Vijayraj Vs. Collector of Customs - Court Judgment

Excerpt:
customs - confiscation - customs act, 1962 - petitioner firm was suppliers of various type of raw materials - inadvertently consigned goods in favour of respondent no. 4 - respondent no. 2 and 3 seized goods on apprehension that imported silver had been clandestinely imported - petitioner sought direction to respondent no. 1 to 3 to permit re-export of goods - goods came to place without any intention to import goods - evidence placed by petitioner firm proved that goods consigned by mistake - goods not brought within territorial sea waters for purpose of being imported - respondent no. 1 and 3 can contemplate any action they might chose - petitioner to give undertaking and personal bond and subject themselves to any action respondents 1 to 3 may initiate - directed respondent no. 1 to 3 to permit re-export of goods. - - the petitioner-firm claims to be well known suppliers and exporters of various types of raw materials and finished goods from singapore to india and other countries. about 249 drums of metallurgical grade silicon and certain other goods like cadmium were shipped by the petitioner by the vessel m. in this connection, learned counsel for the petitioner, emphasizes the fact that as soon as the mistake was not noticed, messages were sent to the local agents as well as the captain of the vessel. narasimhan, learned senior central government standing counsel, argues that section 116 of the customs act, 1962 says that if any goods loaded in a conveyance for importation into india, are not loaded at the place of destination in india and if the failure to unload is not explained to the satisfaction of the assistant collector of customs, the person in-charge of the conveyance shall be liable for certain penalties. respondents 1 to 3 are issuing a show-cause notice against the concerned persons for the failure to unload the goods in india and for the misdeclaration of the goods in the import general manifest. therefore, it is well open to respondents 1 to 3 to take action against the person in-charge of the conveyance and it is not pretended that the customs authorities have a clear hold on the shipping agents. the facts of the case clearly disclose that though the goods had come to the madras port, there was absolutely no intention to import the goods. so far as the petitioner-firm is concerned, they have clearly established by the fax and telex messages that as soon as they found out the mistake in the consignment of the goods, they had recalled the goods back to singapore. the only allegation on the part of respondents 1 to 3 is misdeclaration of the goods and failure to unload the goods as per the import general manifest. whatever action respondents 1 to 3 are contemplating, it is well open to respondents 1 to 3 to initiate and complete the same.order1. this writ petition coming on for orders as to admission on wednesday the 9th day of january 1991 and on this day upon perusing the petition and the affidavit filed in support thereof and upon hearing the arguments of mr. k. kantwala for m/s. t. muthuraman, a. k. jayaraj and m. jawahar, advocates for the petitioner, and on notice mr. p. narasimhan, senior central government standing counsel on behalf of the respondents 1 to 3 of mr. m. muthappan, advocate for the 4th respondent, the court made the following order :- mr. p. narasimhan, learned senior central government standing counsel has taken notice on behalf of respondents 1 to 3 and has also filed a detailed counter affidavit. having regard to the scope of the writ petition, i have taken up the writ petition itself for final disposal with the consent of both the parties. 2. the petitioner is the constituted attorney of m/s. west yong traders. the petitioner-firm claims to be well known suppliers and exporters of various types of raw materials and finished goods from singapore to india and other countries. one of the customers of the petitioner-firm is the 4th respondent who has bought many items especially metallurgical grade silicon. about 249 drums of metallurgical grade silicon and certain other goods like cadmium were shipped by the petitioner by the vessel m.v. 'leuve' on 16-10-1990. the said goods had been consigned to and in favour of the 4th respondent. but the entire case of the petitioner is that the 4th respondent never placed any orders for the said goods and the goods had been consigned in favour of the 4th respondent by inadvertence and by an administrative mistake. after the vessel commenced its voyage towards madras, the petitioner claims to have discovered the mistake and they had sent urgent fax message to m/s. macoline, agents of the vessel at singapore, directing them to inform the vessel's agent m/s. patvolk at madras not to unload the containers and to bring them back to singapore. a similar telex message was also sent to the captain of the vessel. when the vessel was about to reach madras port and before receiving the telex message, the import general manifest was filed by the vessel, mentioning the 4th respondent as the importer for the 4 containers containing the said 249 drums. the shipping agent, after receiving the message, had not filed an amendment to the import general manifest. to continue the narration, the vessel did not discharge the disputed goods and left madras for its onward journey to colombo. respondents 2 and 3 became suspicious, after going through the import general manifest and started investigating the matter. their apprehension was that imported silver had been clandestinely brought in the guise of metallurgical grade silicon. the vessel's agent at madras m/s. patvolk was pressurised by the second respondent to bring the cargo back to madras, threatening to detain all vessels belonging to macoline coming to india. the goods were ultimately brought back to madras during the first week of november, 1990 and the respondents carried out extensive examination of the goods. no incriminating materials were found and the containers contained only silicon, tin and a small quantity of cadmium. the petitioner-firm sent a telex message to the third respondent explaining the entire facts and seeking permission to re-export the goods back to the petitioner-firm. further letters dated 12th and 13th november, 1990 proved unproductive. it is under these circumstances that the petitioner has come forward with this writ petition seeking a writ of manda mus to direct respondents 1 to 3 to permit re-export of the goods packed in four containers without charging any duty, fine or penalty. 