharging duty payable on 1786.053 MT of edible grade Crude Palmolein involving duty of Rs. 2,55,88,969/- and that these DEPB Scrips were obtained on fraudulent exports, under the DEPT Scheme, as reported by the Additional Commissioner of Customs, Calcutta, vide letter dated 21.12.2004. It is stated that the petitioner is a habitual offender in obtaining forged DEPB Scrips and in using them to clear imported edible oils without payment of duty.
9. In reply, the petitioner would contend that there is no provisional assessment, as contemplated under Section 18 of the Customs Act, since the order of provisional assessment can only be passed by a speaking order. It is only when the duty, if any, payable pursuant to the provisional assessment order, is demanded, is there any liability to pay duty and since, in the present case, there was no provisional assessment as contemplated in law, execution of the PD bond was itself an unnecessary formality which the respondents had insisted upon. The petitioner would submit the very fact that, at the time of execution of PD bonds, on various dates, there was no demand for duty clearly showed that there is no provisional assessment order. With regards forgery of DEPB Scrips, petitioner submits that they had purchased DEPB Scrips in the market and when these documents were submitted to the Customs Authorities at Kakinada the same were verified, they were again subjected to verification by the internal audit wing of the Customs House including signatures of the Customs Officials on these DEPB Scrips and only thereafter were the DEPB Scrips cleared for payment of duty. Petitioner admits that the bank guarantees furnished by them was not for Rs. 49.8 lakhs but was for Rs. 39.8 lakhs only. They, however, contend that since the respondents themselves had, in accordance with the practise in vogue, returned the bank guarantees earlier, accepting a Solvency Certificate instead, they are bound to accept the Solvency Certificate furnished by the petitioner on 9.10.2004 and return the bank guarantees.
10. Since the relief sought for in the writ petition, for refund of the amount appropriated under the Fixed Deposit receipts, is based on the order of CESTAT dated 2.11.2004, which order is questioned in C.E.A.No. 42 of 2005 and C.E.A.(S.R). No. 2340 of 2005, it is necessary to decide the appeals first.
11. Against an order of CESTAT, an appeal lies to the High Court under Section 130 of the Customs Act which reads as under:
Section 130. Appeal to High Court: (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law.
2. The Commissioner of Customs or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this Sub-section shall be--
(a) filed within one hundred and eighty days from the date on which the order appealed against is received by the Commissioner of Customs or the other party;
(b) accompanied by a fee of two hundred rupees where such appeal is filed by the other party;
(c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved.
3. Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.
4. The appeal shall be heard on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question:
Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question.
5. The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit.
6. The High Court; may determine any issue which--
(a) has not been determined by the Appellate Tribunal; or
(b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in Sub-section (1).
12. Respondents contend that most of the documents sought for by the petitioner were furnished, other documents were not supplied as they had not been relied upon in the show cause notice and as their relevance for the defence of the petitioner was not established. It is contended that, while the petitioner had sought permission to cross-examine Customs Officials, to prove their innocence, establish that they were not involved in the forgery and had purchased DEPB Scrips from the market in good faith, the fact that the DEPB Scrips were forged/fake was not in dispute. It is contended that involvement of the petitioner, in the forgery of the DEPB Scrips, is under investigation by the C.B.I. As payment of customs duty through such forged DEPB Scrips was as good as customs duty not having been paid, at all, the petitioners were called upon to make payment of customs duty. It is contended that the public exchequer cannot be allowed to be defrauded merely because some officials have either been negligent or had colluded with the importer in their acts or omissions, and that a substantial question of law has arisen since the impugned order of CESTAT dated 2-11-2004 is as a result of the perverse interpretation of the whole issue wherein the petitioner had admitted liability of customs duty and had cleared the goods making payment partly by cash and partly by using DEPB Scrips which were admittedly forged.
