Standard Brand Corporation vs Union of India

P.D. Desai, C.J.—The Writ Petitioners are a partnership firm carrying on business, inter alia, in diverse Alloy Steel Items. In the course of the said business, they imported Electric Resistance Strips (Ferrous Base) on 19th April 1990 as per invoices dated 27th February 1990. According to them, the goods in question were Alloy Steel Items falling under Customs Tariff Heading 7226.99. They filed two bills of entry for warehousing of the said goods (see Exhibit ''A'' collectively) and thereunder claimed benefit of Exemption Notification No. 81/90-Cus., dated 20th March 1990. The claim for exemption was advanced on the footing that the goods were covered by serial No. 3 of column 3 of the Table incorporated in the said Notification. In substance, the claim was that the goods were liable to be subjected to the basic customs duty at the rate of 70% ad valorem. Be it stated that there was and is no dispute with regard to the auxiliary duty and additional duty payable.

In April 1991, the Writ Petitioners desired removal of the said goods from the bonded warehouse. At that time the Respondents intimated that the goods were liable to be treated as Stainless Steel Item falling under Custom Tariff Heading 7220.90 and that although the benefit of Exemption Notification No. 81/90-Cus., dated 20th March 1990 was available in respect of the Stainless Steel Item, the goods in question were liable to be classified as falling under Item 2 of column 3 of the said Notification. On the aforesaid basis the Writ Petitioners became liable to pay the basic customs duty at the rate of 100% ad valorem.

The Writ Petitioners produced before Respondent No. 3 certificates issued by different experts/manufacturers in support of their claim that the goods were liable to be subjected to the basic customs duty at the rate of 70% ad valorem. It appears however that the Respondents were not inclined to accept the submission.

By their letter dated 3rd September 1991 (Ex.H) the Writ Petitioners offered to pay the basic customs duty under protest at the rate of 100% ad valorem in respect of the goods worth Rs. 4,31,774/- and requested that the goods to the said extent be allowed to be cleared. The said written request was rejected by the following endorsement made below the said communication by Respondent No. 3 :

"The % of Alu, shall not affect the constitution of Stainless Steel (Cr. 21.08% and C .016%). Hence the assessment at the rate of duty 100% + 50% plus CVD as usual is correct. There is no question to accept party''s request to pay duty under protest. B/E may be assessed on merits."

In this Writ Petition the Writ Petitioners seek the relief, inter alia, that it be declared that the goods in question are Alloys Steel goods and not Stainless goods and that they are eligible for the benefit conferred by Exemption Notification No. 81 of 1990. The clearance of the goods in question on the said basis is also prayed for.

The Writ Petition reached preliminary hearing on 13th November 1991. The Court expressed disinclination to go into the wider question as to whether the goods were liable to be subjected to the basic customs duty at the rate of 100% ad valorem or 70% ad valorem, since these matters fell legitimately within the scope of regular adjudication. However, the Court was unable to appreciate why the offer made by the Writ Petitioners on 3rd September 1991 as regards clearance of a portion of the goods on the payment of basic customs duty at the rate of 100% ad valorem under protest was rejected by Respondent No. 3. It was felt that in order to appreciate the circumstances under which the said order came to be passed, the presence of Respondent No. 3 before the Court would be necessary. The learned Counsel for the Respondents was, therefore, requested to communicate to Respondent No. 3 that he should attend the Court at 11.00 A.M. on 14th November 1991. The direction was duly communicated. Respondent No. 3, however, did not remain present on 14th November 1991 at 11.00 A.M. as directed. Under the circumstances, the Court passed an order recording that such conduct on the part of Respondent No. 3 amounted to gross disrespect towards the Court''s order and giving an opportunity to him to comply with the said order by remaining present at 1 P.M. The said Order having been communicated to Respondent No. 3 he attended the Court at 1 P.M. He attempted to give an oral explanation as regards his failure to attend the Court at 11.00 A.M. But the Court was of the view that whatever he had to say must be placed on record by way of an affidavit. The matter was, therefore, adjourned to 15th November 1991 in order to enable him to file an affidavit explaining the circumstances under which he failed to attend the Court at 11.00 A.M. on that day (i.e. 14th November 1991).