3. in the counter affidavit of respondents 1 to 3, it is stated that the consignment was also insured with m/s. india international insurance private limited, singapore with the claims payable by m/s. united india insurance co., at madras. it is also stated that the goods when taken back from madras to colombo had been off loaded at colombo. it is also stated that from the statement recorded from the proprietor of the 4th respondent, respondents 1 to 3 had every apprehension that contraband articles were sought to be smuggled into india and apparently having scent of the proposed action of the customs authorities, had diverted the goods to colombo. whatever that may be, ultimately, it is admitted that the containers contained only 1534 bars of tin ingots in 86 drums, 4160 kgs. of cadmium in 13 drums and the rest of the drums contained silicon. it is stated that the market value of the undeclared goods amounts to rs. 1 crore. according to the respondents, the parties have violated the provisions of the customs act. in particular, it is stated that having mentioned the goods in question in the import general manifest, the action of the person in-charge of the conveyance in not unloading the goods in india attracts the penal provisions of section 116 of the customs act. it is also pleaded that respondents 1 to 3 have no authority to allow re-export of the goods unless applied for with proper and admissible reasons. the emphasis is on the fact that the goods were intended to be imported to india and this position is clear from the various documents. it is not incumbent on the third respondent to direct re-export of the goods. 4. the fourth respondent has also filed a counter affidavit. it is stated that the fourth respondent did not enter into any contract with respect to the subject goods. his business premises were raided on 31-10-1990. when he contacted the steamer agent with reference to the import general manifest, he was informed that the same had been cancelled as per the request of the steamer agent. the documents which were sent to the bharath overseas bank had been returned to the petitioner-firm at their request. 5. on the above pleadings, the short submission of mr. kantwala, appearing for the petitioner-firm, is that inasmuch as the goods have been brought back to madras, inspected by respondents 1 to 3 and found to contain only licit goods, there is no reason why the goods should not be permitted to be re-exported. in this connection, learned counsel for the petitioner, emphasizes the fact that as soon as the mistake was not noticed, messages were sent to the local agents as well as the captain of the vessel. it is also pointed out that the filing of the import general manifest was by a mistake and in any event, an amendment has now been sought for. learned counsel relies on two judgments, one of the delhi high court and the other of the customs excise and gold control appellate tribunal (cegat), to press the contention that the goods should be permitted to be re-exported. in mehra spinning mills v. collector of customers , the tribunal was considering a case where a show-cause notice had been issued in respect of certain goods which had been manifested, but in respect of which, the appellants in that case had not filed any bill of entry or any other documents for clearance of goods. but that case did not relate to the re-export of the goods because the appellants therein did not contest the confiscation of the goods. even the delhi high court judgment in janak photo enterprises (p) ltd. v. union of india : 1990(49)elt339(del) relates to certain photographic films imported from japan under open general licence and which were sought to be re-exported to singapore. after issuing show-cause notice, the goods were confiscated under section 113(d) of the customs act, 1962 but the party had been allowed to export the goods on payment of certain redemption fine. the court permitted re-export of the goods without payment of any duty subject to section 69(1) of the act. section 69(1) of the act relates to the export of warehoused goods on certain conditions. therefore, even this judgment does not directly apply to the facts of the present case. there is yet another case in pfaff industriamaschinen vertriebsgessellschaft mbh kaisersiautern and 2 others v. additional collector of customs & 4 others : 1988(37)elt500(bom) . in that case, the goods were shipped to india from brazil on a contract and letters of credit had also been opened. on arrival, the importer refused to retire the documents and also refused to clear the goods. it was, therefore sought to be re-exported to singapore. the additional collector of customers passed an order confiscating the goods and permitting re-shipment on payment of a sum of rs. one lakh in foreign exchange. the court held that section 111(d) did not apply to the facts of the case, and set aside the orders of the additional collector imposing the fine. in that case, by the time the final order was passed, the goods had been permitted to be exported to singapore on payment of the disputed amount. the facts of these cases are slightly different and according to me, in the present case there is no difficulty with reference to the claim of the petitioner. in this case, the 4th respondent did not file any document to clear the goods and even before the ship was berthed, instructions had been given to recall the goods back to singapore. 