13. Learned Assistant Solicitor General would submit that since the petitioners had never disputed that the DEPB Scrips were forged, the Tribunal ought not have held that Principles of Natural Justice had been violated, since observance of the rules of natural justice is not a mere formality and would have no application if facts are not in dispute.
14. Learned Assistant Solicitor General would rely on Viveka Nand Sethi v. Chairman, J&K; Bank Ltd., : (2005)IILLJ1034SC ; and Karnataka SRTC v. S.G. Kotturappa, : (2005)IILLJ161SC , in support of his submission that, when facts are either admitted or are not in dispute, conducting an enquiry would merely be an empty formality, that Principles of Natural Justice is no unruly horse, cannot be put in a straight jacket formula and would require compliance having regard to the obtaining fact situation.
15. Learned Assistant Solicitor General would submit that admitted facts need not be proved and, where the facts are not in dispute, it cannot be said that Principles of Natural Justice have been violated. He would submit that while the petitioner had contended that they were unaware of the fact that the documents were forged, the fact that the DEPB Scrips submitted by them were forged is not in dispute and, since facts not in dispute is akin to an admission, Principles of Natural Justice would have no application. Learned Counsel would place reliance on M.C. Mehta v. Union of India, : [1999]3SCR1173 ; and Aligarh Muslim University v. Mansoor Ali Khan, : AIR2000SC2783 , in this regard.
16. Learned Assistant Solicitor General would submit that since it is not in dispute that the DEPB Scrips were forged, which is a tacit admission by the petitioner, the Tribunal's finding that the order of the 1st respondent was in violation of the rules of natural justice, is an order ignoring material evidence and such a finding of fact, ignoring the admission of the petitioner, would give rise to a substantial question of law. He would place reliance on Yadarao Dajiba Shrawane v. Nanilal Harakchand Shah, : AIR2002SC2849 , wherein the Supreme Court held thus:
'From the discussions in the judgment it is clear that the High Court has based its findings on the documentary evidence placed on record and statements made by some witnesses which can be construed as admissions or conclusions. The position is well settled that when the judgment of the final Court of fact is based on misinterpretation of documentary evidence or on consideration of inadmissible evidence or ignoring material evidence the High Court in second appeal is entitled to interfere with the judgment. The position is also well settled that admission of parties or their witnesses are relevant pieces of evidence and should be given due weightage by Courts. A finding of fact ignoring such admissions or concessions is vitiated in law and can be interfered with by the High Court in second appeal....'
17. Learned Assistant Solicitor General would submit that in any event, Section 130(6) of the Customs Act enables this Court, even if a substantial question of law has not been raised in the appeal, to formulate the question and decide the matter.
18. Sri D. Prakash Reddy, learned Senior Counsel, appearing for the petitioner (respondent in the appeal), would submit that the petitioner has not admitted that the DEPB Scrips were forged. Learned Senior Counsel would refer to the interim reply submitted by the petitioners on 22.2.2004 wherein they had sought for being provided an opportunity to verify the genuineness of the DEPB Scrips. In the said letter, the petitioner had stated that all payments, for purchase of DEPB Scrips, were made through legalized channels by means of account payee cheques, that they had made huge payments to the seller of the Scrips only after the department had accepted the DEPB Scrips, that the department had not pointed out any irregularities in the DEPB Scrips and could not therefore dispute its genuineness and that the petitioner had informed that they had no occasion to examine the originals and it was therefore necessary that they be allowed inspection of the originals to confront the witnesses with the original documents during cross examination.
