National Timbers vs Union of India

P.R. Ramachandra Menon, J.—The petitioner has approached this Court in the second round of litigation. Pursuant to the verdict in W.P. (C) No. 33566 of 2009 (Ext. P2), Ext. P7 order was passed by the Commissioner, which is under challenge herein contending that, it is per se wrong and illegal. In so far as the rate of conversion adopted for measurement of timber imported from elsewhere was following the formula adopted in European, African and Malasian countries, i.e. 1 Hoppuston = 1.8027M3, whereas it ought to have been reckoned at the rate of 1 Hoppuston = 1.416M3. The pleadings as well as the materials would reveal that the goods imported by the petitioner from abroad was assessed to duty payable adopting the conversion table following the formula as 1 Hoppuston = 1.416M3. It is the case of the petitioner that the proceedings were finalised on that basis. But subsequently, based on some adverse notings made by the Sales Tax Department the Customs authorities sought to undo the things, which made the petitioner to have it challenged in W.P.(C) 33566 of 2009, culminating in Ext. P2 judgment. Pursuant to Ext. P2, the direction to have a joint physical verification was conducted, based on which Ext. P1 order has been passed on 5-8-2010.

It is very much discernible from Ext. P1 that the physical verification and measurement of timber was conducted in the presence of the timber dealers and their clearing agents, Customs officials, the officials who signed Ext. P1 order and other officials of the Commercial Tax Department and a Mahazar was also prepared in this regard. After considering the entire materials, the concerned authority who is the Intelligence Officer III of the Department observed in Ext. P1 as follows :

I have verified the Commercial Invoice taken for measurement in which volume of the timber logs shown in 69.746 HT and the corresponding Cbm is 98.760 by applying the conversion rate 1 Hoppuston is equivalent to 1.416M3. But in actual measurement the volume found in Cubic Meter is less than the volume shown in the commercial Invoice i.e., 97.770M3 and 97.663 M3 respectively. From the above it is evident that there is no suppression of turnover of imported timber round logs. If the dealer had applied the conversion rate one HT is equivalent to 1.802M3 the volume taken for 50 logs would have been 125.682M3. But in actual measurement it is nearly 98.760M3 shown in the Commercial Invoice. From the above I am of the view that there is no attempt on the part of the dealer to suppress the Turnover as alleged.

The learned Counsel for the petitioner submits that Ext. P1 has become final, based on which all the penalty proceedings have been dropped. In the course of events, the petitioner filed an application for refund, which however was considered by the second respondent, allegedly in a wrong and perverse manner, leading to Ext. P7, whereby only a partial refund has been ordered, which made the petitioner to approach this Court challenging the same.

The case of the petitioner, as put forth by the learned Counsel for the petitioner is that, while considering the claim for refund the second respondent has sought to pursue the very same exercise, whereby the conversion has been sought to be made at the rate of 1 Hoppuston = 1.8027M3 instead of 1 Hoppuston = 1.416M3. The learned counsel also submits that the refund application has been considered on the basis of additional customs duty actually payable, with reference to Ext. P6 circular, It is without any regard to the actual facts and figures, that Ext. P7 has been passed by the second respondent, wrongly and adopting the conversion table of 1 Hoppuston = 1.8027M3 instead of I Hoppuston = 1.416M3 and thus denying the benefit of full refund, which hence is sought to be intercepted.

The learned Standing Counsel with reference to the counter affidavit filed submits that the petitioner is very much having an alternate remedy by way of appeal u/s 128 of the Customs Act. It is stated in paragraph 6 of the counter affidavit that, in the absence of authentic conversion table, the Department was following the conversion formula of 1 Hoppuston = 1.8027M3 (which was downloaded from the site www.wikipedia.org). However, it is stated in paragraph 8 that the request made by the petitioner for refund, by adopting conversion formula of 1 Hoppuston - 1.416M3 could not be considered by the Dy. Commissioner for the fact that he had become ''functus officio'' by that time and hence the matter was placed before the second respondent and was waiting a reply. It is contended by the petitioner that the stand taken by the concerned respondent is not liable to be held as correct or proper in view of the course that is being pursued by the very same Department in respect of the import through other Ports, as borne out from the proceedings in Ext. P3 where the conversion formula adopted by the Department was 1 Hoppuston - 1.416M3

In the above circumstance, this Court finds that the matter requires to be re-considered by the second respondent, so as to assess the actual facts, as to whether the petitioner is entitled to have the balance refund, if any, on applying the correct conversion table.

Accordingly, Ext. P7 issued by the second respondent is set aside and the second respondent is directed to re-consider the matter with reference to the actual conversion table as well as the formula that is being adopted by the Department in other Ports, as reflected from Ext. P3 as well to have uniformity. This shall be done, after giving an opportunity of hearing to the petitioner, as expeditiously as possible, at any rate, within two months from the date of receipt of a copy of the judgment. The petitioner shall produce a copy of the judgment before the second respondent for further steps. The Writ Petition is disposed of.