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Judgment
V.C. Daga, J.—This petition filed under Article 226 of the Constitution of India is directed against the communications dated 29th September, 2009 and 1st October, 2009 issued by the Deputy Commissioner of Customs, CIU, JNCH (respondent No. 4) with further prayer to forthwith permit clearance of the goods covered by the Bills of Entry Nos. 649199 dated 26th August, 2009 and 650812 dated 27th August, 2009 by extending the benefit of Notification No. 26/2000-Cus dated 1st March, 2000 without any conditions. Communication dated 29th September, 2009 calls upon the petitioner to submit bank guarantee equivalent to the amount of Rs. 88,30,137/- for the aforesaid two bills of entry along with past 28 bills of entry finally assessed during the year 2009 with further directions to the petitioner to submit bond for the sum of Rs. 15,75,33,199/- in respect of CVD for the past 28 bills of entry and basic customs duty. By another communication dated 1st October, 2009, the petitioner once again informed that the Commissioner of Customs (Import) has accepted the petitioner�s request for provisional release of the consignment with the subject bills of entry referred to hereinabove, subject to the conditions reading as under:
1) On payment of differential amount of duty in respect of CVD of past imports amounting to Rs. 69,22,982/-.
2) On execution of Bond of the amount of Rs. 8,83,01,366/- being assessable value for the above said two Bill of Entries and past 28 Bills of Entries filed during the current year i.e. 2009.
3) On furnishing and execution of Bank Guarantee equivalent to the amount of Rs. 88,30,137/- in respect of BCD for the above said two Bill of Entries and for the past 28 Bill of Entries filed during the current year i.e. 2009.
The aforesaid demand by respondent No. 4 is the subject matter of challenge in the petition.
FACTUAL CONTEXT
The petitioner is proprietor of M/s. Hi-Tech Corporation carrying on business inter alia; as importers of Printed Thermal Paper Roll ("PTPR" for short) having their office at Navi Mumbai. The petitioner has been regularly importing from Sri Lanka PTPR through Nhava Sheva Port and dealing in such imported PTPR in India. According to the petitioner, he has filed more than 100 bills of entry seeking clearances of similar/identical goods. All the past consignments have been released as and by way of final assessment.
The present dispute relates to PTPR imported by the petitioner from Sri Lanka covered under the bills of entry Nos. 649199 dated 26th August, 2009 and 650812 dated 27th August, 2009 detailed hereinbefore. It appears that after filing of the bills of entry referred to herein, the goods were withheld and were not released by respondent No. 4 in spite of the requests made by the petitioner.
It appears that the summons dated 14th September, 2009 was issued to the petitioner. In response to the said summons, the statements of the Manager of Petitioner was recorded u/s 108 of the Customs Act on 18th September, 2009. Thereafter, the petitioner was asked to deposit an amount equivalent to the CVD on the said imported PTPR. The petitioner deposited Rs. 2,47,540/- and Rs. 1,05,503/- towards CVD payable on the said imported goods under protest and without admitting the classification thereof.
The petitioner vide letter dated 23rd September, 2009, informed respondent No. 4 of having deposited the amount with the Revenue the equivalent to the amount of CVD. It appears that thereafter vide letter dated 24th September, 2009, petitioner requested respondent No. 2 to look into the matter and allow clearance of the imported consignments. In response to the said request of the petitioner, respondent No. 4 vide his letter dated 29th September, 2009 called upon the petitioner to submit bank guarantee equivalent to the amount of Rs. 88,30,137/- in respect of basic customs duty for the said two bills of entry and for the past 28 bills of entry filed in the year 2009 with further direction to submit a bond for the amount of Rs. 15,75,33,199/- in respect of CVD for the past 28 bills of entry and BCD.
The petitioner, vide letter dated 30th September, 2009 informed respondent No. 4 that past 28 bills of entries have no connection whatsoever to the present consignments and in any case, if the department feels that in respect of the past bills of entry the petitioner is liable to pay duty on the imported consignments of PTPR, a proper show cause notice in that behalf may be issued to enable the petitioner to justify his stand. By the said letter, the petitioner also requested respondent No. 4 to allow him to clear the imported consignments since he had already deposited the amount in respect of CVD and the goods detained were incurring heavy detention and demurrage charges. Finally, vide letter dated 1st October, 2009, respondent No. 4 informed the petitioner that respondent No. 3 has accepted the petitioner�s request for provisional release of the consignments with the said bills of entry, subject to the conditions mentioned in para 1 hereinabove.
The petitioner did not accept the above demands and has invoked writ jurisdiction of this Court to challenge their action and order.