19. Sri D. Prakash Reddy, learned Senior Counsel, would submit that not only is there no admission on the part of the petitioners, they had also specifically stated that the department had not disputed the genuineness of the DEPB Scrips and had sought for production of the originals to establish its genuineness. Learned Senior Counsel would contend that since the petitioners had, in fact, disputed the contention of the appellants that the DEPB Scrips were forged, it could not be said that the requirement, of compliance of the rules of natural justice, was an empty formality which could be dispensed with. Learned Senior Counsel would also submit that the order, of CESTAT dated 2.11.2004, cannot be misconstrued as requiring the Commissioner to wait till completion of the C.B.I. enquiry and that no prejudice can be said to have been caused, since the matter has only been remanded for the de novo consideration of the first respondent who, if he considers it necessary, could proceed to finalise the assessment without awaiting completion of the C.B.I. investigation. Learned Senior Counsel would contend that the order of CESTAT, in setting aside the order of the 1st respondent on the ground of violation of Principles of Natural Justice, did not call for any interference, since the scope of an appeal under Section 130(1) of the Customs Act was extremely limited and no substantial question of law has arisen for consideration in the appeal.
20. The proper test for determining whether a question of law, arising in a given case, is substantial or not would be whether it is of general public importance and whether it directly and substantially affects the rights of parties and if so whether it is either an open question in the sense that it is not finally settled by the Supreme Court or this Court or is not free from difficulty or calls for discussion if alternative views. If the question is settled by the highest Court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or the plea raised is palpably absurd, the question would not be a substantial question of law (Sir Chunilal V. Mehta and Sons Ltd. v. Century Spg. & Mfg. Co., Ltd., : AIR1962SC1314 ). It is not within the domain of this Court to investigate the grounds on which the findings were arrived at by CESTAT which is the final Tribunal of fact. This Court would, normally, not substitute its opinion for that of the Tribunal, unless it is found that the conclusions drawn were erroneous, being contrary to the mandatory provisions of law or its settled position on the basis of pronouncements made by the Supreme Court, or was based on inadmissible evidence or arrived at without evidence. If the question of law, termed as a substantial question, stands already decided by this Court or by the Supreme Court, its wrong application on the facts of the case cannot be termed a substantial question of law. Mere appreciation of facts cannot be said to have given rise to a substantial question of law. (Kondiba Dagadu Kadam v. Savitribai Sopal Gujar, : [1999]2SCR728 ). Where the CESTAT is shown to have exercised its discretion in a judicial manner, it cannot be termed to be an error either of law or of procedure requiring interference by this Court.
21. While there is considerable force in the submission of Sri D. Prakash Reddy, learned Senior Counsel, that the petitioners had not specifically admitted that the DEPB Scrips were forged, on going through the contents of the interim reply, on which reliance is placed by the learned Senior Counsel, we find that there is no specific denial either. We are however not inclined to examine this aspect any further as no substantial question of law has arisen for consideration in the present appeal. The order of CESTAT dated 2.11.2004, has not finally determined the rights of parties and has merely directed the 1st respondent to consider the matter de novo. It is only when the question of law which arises in a given case, directly and substantially affects the rights of parties, would it give rise to a substantial question of law. We see no basis for the apprehension of the appellants, that the order of CESTAT dated 2.11.2004 precludes the 1st respondent from deciding the matter afresh till the C.B.I. completes its investigation. We are in complete agreement with the submission of Sri D. Prakash Reddy, learned Senior Counsel, that the order of CESTAT dated 2.11.2004 cannot be construed in such a manner. However to set at rest the apprehensions of the appellants, (respondents in the writ petition), forcibly put across by the learned Assistant Solicitor General, we make it clear that it is open for the 1st respondent, if he considers it appropriate, to take up the matter for de novo consideration without awaiting completion of investigation by the Central Bureau of Investigation.
22. In its order dated 2.11.2004, the CESTAT has merely held that the petitioners were entitled to be furnished all the documents relied upon by the department, and failure to do so was in violation of the rules of natural justice. The CESTAT further held that, since the case was built on the basis of the statement recorded from the Customs Officials, an opportunity was required to be given to the petitioners to cross-examine them. The CESTAT had merely followed the judgments of the Supreme Court and High Courts in this regard and had allowed the appeals on the ground of violation of Principles of Natural Justice. The CESTAT has taken relevant and material facts into consideration and had applied the correct principles of law. Though Section 130(6) confers power on this Court to determine any issue, though not specifically raised in the appeal, in case such an issue has been wrongly determined by the CESTAT, we see no reason to exercise the power since, in our view, the CESTAT has not wrongly determined the issues before it.