6. it is alternatively contended that there has been no import at all in this case and no action can be taken against the petitioner-firm. the following observation in the empress mills, nagpur v. the municipal committee, wardha : [1958]1scr1102 is relied on : 'this supports the contention raised that 'import' is not merely the bringing into but comprises something more i.e. 'incorporating and mixing up of the goods imported with the mass of the property' in the local area.' the provisions of the customs act, 1962 get attracted only by virtue of section 3(2) of the imports and exports (control) act. the judgment of this court in k.r. ahmed shah v. additional collector of customs, madras and others : 1981(8)elt153(mad) is relied on by the petitioner. the following passage is apposite :- 'the learned counsel would contend that if goods arrived by a vessel can be deemed to be imported into the country the moment they enter the territorial waters of india, there is every reason to conclude that the moment the plane landed at one of the airports of the country, the goods have been imported. however, it is now settled by high authority that unless goods that are brought into the country for the purpose of use, enjoyment, consumption, sale or distribution are incorporated in and got mixed up with the totality of the property in the country, they cannot be said to have been imported.' 7. mr. p. narasimhan, learned senior central government standing counsel, argues that section 116 of the customs act, 1962 says that if any goods loaded in a conveyance for importation into india, are not loaded at the place of destination in india and if the failure to unload is not explained to the satisfaction of the assistant collector of customs, the person in-charge of the conveyance shall be liable for certain penalties. respondents 1 to 3 are issuing a show-cause notice against the concerned persons for the failure to unload the goods in india and for the misdeclaration of the goods in the import general manifest. he also refers to section 111(d) of the act, as enabling the department to confiscate the goods. therefore, the only contention of the learned counsel for respondents 1 to 3 is that if the goods are allowed to be re-exported, the respondents will not have any security to proceed against the event of the adjudication proceedings resulting in the levy of fine or penalty. of course, he also contends that if the goods are liable for confiscation, then there is no question of permitting re-export of the goods. 8. the arguments of mr. p. narasimhan are no doubt attractive. but a closer examination of the points raised by him shows that section 116 cannot at all be invoked against the petitioner-firm. admittedly, the petitioner is not the person in-charge of the conveyance of the subject goods. therefore, it is well open to respondents 1 to 3 to take action against the person in-charge of the conveyance and it is not pretended that the customs authorities have a clear hold on the shipping agents. so far as section 111 is concerned, the ingredients of section 111(d) are not present in the case. as rightly argued by the learned counsel for the petitioner, the goods have not been imported or even attempted to be imported into india. the facts of the case clearly disclose that though the goods had come to the madras port, there was absolutely no intention to import the goods. the counter affidavit of the 4th respondent is crystal clear on this aspect. so far as the petitioner-firm is concerned, they have clearly established by the fax and telex messages that as soon as they found out the mistake in the consignment of the goods, they had recalled the goods back to singapore. the only hitch in the case is regarding the filing of the import general manifest. whatever may be the reason for the action of the petitioner in recalling the goods back to singapore, one cannot come to a conclusion on the facts of the case that the goods were imported or attempted to be imported. the goods were also not brought within the indian sea water for the purpose of being imported. it is categorically admitted in the counter affidavit of respondents 1 to 3 that the containers did not contain any contraband or prohibited goods. the only allegation on the part of respondents 1 to 3 is misdeclaration of the goods and failure to unload the goods as per the import general manifest. i have no doubt in my mind, these allegations of respondents 1 to 3 have no bearing via-a-vis the petitioner. whatever action respondents 1 to 3 are contemplating, it is well open to respondents 1 to 3 to initiate and complete the same. such a contemplated action does not have any relation to the goods which are sought to be re-exported. while, therefore, preserving the right of respondents 1 to 3 to take action against whomsoever they choose, i do not think that there is any hurdle in directing re-export of the goods. the petitioner will, however, give an undertaking and personal bond to subject themselves to any action that respondents 1 to 3 may initiate and also to bind themselves to the ultimate adjudication, subject to their right to challenge such orders in appeals or in other forums. 9. the writ petition is, accordingly allowed as prayed for. respondents 1 to 3 shall pass orders immediately after the petitioner-firm files the undertaking and the personal bond referred to above. there will be, however, no order as to costs.