RIVAL SUBMISSIONS:
Mr. Shah, learned Counsel for the petitioner submits that the respondents have no power, authority and/or jurisdiction to refuse to allow clearances of the goods covered by the aforesaid bills of entry Nos. 649199 and 650812 dated 26th August, 2009 and 27th August, 2009 respectively. He submits that the respondents are withholding the clearance of goods covered by the aforesaid two bills of entry until the petitioner makes payment of duty and give security for the consignment which were already assessed and allowed to be cleared is nothing but an act of twisting the arms of the petitioner to pressurize him to succumb to their pressure tactics. This modus adopted by Revenue, according to Mr. Shah is clearly not permissible in law. He further submits that the petitioner has already deposited CVD under protest although not payable. According to him, there is no justification in not allowing the goods covered by two bills of entry referred to hereinabove.
Mr. Shah further submits that instead of issuing show cause notice in accordance with the provisions of Section 27 of the Act, respondents are seeking to recover duty by not allowing the clearance of the goods covered by two bills of entry referred to hereinabove only to compel petitioner to make payment of duty which is not due and payable. He further submits that the action of the respondents in demanding duty allegedly short paid with bank guarantee and bond in respect of basic customs duty in respect of two disputed bills of entry clubbing it with the past imports is clearly bad in law and untenable.
PER CONTRA:
Mr. Sethna, learned Senior Counsel for the Revenue submits that the provision of Section 18 of the Customs Act deals with the provisional assessment of duty leviable on goods pending production of documents when any further information is necessary for assessment of duty or the goods are pending chemical or the other test for the purpose of determination of proper duty. In his submission, Section 28 of the Act empowers the competent officer to levy duty if the same has not been levied or has been short levied. He submits that Section 18 and 28 operate in different sphere i.e. when there is no allegation of evasion of duty intentionally but there is bona fide dispute in respect of quantum of levy of customs duty. On the other hand, u/s 111(m) of the Act, if the goods do not correspond in respect of value or any other particulars disclosed in the bills of entry under the Act, then such goods are liable to be confiscated though the proper duty is to be quantified u/s 28 of the Act. He submits that the penalty for short levy or non levy of duty in terms of Section 114A includes penalty equal to the duty or interest. He further submits that the imported goods are liable to be adjudicated by invoking Section 111 of the Customs Act, which may result into confiscation and redemption fine with further penalty u/s 112 of the Customs Act.
Mr. Sethna submits that to safeguard the Govt. revenue, the condition of execution of bond and bank guarantee with undertaking has been imposed. He further submits that provisional release of such goods is dealt with u/s 110A of the Act and not u/s 18 of the Act. Such provisional release of goods is in respect of goods liable to be confiscated, whereas in respect of proceedings u/s 18 of the Act, the goods are not liable to be confiscated. He, thus, submits that the respondents are justified in imposing conditions of execution of bank guarantee with undertaking for the purpose of safeguarding Govt. revenue.
Mr. Sethna further submits that as per Sub-section (4) of Section 17 of the Customs Act, 1962 which states that notwithstanding anything contained in this section, imported goods or export goods may, prior to the examination or testing thereof, be permitted by the proper officer to be assessed to duty on the basis of the statements made in the entry relating thereto and the documents produced and the information furnished under Sub-section (3); but if it is found subsequently on examination or testing of the goods or otherwise that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act, be reassessed to duty. He, thus, submits that the goods imported under two bills of entry dated 26th and 27th August, 2009 were found misdeclared at the time of examination, the department is thus empowered to stop the consignment for clearance for home consumption and investigate the matter. He sought to place strong reliance on the judgment of the Punjab and Haryana High Court in the case of Kundan Rice Mills Ltd. v. The Union of India and Ors. in Civil Writ Petition No. 13914 of 2008 decided on 15th December, 2008 (unreported), in support of his submission.
On being asked as to how the action of the Revenue is justified with respect to the demand relating to the past 28 imports which were already assessed and released pursuant to 28 bills of entry filed during the year 2009; Mr. Sethna fairly conceded that in absence of show cause notice, no action could be justified. Finding absence of show cause notice, he sought time to issue show cause notice so as to legalise the impugned action. The request made in this behalf did not appeal to our judicial mind, in view of the fact that this petition is pending in this Court since October, 2009, no steps in that direction were taken till date. Prior to granting Rule vide order dated 7th December, 2009, this petition was heard by this Court on more than 3 to 4 occasions. Every time, this Court was told that the show cause notice is being issued. However, in spite of lapse of more than 3� months after admission of the petition, no steps were taken by the Revenue to issue show cause notice. Two consignments referred to hereinabove under the bills of entry dated 26th and 27th August, 2009 are lying with the Customs, from the date of communication of the order dated 1st October, 2009, and more than six months have passed thereafter. Consignment is suffering detention and demurrage charges. This inaction on the part of the Revenue cannot be allowed to yield further premium. The request made is not bona fide. Thus, the request of Mr. Sethna in this behalf did not find favour with this Court.