23. The appeals in C.E.A.No. 42 of 2005 and C.E.A.(S.R).No. 2340 of 2005 fail and are accordingly dismissed.
24. Now the writ petition and the question whether the petitioner should be granted the relief of refund of Rs. 44,95,629/-, (representing the encashed FDRs), and return of bank guarantees of Rs. 39.80 lakhs pending de novo consideration by the 1st respondent.
25. Sri S. Ravi, learned Counsel for the petitioner, would refer to Paragraph 7 of the order of CESTAT dated 2.11.2004, which reads thus:
'We have carefully considered the submissions made by both sides and have perused the records. The allegation against the appellant is that they have produced forged DEPB Scrips. The appellants have pleaded bona fide purchase in the matter and have stated that they are not at all aware about the DEPB Scrips having been forged by the seller in connivance with the Customs Officials. In order to establish their innocence, it is important that the department has to furnish all the documents relied upon as prayed by them. This is in keeping with the Supreme Court judgment and the High Court judgments cited supra. Non-furnishing of these documents certainly violates the Principles of Natural Justice. We also find that the case is built on the basis of the statement recorded from the Customs Officials. The appellants have to be given an opportunity to cross-examine them as the appellants will not be in a position to establish their innocence unless they are afforded with an opportunity to cross-examine the witnesses relied by the department. Further, the prayer that the Commissioner should wait till the CBI enquiry is completed may be considered by the Commissioner in the facts and circumstances of the case as ultimately if the CBI drops the charges, then the appellants can take advantage from such reports, which will certainly have a bearing on the case. In view of our findings on violation of Principles of Natural Justice, we allow the stay applications and the appeals. The impugned order is set aside and the matter remanded to the Commissioner of Customs for de novo consideration in the light of the directions given in the matter.'
26. Sri S. Ravi, learned Counsel for the petitioner, would refer to the DEPB licence to submit that the said licence was subjected to verification at several levels before it was accepted by the respondents and the allegation that the licences are forged is without basis. Learned Counsel would place reliance on Metal Forgings v. Union of India, : 2002(146)ELT241(SC) , to contend that in the absence of a speaking order being passed, there is no provisional assessment order in the eye of law and execution of PD bonds by the petitioner was itself an unnecessary formality. Learned Counsel would submit that since the order of the 1st respondent, dated 27.2.2004, has been set aside by the CESTAT, the amounts recovered earlier, pursuant to the order of the 1st respondent, are required to be refunded to them. Learned Counsel would submit that the practise, in vogue, earlier was to accept Solvency Certificates as security, for the bond executed under Section 59(1) of the Customs Act, towards duty and interest payable on imported Crude Petroleum stored in the warehouse tanks, and since the petitioner had furnished such a Solvency Certificate, issued by the State Bank of Hyderabad dated 9.10.2004, the respondents were not justified in retaining the bank guarantees and in not accepting the Solvency Certificate submitted by the petitioner.
27. Learned Assistant Solicitor General, appearing on behalf of the respondents, would refer to the Bills of Entry for Ex-bond clearance home consumption, (wherein it is clearly stated that it was passed provisionally under DEPB Scheme), and submit that a provisional assessment order was indeed passed. Learned Assistant Solicitor General would submit that the petitioner, having accepted the provisional assessment and having cleared goods on payment of duty pursuant thereto, cannot, for the first time in the present writ petition, contend that the order passed as early as on 16-12-2002 is not a provisional assessment in the eye of law. He would rely on Roshan Deen v. Preeti Lal, : (2002)ILLJ465SC , in this regard.