Judgment:
ORDER

1. This Writ Petition coming on for orders as to admission on Wednesday the 9th day of January 1991 and on this day upon perusing the petition and the affidavit filed in support thereof and upon hearing the arguments of Mr. K. Kantwala for M/s. T. Muthuraman, A. K. Jayaraj and M. Jawahar, Advocates for the petitioner, and on notice Mr. P. Narasimhan, Senior Central Government Standing Counsel on behalf of the respondents 1 to 3 of Mr. M. Muthappan, Advocate for the 4th respondent, the Court made the following order :-

Mr. P. Narasimhan, learned Senior Central Government Standing Counsel has taken notice on behalf of respondents 1 to 3 and has also filed a detailed counter affidavit. Having regard to the scope of the writ petition, I have taken up the writ petition itself for final disposal with the consent of both the parties.

2. The petitioner is the Constituted Attorney of M/s. West Yong Traders. The petitioner-firm claims to be well known suppliers and exporters of various types of raw materials and finished goods from Singapore to India and other countries. One of the customers of the petitioner-firm is the 4th respondent who has bought many items especially metallurgical grade silicon. About 249 drums of metallurgical grade silicon and certain other goods like cadmium were shipped by the petitioner by the vessel M.V. 'LEUVE' on 16-10-1990. The said goods had been consigned to and in favour of the 4th respondent. But the entire case of the petitioner is that the 4th respondent never placed any orders for the said goods and the goods had been consigned in favour of the 4th respondent by inadvertence and by an administrative mistake. After the vessel commenced its voyage towards Madras, the petitioner claims to have discovered the mistake and they had sent urgent FAX Message to M/s. Macoline, Agents of the Vessel at Singapore, directing them to inform the Vessel's agent M/s. Patvolk at Madras not to unload the containers and to bring them back to Singapore. A similar telex message was also sent to the Captain of the vessel. When the vessel was about to reach Madras Port and before receiving the telex message, the Import General Manifest was filed by the vessel, mentioning the 4th respondent as the importer for the 4 containers containing the said 249 drums. The Shipping Agent, after receiving the message, had not filed an amendment to the Import General Manifest. To continue the narration, the vessel did not discharge the disputed goods and left Madras for its onward journey to Colombo. Respondents 2 and 3 became suspicious, after going through the Import General Manifest and started investigating the matter. Their apprehension was that imported silver had been clandestinely brought in the guise of metallurgical grade silicon. The Vessel's Agent at Madras M/s. Patvolk was pressurised by the second respondent to bring the cargo back to Madras, threatening to detain all vessels belonging to Macoline coming to India. The goods were ultimately brought back to Madras during the first week of November, 1990 and the respondents carried out extensive examination of the goods. No incriminating materials were found and the containers contained only silicon, tin and a small quantity of cadmium. The petitioner-firm sent a telex message to the third respondent explaining the entire facts and seeking permission to re-export the goods back to the petitioner-firm. Further letters dated 12th and 13th November, 1990 proved unproductive. It is under these circumstances that the petitioner has come forward with this writ petition seeking a writ of manda mus to direct respondents 1 to 3 to permit re-export of the goods packed in four containers without charging any duty, fine or penalty.