Respondent No. 3 accordingly filed an affidavit affirmed on 15th November 1991. He stated that while he was leaving his office in order to reach the Court at 11.00 A.M., he was called by the Additional Collector of Customs to seek certain information in connection with the meeting scheduled to be held with the Customs House Agents on 14th November 1991. Under these circumstances, according to him, he directed his junior Officer, Shri S. Dayal, to attend the Court and to convey a message to his Counsel that he would follow soon thereafter. However, he could not reach the Court in time before the matter was called out and that led to the passing of the order directing him to attend the Court at 1.00 P.M.

We do not find this explanation to be satisfactory. There could not possibly be any matter which could have priority over the compliance of a judicial order. Even if Respondent No. 3 was asked by his superior officer to meet him and/or to attend to some other business, it was his duty to point out to such superior officer that his presence was required in the Court and that, therefore, he should be allowed to attend the Court on a priority basis. A responsible officer like the Assistant Collector of Customs should know where his duty lay, but we regret to find that Respondent No. 3 has failed to act accordingly with due circumspection. We do not, however, propose to take a serious view of the matter since in the course of his affidavit Respondent No. 3 has expressed an unconditional apology and assured the Court that in future such a lapse would not be repeated. The Court expects that the Respondents will ensure that no such lapse occurs on the part of Respondent No. 3 or any of the officers of the Department in future. If any such lapse occurs, the Court will have to take a serious view and proceed to deal with the defaulting officer (s) in accordance with law.

Reverting now to the controversy before the Court, we are unable to appreciate and find no valid reasons for the rejection of the offer of the Writ Petitioners to allow the goods worth Rs. 4,31,774/- to be cleared on payment of 100% ad valorem basic customs duty (in addition to auxiliary duty and additional duty) made, vide letter dated 3rd September 1991. If the objection was against the offer to make payment of the basic duty under protest, the said objection was wholly invalid. Since regular adjudication had yet to take place and the Writ Petitioners wanted to take up the stand in the said proceedings as regards levy of basic customs duty at 70% ad valorem, the payment was offered to be made under protest and this should have been appreciated by an Officer of the rank of Respondent No. 3. It is strange to find an Officer dealing with the recovery of the customs duty rejecting the offer of payment of duty at the rate at which, according to him, they were liable to pay duty and not permitting clearance of the goods to the extent covered by such payment under these circumstances. The said action is wholly arbitrary and irrational.

For the foregoing reasons, in our opinion, the Writ Petition deserves to be allowed and is allowed. The Respondents are directed to permit the Writ Petitioners to clear the goods in question against payment of the basic customs duty at the rate of 100% ad valorem (in addition to the auxiliary duty and additional duty) in a single installment within a period of ten days from date. No warehousing charges and interest on that portion of the basic customs duty which the Writ Petitioners had offered to pay by their letter dated 3rd September 1991 shall be leviable for the period from 3rd September 1991 till the expiry of the period of 10 days from date. The question relating to the claim of exemption under Exemption Notification No. 81/90-Cus., dated 20th March 1990 on the basis that the goods are Aluminium Alloy Steel and not Stainless Steel shall be decided in the course of the adjudication proceedings in accordance with law, without any prejudice being occasioned to the Writ Petitioners on account of their having paid the basic customs duty at the rate of 100% ad valorem under protest.

Rule made absolute accordingly. The Respondents shall pay the costs of this Writ Petition to the Writ Petitioners quantified at Rs. 500/-. The costs shall be adjusted against the basic customs duty payable by the Writ Petitioners at the time of the clearance of the goods.

A copy of this judgment be forwarded to the Chairman of the Central Board of Excise and Customs under the seal of this Court and signature of the Prothonotary and Senior Master and also to the Collector of Customs, Bombay for their information and for appropriate action. In our opinion, if proper action/view is taken in such matters by the departmental authorities at the right time, the flow of Writ Petitions in this Court directed against them will automatically diminish.

Certified copy to issue on expeditious basis on payment of the requisite charges.