28. Learned Assistant Solicitor General would further submit that the petitioner has not disputed the quantum of customs duty payable by them, they had only sought to make payment by way of DEPB Scrips and had thereafter cleared the goods provisionally. The contention that no provisional order has been passed, according to the learned Assistant Solicitor General, is merely an attempt to avoid payment of customs duty and that, as part of this endeavour, the petitioner is seeking to divert the whole issue. In support of his submission that the payment made, under the fake DEPB licences, is no payment in the eye of law, and the petitioner would therefore be required to make payment towards customs duty for the goods cleared by them, for the amounts covered under these fake DEPB licences, learned Assistant Solicitor General would place reliance on New India Assurance Co., Shimla v. Kamla, : [2001]2SCR797 , wherein the Supreme Court held that a fake licence cannot get its forgery outfit stripped off merely on account of some officer renewing the same with or without knowing it to be forged, that no Licensing Authority had the power to renew a fake licence and a renewal, if at all made, could not transform a fake licence as genuine, that any counterfeit document showing that it contains a purported order of a statutory authority would ever remain counterfeit albeit the fact that other persons, including some statutory authorities, have acted on the document unwittingly on the assumption that it was genuine, the proposition that renewal of a forged document would bring with it validity, if allowed to stand as a legal principle, would thrill counterfeiters the world over and would encourage them to manufacture fake documents in a legion. What was originally a forgery would remain null and void forever and would not acquire legal validity at any time by whatever process of sanctification subsequently done on it, that forgery is antithesis to legality, that law could not afford to validate a forgery and that the forged bonds, submitted by the petitioner, would not acquire validity merely because the forgery was not detected earlier.
29. Learned Assistant Solicitor General would submit that the petitioner has not approached this Court with clean hands and their endeavour is to divert the issue and thereby avoid payment. He would contend that, before the CESTAT, the petitioner had submitted that, any action by the 1st respondent would necessarily have to await C.B.I. investigation, with the full knowledge that such investigation would take a long period to complete. Learned Assistant Solicitor General would submit that since the remedy, under Article 226 of the Constitution of India, is discretionary and as no equity arises in favour of the petitioner, this Court should not exercise its discretion in favour of a person who has not approached this Court with clean hands. Reliance is placed on Union of India v. S.M. Hussain Rasheed, : 2003(5)ALD150 (DB), (wherein one of us BRSRJ), held thus:
'It is a well settled position in law that a petition challenging an action of the authority as arbitrary or unreasonable, must indicate how and in what manner it is arbitrary or unreasonable. Vague and general allegations are not sufficient. As per settled law, the party who invokes the extraordinary jurisdiction of the Court under Article 226 of the Constitution is supposed to be truthful, frank and open. He must disclose all material facts without any reservation and one cannot be permitted to pick and choose the facts he likes to disclose and to suppress or not to disclose other facts. The very basis of the writ jurisdiction of this Court rests on disclosure of true and complete facts. It is equally well settled that a petitioner who does not come with candid facts and clean hands cannot hold a writ of the Court with soiled hands. Suppression or concealment of material facts is most reprehensible. In a writ proceeding, if the petitioner does not disclose all the material facts fairly and truly but states them in a distorted manner with a view to mislead or deceive the Court, the Court is bound to protect itself and to prevent an abuse of its process. Jugglery has no pace in equitable and prerogative jurisdiction.'
30. The claim of the petitioner, in this writ petition, is in two parts. The first is for refund of Rs. 44,95,629/- with interest at 24% per annum and the second is for return of bank guarantees of Rs. 39.80 lakhs. While the first claim is based on the orders of the CESTAT dated 2-11-2004, the second is based on the practice, said to be in vogue in the Customs Department, to accept Solvency Certificates, instead of bank guarantees, as security, for the bonds executed under Section 59(1) of the Customs Act, towards duty and interest payable on the imported goods.
31. The bank guarantee of Rs. 39.80 lakhs furnished as security, for the bond executed under Section 59(1) of the Customs Act, was towards duty and interest payable on imported crude palmolein stored in warehouse tanks. As on 1-4-2005, 3888.384 Metric Tonnes of non duty paid edible oil is said to have been available in the warehouse tanks of the petitioner.