3. In the counter affidavit of respondents 1 to 3, it is stated that the consignment was also insured with M/s. India International Insurance Private Limited, Singapore with the claims payable by M/s. United India Insurance Co., at Madras. It is also stated that the goods when taken back from Madras to Colombo had been off loaded at Colombo. It is also stated that from the statement recorded from the Proprietor of the 4th respondent, respondents 1 to 3 had every apprehension that contraband articles were sought to be smuggled into India and apparently having scent of the proposed action of the customs authorities, had diverted the goods to Colombo. Whatever that may be, ultimately, it is admitted that the containers contained only 1534 bars of tin ingots in 86 drums, 4160 kgs. of cadmium in 13 drums and the rest of the drums contained silicon. It is stated that the market value of the undeclared goods amounts to Rs. 1 crore. According to the respondents, the parties have violated the provisions of the Customs Act. In particular, it is stated that having mentioned the goods in question in the Import General Manifest, the action of the person in-charge of the conveyance in not unloading the goods in India attracts the penal provisions of Section 116 of the Customs Act. It is also pleaded that respondents 1 to 3 have no authority to allow re-export of the goods unless applied for with proper and admissible reasons. The emphasis is on the fact that the goods were intended to be imported to India and this position is clear from the various documents. It is not incumbent on the third respondent to direct re-export of the goods.

4. The fourth respondent has also filed a counter affidavit. It is stated that the fourth respondent did not enter into any contract with respect to the subject goods. His business premises were raided on 31-10-1990. When he contacted the Steamer Agent with reference to the Import General Manifest, he was informed that the same had been cancelled as per the request of the Steamer Agent. The documents which were sent to the Bharath Overseas Bank had been returned to the petitioner-firm at their request.

5. On the above pleadings, the short submission of Mr. Kantwala, appearing for the petitioner-firm, is that inasmuch as the goods have been brought back to Madras, inspected by respondents 1 to 3 and found to contain only licit goods, there is no reason why the goods should not be permitted to be re-exported. In this connection, learned counsel for the petitioner, emphasizes the fact that as soon as the mistake was not noticed, messages were sent to the local agents as well as the Captain of the vessel. It is also pointed out that the filing of the Import General Manifest was by a mistake and in any event, an amendment has now been sought for. Learned counsel relies on two judgments, one of the Delhi High Court and the other of the Customs Excise and Gold Control Appellate Tribunal (CEGAT), to press the contention that the goods should be permitted to be re-exported. In Mehra Spinning Mills v. Collector of Customers , the Tribunal was considering a case where a show-cause notice had been issued in respect of certain goods which had been manifested, but in respect of which, the appellants in that case had not filed any Bill of Entry or any other documents for clearance of goods. But that case did not relate to the re-export of the goods because the appellants therein did not contest the confiscation of the goods. Even the Delhi High Court judgment in Janak Photo Enterprises (P) Ltd. v. Union of India : 1990(49)ELT339(Del) relates to certain photographic films imported from Japan under Open General Licence and which were sought to be re-exported to Singapore. After issuing show-cause notice, the goods were confiscated under Section 113(d) of the Customs Act, 1962 but the party had been allowed to export the goods on payment of certain redemption fine. The Court permitted re-export of the goods without payment of any duty subject to Section 69(1) of the Act. Section 69(1) of the Act relates to the export of warehoused goods on certain conditions. Therefore, even this judgment does not directly apply to the facts of the present case. There is yet another case in Pfaff Industriamaschinen Vertriebsgessellschaft Mbh Kaisersiautern and 2 Others v. Additional Collector of Customs & 4 Others : 1988(37)ELT500(Bom) . In that case, the goods were shipped to India from Brazil on a contract and letters of credit had also been opened. On arrival, the importer refused to retire the documents and also refused to clear the goods. It was, therefore sought to be re-exported to Singapore. The Additional Collector of Customers passed an order confiscating the goods and permitting re-shipment on payment of a sum of Rs. one lakh in foreign exchange. The Court held that Section 111(d) did not apply to the facts of the case, and set aside the orders of the Additional Collector imposing the fine. In that case, by the time the final order was passed, the goods had been permitted to be exported to Singapore on payment of the disputed amount. The facts of these cases are slightly different and according to me, in the present case there is no difficulty with reference to the claim of the petitioner. In this case, the 4th respondent did not file any document to clear the goods and even before the ship was berthed, instructions had been given to recall the goods back to Singapore.

