Amit Bhatia vs Commissioner of Cus., ICD

S. Muralidhar, J.—The challenge in this writ petition is to a communication dated 17th March 2008 from the Office of the Commissioner of Customs, ICD, Tughlakabad addressed to the Petitioner concerning provisional release of the goods seized from the Petitioner on 24th October 2007. These goods which were heavy duty AA pencil batteries were imported by the Petitioner by a bill of entry dated 24th October 2007. Provisional release of the seized goods was ordered pending completion of investigations subject to fulfillment of the following conditions:

(i) Deposit of anti-dumping duty, which works out to be Rs. 34,01,254/-;

(ii) Bond for 100% of the value of the goods, and

(iii) Bank guarantee for amount of Rs. 19,03,200/- which is equivalent to 50% of the differential duty.

The grievance of the Petitioner in the writ petition was that the above conditions were harsh. The prayer, therefore, was that the goods be released unconditionally after payment of the appropriate provisional customs duty of Rs. 3,84,723/-. Alternatively it was prayed that the Petitioner should be permitted to make a payment of 20% of the provisional customs duty in terms of Rule 2 of the Customs Provisional Act, 1963.

This Court directed issuance of notice in the petition on 24th May 2008. However, a reply was filed to the petition by the Respondents only in February 2009. During the pendency of the petition, the Petitioner filed an application being CM. No. 14190/2009 stating therein that by an application made under the Right to Information Act, 2005 (''RTI Act'') the Petitioner learnt that the seized goods had been sold on 7th August 2008 for an absurdly low cost for which ''no intimation whatsoever/notice of any kind has been sent to the Petitioner''. The attention of this Court was drawn to the counter affidavit filed by the Respondent in February 2009 where no mention was made about the sale of the seized goods. In the circumstances, the prayer in the said application was for a direction to the Respondents to place before this Court all the papers with regard to the said ''sale of goods of the Petitioner and as to how the said sale was affected without any notice to the Petitioner''.

In reply to this application it has been stated on behalf of the Respondents that the Petitioner himself had written three letters dated 3rd June 2008, 26th July 2008 and 23rd August 2008 requesting the department to dispose of the seized goods as they were perishable. It was pleaded: ''at the end of the day in the event of confiscation the department or government is not likely to get anything nor would I gain anything''. Attention of the department was drawn to the circular dated 20th February 2006 which laid down the guidelines for the valuation and disposal by auction-cum-tender of the seized, confiscated and time-expired goods in terms of Sections 150 and 72(2) of the Customs Act, 1962.

This Court was not satisfied with the above reply and consequently the following order was passed on 18th March 2010:

This petition is directed against an order dated 17th March 2008 of ''provisional release'' passed by the Assistant Commissioner of Customs (SHB), ICD, Tughlakabad, New Delhi. By the said order provisional release of the goods of the Petitioner was ordered subject to the deposit of the Petitioner depositing anti-dumping duty of Rs. 34,01,254/- (in cash), bond for 100% of the value of the goods and a Bank Guarantee for Rs. 19,03,200/-which was equivalent to 50% of the differential duty.

Notice in this petition was issued on 23rd May 2008.

It appears that during the pendency of the present petition, without informing this Court or the Petitioner, the Respondent sold the seized goods for a sum of Rs. 11 lakhs on 7th August 2008. This the Petitioner found by making an enquiry under the Right to Information Act, 2005 (''RTI Act''). Consequently, the Petitioner filed on 11th November 2009 CM No. 14190 of 2009 praying inter alia that the Respondents should be directed to place the full facts with regard to sale of the seized goods before the court. He also prayed that the matter be referred to the Central Bureau of Investigation (''CBI'') to examine if offences under the Prevention of Corruption Act, 1988 have been committed by officers of the Respondent.

A reply has been filed to the said application, supported by an affidavit of Mr. H.L. Wadhwani, Assistant Commissioner (Disposal), Office of Commissioner of Customs, Inland Container Depot, Tughlakabad, New Delhi.

In the rejoinder affidavit dated 10th March 2010 the Petitioner has pointed out that the above reply does not deal with the issue of sale of the seized goods on 7th August 2008.

Mr. Handoo, learned Counsel for the Petitioner further points out that in the meanwhile on 29th January 2010 the Commissioner of Customs, ICD, Tughlakabad, New Delhi has now passed a final adjudication order confiscating the goods (which were purportedly sold on 7th August 2008). He has imposed a penalty on the Petitioner and raised a demand of more than Rs. 50 lakhs.

This Court requires Mr. Wadhwani, Assistant Commissioner (Disposal), Office of Commissioner of Customs, ICD, Tughlakabad to file a further affidavit explaining why the facts as regards the sale of the seized goods on 7th August 2008 have not been placed before this Court. He is directed to present personally in Court along with the records of the case on the next date of hearing.