32. Chapter DC of the Customs Act relates to warehousing and Section 58 thereunder relates to licensing of private warehouses. Under Section 58(1), the Assistant Commissioner of Customs or the Deputy Commissioner of Customs may licence private warehouses wherein dutiable goods, imported by or on behalf of the licensee, or any other imported goods in respect of which facilities for deposit in a public warehouse are not available, may be deposited. Section 59 relates to warehousing bond and under Sub-section (1) thereof, the importer of any goods, which have been entered for warehousing and assessed to duty under Section 17 or Section 18, shall execute a bond binding himself for a sum equal to twice the amount of duty assessed on such goods, to observe, all the provisions of the Customs Act and the rules and regulations in respect of such goods and to pay on or before a date specified in a notice of demand, all duties, interest etc., Under Sub-section (3) the bond executed under Section 59, by an importer, in respect of any goods shall continue in force notwithstanding the transfer of the goods to any other person or the removal of the goods to another warehouse. The security bond is therefore required to be kept alive as long the warehouse licence, granted under Section 58, is in force.
33. Section 68 of the Customs Act reads as under:
'Clearance of warehoused goods for home consumption: The importer of any warehoused goods may clear them for home consumption if--
(a) a bill of entry for home consumption in respect of such goods has been presented in the prescribed form;
(b) the import duty leviable on such goods and all penalties, rent, interest and other charges payable in respect of such goods have been paid; and
(c) an order for clearance of such goods for home consumption has been made by the proper officer:
Provided that the owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish his title to the goods upon payment of rent, interest, other charges and penalties that may be payable in respect of the goods and upon such relinquishment, he shall not be liable to pay duty thereon.'
34. It is clear therefrom that an importer can clear the goods, from the warehouse, for home consumption only on payment of import duty leviable on such goods. As security for payment of customs duty, for the imported goods stored in the warehouse, the importer is required to execute the bond under Section 59. No statutory provision, regarding the nature of security required to be provided in this regard, is brought to our notice. The kind of security, required to be provided under Section 59(1), is therefore for the customs authorities to decide and not for this Court to adjudicate. If the respondents, in their wisdom, have chosen to insist on bank guarantees being furnished as security, instead of a Solvency Certificate, it is not for this Court to either weigh the pros and cons or examine as to whether a Solvency Certificate would suffice as security instead of the bank guarantees furnished by the petitioner. We have no manner of doubt that these are all matters which this Court would not, normally, adjudicate, nor would this Court sit in appeal over the exercise of discretion of statutory authorities in such matters. The claim of the petitioner, for return of bank guarantees of a sum of Rs. 39.80 lakhs, is therefore rejected.
35. The other claim relates to refund of the FDR amounts of Rs. 44,95,629/-, which the respondents had encashed towards payment of customs duty pursuant to the order of the 1st respondent dated 27-2-2004. The basis of this claim is that the CESTAT, by order dated 2-11-2004, had set aside the order of the 1st respondent dated 27-2-2004.