CONSIDERATION
With the aforesaid rival contentions and the factual sketch drawn, we are called upon to decide the validity of two impugned communications dated 29th September, 2009 and 1st October, 2009.
The petitioner has no objection to accept conditions put in the communication dated 1st October, 2009, while accepting his request for provisional release of the consignment referred covered under the bills of entry No. 649199 and 650812 dated 26th and 27th August, 2009, however, he is not ready to accept conditions put by the Revenue, in relation to the past 28 imports covered under the 28 bills of entry during the year 2009 and demand for differential payment of amount of duty in respect of those imports. Mr. Sethna has fairly stated that in absence of show cause notice the demand with respect of past imports covered under 28 bills of entry assessed during the year 2009 can not be justified. Even the judgment in Kundan Rice Mills Ltd. (Supra) on which reliance is placed is also misplaced in the fact and circumstances of the case in hand. Under these circumstances, the communication dated 1st October, 2009 to that extent is liable to be quashed and set aside.
We were also taken to the various provisions of the Act by Mr. Shah as well as Mr. Sethna in support of their respective submissions. The Revenue cannot demand the amount of duty in respect of past CVD on the imports covered under 28 bills of entry which were already assessed and cleared during the year 2009, in the absence of any positive action by issuing show cause notice to set up demand in this regard. Needless to mention that once the show cause notice is issued the assessee/notice would get an opportunity to put-forth his say. Once, he has elected to file his say and objection is raised, then the adjudicating authority is free to adjudicate upon rival contentions in accordance with law by reasoned order following principles of natural justice. But no law permits the Revenue to twist the arms of the importer in the manner in which it is being done through the communication dated 1st October, 2009. The action of the Revenue to the extent of their duty demand in respect of CVD for the past import covered under 28 bills of entry during the year 2009 is clearly bad and illegal and unsustainable in law besides being in breach of principles of natural justice.
We must remind the officers of the respondents that every holder of a statutory office is a trustee to whom statutory powers are entrusted. His highest duty is to follow mandate of the statute. Therefore, every holder of a statutory office must discharge his duty without bias and ill will. In modern society, no authority can arrogate to itself the power to act in a manner which is arbitrary. Every State action or action of the statutory authority, in order to survive, must not be susceptible to the vice of arbitrariness which is the crux of Article 14 and basic to the rule of law the system which governs us. Arbitrariness is the very negation of the rule of law. Satisfaction of this basic test in every State or statutory action is sine qua non to its validity and in this respect the statutory authority cannot claim comparison with a private individual even in the field of exercising judicial or quasi judicial powers.
Conferment of the statutory power together with the discretion which goes with it to enable proper exercise of the power is coupled with the duty to shun arbitrariness in its exercise and to promote the object for which the power is conferred, which undoubtedly is not for individual or private gain, whim or caprice of any individual. All persons entrusted with any such power have to bear in mind its necessary concomitant which alone justifies conferment of power under the rule of law.
The question, whether an impugned act is arbitrary or not, is ultimately to be answered on the facts and in the circumstances of a given case. An obvious test to apply is to see whether there is any discernible principle emerging from the impugned act and if so, does it satisfy the test of reasonableness. Where a mode is prescribed for doing an act and there is no impediment in following that procedure, performance of the act otherwise and in a manner which does not disclose any discernible principle which is reasonable, may itself attract the vice of arbitrariness. Every statutory order must be informed by reason and it follows that an act uniformed by reason, is arbitrary. Rule of law contemplates governance by laws and not by humour, whims or caprices of the men to whom the governance is entrusted for the time being. It is trite that �be you ever so high, the laws are above you�. ( Kumari Shrilekha Vidyarthi and Others Vs. State of U.P. and Others, ).
Having said so, we are constrained to set aside the impugned order to the extent it makes demand of the differential amount of duty in respect of CVD, execution of bond and bank guarantee with respect to past imports covered under 28 bills of entry filed, assessed and acted upon by releasing goods during the year 2009 and maintain the action and terms put by the respondents in acceptance of the petitioner�s prayer for provisional release of the consignments covered by bills of entry No. 649199 and 650812 dated 26th 27th August, 2009. We may clarify that this order shall not preclude the Revenue if they decide to take action in respect of the past imports covered by 28 bills of entry in accordance with law, if advised.
In the result, the petition is partly allowed. Rule is made absolute to that extent with costs quantified in the sum of Rs. 25,000/- (Rs. Twenty Five Thousand Only) to be paid by the Revenue to the petitioner for their unjustifiable and arbitrary decision with respect to past imports covered by 28 bills of entry during the year 2009, which respondents could not justify on any count.
In view of the above, no orders are necessary on the Civil Application No. 2933 of 2009. Hence, the same stands dismissed.