6. It is alternatively contended that there has been no import at all in this case and no action can be taken against the petitioner-firm. The following observation in The Empress Mills, Nagpur v. The Municipal Committee, Wardha : [1958]1SCR1102 is relied on :

'This supports the contention raised that 'import' is not merely the bringing into but comprises something more i.e. 'incorporating and mixing up of the goods imported with the mass of the property' in the local area.'

The provisions of the Customs Act, 1962 get attracted only by virtue of Section 3(2) of the Imports and Exports (Control) Act. The judgment of this Court in K.R. Ahmed Shah v. Additional Collector of Customs, Madras and Others : 1981(8)ELT153(Mad) is relied on by the petitioner. The following passage is apposite :-

'The learned counsel would contend that if goods arrived by a vessel can be deemed to be imported into the country the moment they enter the territorial waters of India, there is every reason to conclude that the moment the plane landed at one of the airports of the country, the goods have been imported. However, it is now settled by high authority that unless goods that are brought into the country for the purpose of use, enjoyment, consumption, sale or distribution are incorporated in and got mixed up with the totality of the property in the country, they cannot be said to have been imported.'

7. Mr. P. Narasimhan, learned Senior Central Government Standing Counsel, argues that Section 116 of the Customs Act, 1962 says that if any goods loaded in a conveyance for importation into India, are not loaded at the place of destination in India and if the failure to unload is not explained to the satisfaction of the Assistant Collector of Customs, the person in-charge of the conveyance shall be liable for certain penalties. Respondents 1 to 3 are issuing a show-cause notice against the concerned persons for the failure to unload the goods in India and for the misdeclaration of the goods in the Import General Manifest. He also refers to Section 111(d) of the Act, as enabling the department to confiscate the goods. Therefore, the only contention of the learned counsel for respondents 1 to 3 is that if the goods are allowed to be re-exported, the respondents will not have any security to proceed against the event of the adjudication proceedings resulting in the levy of fine or penalty. Of course, he also contends that if the goods are liable for confiscation, then there is no question of permitting re-export of the goods.

8. The arguments of Mr. P. Narasimhan are no doubt attractive. But a closer examination of the points raised by him shows that Section 116 cannot at all be invoked against the petitioner-firm. Admittedly, the petitioner is not the person in-charge of the conveyance of the subject goods. Therefore, it is well open to respondents 1 to 3 to take action against the person in-charge of the conveyance and it is not pretended that the Customs Authorities have a clear hold on the shipping agents. So far as Section 111 is concerned, the ingredients of Section 111(d) are not present in the case. As rightly argued by the learned counsel for the petitioner, the goods have not been imported or even attempted to be imported into India. The facts of the case clearly disclose that though the goods had come to the Madras Port, there was absolutely no intention to import the goods. The Counter Affidavit of the 4th respondent is crystal clear on this aspect. So far as the petitioner-firm is concerned, they have clearly established by the FAX and Telex messages that as soon as they found out the mistake in the consignment of the goods, they had recalled the goods back to Singapore. The only hitch in the case is regarding the filing of the Import General Manifest. Whatever may be the reason for the action of the petitioner in recalling the goods back to Singapore, one cannot come to a conclusion on the facts of the case that the goods were imported or attempted to be imported. The goods were also not brought within the Indian Sea Water for the purpose of being imported. It is categorically admitted in the counter affidavit of respondents 1 to 3 that the containers did not contain any contraband or prohibited goods. The only allegation on the part of respondents 1 to 3 is misdeclaration of the goods and failure to unload the goods as per the Import General Manifest. I have no doubt in my mind, these allegations of respondents 1 to 3 have no bearing via-a-vis the petitioner. Whatever action respondents 1 to 3 are contemplating, it is well open to respondents 1 to 3 to initiate and complete the same. Such a contemplated action does not have any relation to the goods which are sought to be re-exported. While, therefore, preserving the right of respondents 1 to 3 to take action against whomsoever they choose, I do not think that there is any hurdle in directing re-export of the goods. The petitioner will, however, give an undertaking and personal bond to subject themselves to any action that respondents 1 to 3 may initiate and also to bind themselves to the ultimate adjudication, subject to their right to challenge such orders in appeals or in other forums.

9. The writ petition is, accordingly allowed as prayed for. Respondents 1 to 3 shall pass orders immediately after the petitioner-firm files the undertaking and the personal bond referred to above. There will be, however, no order as to costs.