36. Payment of customs duty, for import of goods, is a statutory requirement under the Customs Act. While payment in this regard is normally required to be made in cash, an exemption has been provided under Notification No. 45/02, Customs dated 22-4-2002, whereby importers were given the facility to pay duty through debits against DEPB Licences. The petitioner was permitted to clear 1392.575 Metric Tonnnes of Crude Palmolein, valued at Rs. 3,12,27,340/-covered by the bills of entry, which required prior payment of duty under Sections 46 and 47 of the Customs Act. Under Section 47(1) it is only if the importer has paid duty assessed therein and any charges payable under the Act, that the officer concerned is empowered to make an order permitting clearance of the goods for home consumption. The petitioner herein, in view of the exemption under Notification 45/02 dated 22-4-2002, chose to pay customs duty, on the imported crude palmolein valued at Rs. 3,12,27,340/-, by debit against DEPB Scrips instead of making payment in cash. The customs duty payable, on the imported crude palmolein of 1392.575 M.T, was for Rs. 1,98,78,418/-. Without payment of this sum, exceeding Rs. 1.98 crores, the petitioner could not have cleared 1392.575 M.T. of crude palmolein for home consumption. On verification caused, by the office of the Zonal Joint Director General of Foreign Trade, New Delhi, the respondents are said to have been informed that the details in the DEPB Licences/Scrips, submitted by the petitioner, related to advance licences to certain parties and not to DEPB Scrips. The Zonal Joint Director General of Foreign Trade, along with his letter dated 5-6-2003, is said to have sent the extract of a computer generated report which mentions that the file number was not matching in respect of some licences and that no such licence data, was available in the computer database, in respect of other licences. Section 28(1) of the Customs Act enables the Customs Officer, where duty has not been levied, by reason of collusion or any wilful misstatement or suppression of fact by the importer, within five years, to serve a notice, on the person chargeable with duty, requiring him to show cause why he should not pay the amount specified in the notice. The respondents, on holding that the DEPB Scrips/Licence submitted by the petitioner towards payment of customs duty of Rs. 1,98,78,418/- were forged and not genuinely issued by the competent authority, called upon the petitioner to make payment of customs duty, to the extent of Rs. 1,98,78,418/- paid earlier through forged DEPB Scrips/Licences, since payment made through bogus DEPB Scrips was as if no payment of duty had been made at all. Section 142 of the Customs Act relates to recovery of sums due to the Government. Under Sub-section (1) thereof, where any sum payable under the Customs Act, is not paid, the proper officer may deduct or may require any other officer of the Customs to deduct the amount so payable from any money owing to such person which may be under the control of the proper officer of Customs and may recover the amount so payable by detaining and selling any goods pertaining to such person which are under the control of officers of the Customs Department
37. The first respondent, in his order dated 27-2-2004, directed that the duty involved, of Rs. 1,98,78,418/-, be recovered forthwith as the goods had already been released to the petitioner on the basis of payment made against bogus DEPB Scrips. The first respondent ordered that the Fixed Deposits available, if any, having been tendered as security for any purpose, and unless any proceedings were pending or contemplated, should be appropriated towards the duty due of Rs. 1,98,78,418/- forthwith under intimation to the petitioner. The first respondent also ordered that the goods lying in the warehouse/refinery, proportionate (in value) to the dues to be recovered, shall be held, until final payment of the adjudged dues along with interest and if the petitioner failed to pay the entire dues within a period of three months from the date of the order, the goods held in the warehouse should be disposed of in the manner as deemed necessary to realize the duty and interest.
38. While the duty paid by the petitioner earlier, under the said DEPB Scrips, was for Rs. 1,98,78,418/-, the bank guarantees encashed was for Rs. 44,95,629/-. Learned Assistant Solicitor General would contend that the balance amount of Rs. 1,53,82,789/- is still required to be paid by the petitioner. On other hand, Sri S. Ravi, learned Counsel for the petitioner would contend that since the order of the 1st respondent has been set aside by the CESTAT, by order dated 2-11-2004, the amount encashed, of Rs. 44,95,629/-, is liable to be refunded.
39. In Metal Forgings (supra), the question which arose for consideration, before the Supreme Court, was whether the demand, for payment of duty, by the Central Excise Department was within the period of limitation, whether the provisional order should be construed as a show cause notice and whether, by virtue of the explanation to Section 11-A of the Central Excise Act, the period of limitation would get extended. It is in this context that the Supreme Court held that, to establish that clearance was made on provisional basis, there should first of all be an order under Rule 9B of the Central Excise Rules, there should be material to show that the goods were cleared on the basis of said provisional order and that payment of duty was also made on the basis of the said provisional assessment. In the absence of compliance with these requirements, in the case before it, the Supreme Court held that there was no material to establish that there was a provisional order under Rule 9B.
