Tata Oil Mills Co. Ltd. and another vs Union of India and another

The petitioners imported what are known as industrial fatty acids. This was between December 11, 1980 and February 9, 1981. As the goods landed, the Customs department sought to confiscate them on the ground that they were banned goods. The goods were thus detained. Thereafter by an order issued on February 7, 1982, the goods were confiscated but the Collector of Customs allowed the importers to pay fine in respect of each of the consignment and clear the goods for home consumption. The petitioners then paid the duty and fine and cleared the goods.

As against this order the petitioners preferred an appeal to the Central Board of Excise and Customs. The Board by its order dated July 5, 1982 reversed the decision given by the Collector and held that the petitioners'' contentions were fully valid and the appeal was allowed. However, when this order was passed, no order to refund the penalty amount paid by the petitioners was passed.

It appears that against this order the Collector of Customs had preferred an appeal to the Customs Excise and Gold Control Appellate Tribunal but the Appellate Tribunal by its order dated January 12, 1984 rejected the said appeal on the ground that the appeal was not maintainable.

The petitioner then filed this petition some time on or about January 22, 1982. In para 7 of the petition the petitioners have set out the total amount of fine paid by them and also the amount of demurrage claimed by the Port Trust. Mr. Talyarkhan, appearing for the petitioners, submitted that this amount of fine should be given back to the petitioners. He also pointed out that the detention of the goods in the Port Trust was not on account of any fault or negligence on the part of the importers but it was mainly due to the wrongful action on the part of the Customs department. He, therefore, submitted that the Customs department was bound to issue a detention certificate.

As regards the question of refund of fine, it appears that earlier, under the Customs Act 1962, prior to its amendment in 1983, there was a provision being Section 129(3) whereby in any appeal it was decided that the whole or any portion of such duty or penalty was not leviable, the proper officer should return to the appellant such amount of duty or penalty as was not leviable. It appears that after the amendment, there is no such provision for refund of penalty or fine. Perhaps, it is for this reason that the appellate authority did not pass any order to refund the amount of fine. But it is fair and reasonable that the amount of fine has to be refunded to the petitioners. The fine was levied without any authority of law inasmuch as the goods imported by the petitioners were not banned at all and that, therefore there could have been no action to confiscate the same u/s 111(d) of the Customs Act, 1962.

As regards the question of issue of certificate relating to the detention, in my view, the department is bound to issue such a certificate. The goods were detained at the instance of the Customs department and not on account of any fault on the part of the petitioners. In this connection Mr. Talyarkhan has drawn my attention to a Full Bench judgment of Madras High Court in the case of National Industries Vs. Assistant Collector of Customs, Madras, reported in 1980 E.L.T. 128 (Mad.). The Madras High Court after considering all the relevant rules and also the rules of the Port Trust authorities came to the conclusion that the delay is not attributable to any fault or negligence on the part of the importer and the Customs authorities who have been empowered to detain the goods, are bound to issue the detention certificate. The relevant observations in that behalf are as follows :

"As already stated, the right to detain the goods involves the corresponding obligation to issue a detention certificate if the detention of the goods was not attributable to any fault or negligence on the part of the importer, so that the importer could have the benefit of concession and exemption in the payment of demurrage charges in relation to the goods detained. If the customs authorities who have been empowered to detain the goods are not bound to issue a detention certificate in cases where the detention was attributable to any fault or negligence on the part of the importers, it is possible that the power of detention could be used in an authority manner. It is for this reason we are inclined to infer a corresponding duty on the part of the customs authorities to issue a detention certificate if there is an undue delay in examining the goods and conducting the necessary tests and the delay is not attributable to any fault or negligence on the part of the importer. When a power is given by a statute, that power should be taken to impose a corresponding duty to exercise the power in a reasonable manner."

Further the Court observes that.......

"We are of the considered view that the customs authorities are under a public duty to issue a detention certificate in the circumstances contemplated under Rule 13(a) and (b) of the scale of rates fixed by the Port Trust."

Mr. Talyarkhan has drawn my attention to a corresponding resolution of the Trustees of the Port of Bombay which provides for reduced demurrage charges if the detention of the goods is in connection with import trade control formality or for analytical or technical test other than the ordinary processes of customs appraisements.

I, therefore, pass the following order :

I direct that the respondents should refund the amount of fine paid by the petitioners, pursuant to the order Ex. K to the petition together with the interest thereon at the rate of 12% per annum from January 12, 1984 till payment. The amount should be paid within a period of three months from today.

I further direct that the respondents should issue a detention certificate for detaining the petitioners'' goods for I.T.C. formalities within a period of six weeks from today.

In the circumstances of the case, there will be no order as to costs.