List on 4th May 2010. A copy of this order be given dasti to learned Counsel for the parries under the signature of the Court Master. A certified copy of the order be delivered to Mr. Wadhwani, Assistant Commissioner (Disposal) ICD, Tughlakabad within five days from today.

In response to the above order, an additional affidavit has been filed by Mr. H.L. Wadhwani, who is also present today in the Court together with the records of the case. In it, it is stated that pursuant to the request made by the Petitioner on 3rd June 2008 and 26th July 2008, the Circular No. 12/2006 dated 20th February 2006 was followed and the goods were sold to the National Cooperative Consumer Federation of India Ltd. (NCCF) for a sum of Rs. 10,26,000/- plus Vat of Rs. 1,28,250/- totaling Rs. 11,54,250/-. It is stated therein that there is, therefore, no basis of the allegation made by the Petitioner regarding any mala fide action or corruption on the part of the officials of the department.

Mr. R.K. Handoo, learned Counsel for the Petitioner raised strong objections to the procedure purportedly adopted by the Respondents in the instant case. Referring to the Circular dated 20th February 2006 he submits that under Para 4 of the said circular it was mandatory for the department to have given the Petitioner prior notice of disposal of the seized goods. There is no explanation forthcoming as to why this was not done.

Mr. Mukesh Anand, learned Counsel appearing for the Respondents draws attention of the Court to Para 3.15 of the said circular which dispenses with the detailed procedure set out in Paras 3.1 to 3.14 of the said circular in the event that the goods are ''disposed of by sale to NCCF''. Referring to the document which shows the sale of the seized goods to the NCCF, it is submitted that there is absolutely no basis in doubting the said sale as it is to a government controlled organisation. He further points out that even according to the Petitioner, the invoice value of the imported goods was $ 17,000 and, therefore, the amount for which the goods were sold to the NCCF i.e. Rs. 10,26,000/- was much higher and therefore no prejudice was caused to the Petitioner.

The above submissions have been considered. At the outset it requires to be noticed that the show cause notice issued to the Petitioner, consequent upon the seizure of the imported goods, has been adjudicated and a final order has been passed imposing a penalty of over Rs. 50 lakhs on the Petitioner. It is stated by the learned Counsel for the Petitioner that the said order is under challenge in accordance with law.

The grievance that the petition has been rendered infructuous on account of the illegal sale of the seized goods and, therefore, the precipitate action of the Respondents was unreasonable, appeared at first blush to be justified. However, it now transpires that the sale of the seized goods took place at the behest of the Petitioner. The submission that the disposal of the goods without prior notice to the Petitioner u/s 150 of the Customs Act, has to be examined in light of the possible prejudice caused to the Petitioner on account of the failure to be given such prior notice. The Petitioner must be able to show that if he had been given prior notice of the sale then the goods would have fetched a higher price. It appears to this Court that given the declared invoice value of the imported goods of 17,000 US dollars, the sale of the goods to NCCF for a sum of Rs. 10,26,000/- more than two years later, cannot be said to have caused prejudice to the Petitioner. In any event, the Petitioner was itself keen that the goods which were perishable in nature should be disposed of in accordance with the Circular dated 20th February 2006. Para 3.15 of the said circular dispenses with the detailed procedure set out in the circular in the event the goods are sold to the NCCF. In the circumstances, this Court does not find any illegality having been committed by the Respondents in disposing of the seized goods during the pendency of this petition.

The subsequent developments in the case have rendered the petition infructuous. It is not possible to grant any of the reliefs sought in the writ petition. However, it is directed that the amount recovered from the sale of the seized goods should be kept by the Respondents in a fixed deposit with a nationalized bank for an initial period of one year and kept renewed till the final orders in the appellate proceedings. The said amount together with the interest accrued will be released to the Petitioner if he ultimately succeeds in showing that the seizure and confiscation of the imported goods and the action against the Petitioner under the Customs Act was unjustified. If the Petitioner fails and the order in adjudication is confirmed or modified and the differential duty and the penalty levied is found recoverable then the amount in the fixed deposit together with the accrued interest can be adjusted against such amount at the appropriate stage.

In conclusion, this Court would like to observe that the above orders became necessary to be passed by the Court on account of the confusion created by the Respondents in not disclosing the complete facts at the outset in the counter affidavit filed in February 2009. It led the Petitioner to file an application seeking further directions. This Court finds that there has been a lack of coordination in the instant case between the deponent of the counter affidavit and the officers entrusted with the task of sale of the seized goods. It is expected that hereafter there will be proper coordination amongst the officers of the department in preparing and filing replies in such matters.

The petition and the pending applications are disposed of in the above terms with no orders as to costs.

Order dasti to the learned Counsel for the parties.