40. In the present case it is clear, from the Bill of Entry for Ex-bond Clearance Home Consumption, that the imported goods of Crude Palmolein (edible grade) was passed provisionally under the DEPB Scheme and the petitioner had cleared these goods on payment of customs duty by debit of DEPB Scrips/Licences. The tests prescribed, in Metal Forgings (supra), is satisfied, in the case on hand, to the extent that goods were cleared and duty paid on the basis of the provisional assessment. We find considerable force in the submission of the learned Assistant Solicitor General that the provisional assessment, passed as early as on 16-12-2002, not having been questioned for more than 2 years cannot now be challenged collaterally in the present writ petition. Even if no reasons had been assigned, under provisional assessment, the petitioner were legally bound to make payment towards customs duty before clearance of goods for home consumption. Having cleared goods, on payment of customs duty, albeit under the DEPB Licences/Scrips, which are under a cloud of suspicion regarding its genuineness, it is not open to the petitioner to now contend that, in the absence of a speaking order, there is no provisional assessment in the eye of law. The contention of the learned Assistant Solicitor General that, on the final order of the 1st respondent dated 27-2-2004 being set aside by the CESTAT by order dated 2-11-2004, the earlier provisional assessment order is revived, merits acceptance.
41. As against the customs duty of Rs. 1,98,78,418/- paid earlier by way of debit of DEPB Scrips/Licences, (contended by the respondents as being forged), the amount encashed from the fixed deposit receipts is for Rs. 44,95,629/- leaving an uncovered sum of Rs. 1,53,82,789/- still to be paid, in case it is established, in the de novo enquiry to be held by the 1st respondent, that these DEPB Scrips are forged/fake and as against the admitted customs duty of Rs. 1,98,78,418/-, the petitioner, in effect, would have paid Rs. 44,95,629/- under the encashed FDRS, requiring a further sum of Rs. 1,53,82,789/- to be paid by them.
42. It is well to remember that the jurisdiction of this Court under Article 226 of the Constitution of India is discretionary and a writ is not issued as a matter of course. A writ of mandamus is not a writ of course or a writ of right but is, as a rule, discretionary (C.R. Reddy Law College Employees' Association, Eluru, W.G. District v. Bar Council of India, New Delhi, : 2004(5)ALD180 (DB)). The power under Article 226 of the Constitution of India need not be exercised in every case where there is an error of law. In the name of correcting errors of law Courts ought not to bring forth a situation which would result in injustice and if justice became the byproduct, of an erroneous view of law, Courts are not expected to erase such justice in the name of correcting errors of law. (Roshan Deen (supra) one of the limitations imposed by this Court, on itself, is that it would not exercise jurisdiction unless substantial injustice has ensued or is likely to ensue. It would not allow itself to be turned into a Court of appeal to set right mere errors of law which do not occasion injustice. (Sangram Singh v. Election Tribunal, Kotah, : [1955]2SCR1 ). This Court is required to keep larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to the conclusion that overwhelming public interest requires interference, would it intervene in the matter. (Air India Limited v. Cochin International Airport Limited, : [2000]1SCR505 ).
43. In view of the serious allegations made, regarding customs duty of Rs. 1,98,78,418/- having been paid by the petitioner under fake DEPB Licences/Scrips and inasmuch as the encashed FDRs of Rs. 44,95,629/- represents merely a fraction thereof, we see reason, in the facts and circumstances of this case, to exercise our discretion in the petitioner's favour and to grant them the relief of refund of the encashed FDRs of Rs. 44,95,629/- as against Rs. 1,98,78,418/- claimed by the respondents to be due towards customs duty for the goods already cleared by the petitioner. W.P. No. 6610 of 2005 fails and is accordingly dismissed.
44. As a result the appeals in C.E.A. No. 42 and CEA (SR) No. 2340 of 2005 and W.P. No. 6610 of 2005 are all dismissed. There shall, however, be no order as to costs.