Medisource Agenices Pvt Ltd & ... vs Union Of India And Others
1998 Latest Caselaw 826 Del

ORDER

R.C. Lahoti, J.

1. Proceedings under the Customs Act, 1962 with a view to passing an order of adjudication in the matter of likely evasion of payment of customs duty have been initiated against the petitioners. The proceedings are at the stage of investigation. The petitioners have approached this Court seeking quashing of the proceedings complaining of the initiation of the proceedings and the seizure of the goods of the petitioners both being without jurisdiction, also complaining of harassment of the two directors (petitioners 3 and 4) and employees of the companies petitioner 1 and 2 at the hands of the officials of the Customs Department. The Assistant Commissioner of Customs and the Supdt of Customs, respondents 3 and 4 have been impleaded in personal capacity also.

2. According to the petitioners they have been importing canella for aorta vena cavae and similar veins and blood vessels. The two bills entry dated 31.7.98 and 18.8.98 were presented at the Customs for clearance. The goods relating thereto were cleared on 1.8.98 and 21.8.98 respectively. The goods were imported under OGL and claimed to be exempted from payment of customs duty. The clearance was after the requisite satisfaction of the officials of the Customs. M/S Aero Bridge Cargo Services were the customs house clearing agents engaged by the petitioners for clearance of the goods.

3. On 23.9.1988 the respondents swung into action. The officials visited the godown site of the petitioner. There the petitioner No.3, a lady, was detained for questioning and issued a call memo for further questioning. Customs officials were posted around the residential premises of the petitioners 3 and 4 to keep a vigil. Petitioner No.4, husband of petitioner No.3, was out of station. Goods forming subject matter of the bills dated 31.7.98 and 18.8.98 were seized and detained.

4. According to the petitioners, the goods imported by the petitioners are exempted from payment of customs duty vide exemption notification No. 23/98-Cus dated 2.6.98, List 22, Entry No. 34. The goods having been cleared by the Customs official on their satisfaction which was in fact arrived at and in any case will be presumed to have been arrived at and the goods having left the Customs at best or at the worst the petitioners may be held liable to payment of Customs duty, if that be so, and for that purpose the respondents may issue show cause notice and conclude adjudication proceedings but they cannot seize and detain the goods under Section 111/112 of the Act. It was submitted that the petitioners have no objection if the respondents wish to proceed with adjudication proceedings relating to recovery of customs duty but the goods seized must be directed to be released forthwith. Incidentally it was also prayed that the petitioners be protected from harassment by the respondents.

5. According to the respondents the petitioners have miss-declared the goods and thereby succeeded in fraudulently obtaining clearance of the goods which under the law renders the goods liable to confiscation and the petitioners liable to recovery of duty apart from prosecution under the criminal law. The seizure of the goods is defended by the respondents on dual grounds:(i) the goods are liable to confiscation and hence available for seizure as per Sections 100/11 of the Customs Act; and (ii) the petitioners are liable to be prosecuted u/s 132/135 of the Customs Act before a criminal court and the goods seized would constitute case property in the criminal case. The allegations as to harassment at the hands of the officials of the respondents have been denied. It was submitted that the court may not interfere at the stage of investigation by the respondents which is being conducted bonafide and within the exercise of statutory powers of the respondents.

6. The relevant part of the Customs Tariff Rules are as under :

90.18 Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scientist graphic apparatus, other electromedical apparatus and sight-testing instruments.

xxx xxx xxx

Syringes, needles, catheters, canella and the like;

xxx xxx xxx

9018.90 Other instruments and appliances.

7. Notification No. 23/78-Cus dated 2.6.98 List 22 Item 34 reads as under:

"Disposable and non-disposable canella for aorta, vena cavae and similar veins and blood vessels and canella for intra-corporal spaces."

8. According to the learned counsel for the petitioners all disposable and non-disposable canella for aorta vena cavae and similar veins and blood vessels and canella for i.c.s. have been exempted from all payment of Customs duty and that the canella imported by the petitioner under the above said two bills of entry are covered by the exemption notifications. Learned counsel for the respondent has submitted that all canella are liable to payment of customs duty except those exempted by the notifica-tion. The language employed by the notification goes to show that only such limited class of canella which are used as life saving device have been exempted from payment of duty and those not specifically covered by the above said Entry No.34 would be liable to customs duty. It was pointed out by the learned counsel for the respondents that the petitioners themselves imported similar goods earlier describing them as medical equipment_ Venf-lon (I.V. canella) referable to Entry 90.18.90 of the Customs Tariff and paid customs duty thereon 20%. In the two impugned bills of entry the petitioners changed the description of those very goods detailing them as 'life saving devices disposable canella for aorta vena cavae and similar veins and blood vessels' borrowing the language from exemption notifica-tion. On the relevant facts having come to the notice of the respondents they have initiated investigation and seized the goods.

9. At the hearing learned counsel for the parties referred to Oxford Medical Dictionary (4th Edn) in support of their respective contentions. The learned counsel for the respondents also contended that they had sought for expert opinion from several medical institutions including Batra Heart Care Foundation which has supported the view point of the Customs Depart-ment. On the contrary, it was submitted by the learned counsel for the petitioner that such expert opinion could be made available to satisfy the court by the petitioners also but the respondents were not right in forming the opinion which they have done and proceeding on the premises which they are doing.

10. The present petition is not an appropriate occasion for expressing any opinion or recording any final judicial verdict on the correctness or otherwise of the contentions raised by either party. It would be pre-mature and prejudicial to the interest of the parties as will be seen a little ahead.

11. The learned senior counsel for the petitioners referred to Section 28 of the Act which provides for notice for payment of duties not levied, short levied or erroneously refunded and also referred to the definition of 'imported goods' in clause (25) of Section 2 of the Act which provides as under :-

"(25) "Imported goods" means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption."

It was submitted by the learned senior counsel for the petitioners that once the goods have been cleared for home consumption they cease to be liable for confiscation and the only remedy available to the customs de-partment is to take steps for recovery but the goods cannot be seized and confiscated. Learned counsel for the petitioners further referred to Sec-tion 111 of the Act and read out clause by clause, the clause (a) to (p) thereof to submit that the goods were not covered by any of the clauses and therefore are not liable to confiscation. They could not have been seized under Section 110 of the Act.

12. Learned counsel for the respondents submitted that Section 111 of the Act is not confined in its applicability to 'imported goods' merely as defined in clause 25 of Section 2 of the Act. The opening words of Section 111 indicate that the provision is attracted to 'the goods brought from a place outside India' subject to their being covered by any of the clauses thereunder. According to the respondents the goods in question are covered by clause (m) which reads as under :

"any goods which do not correspond in respect of value or any other particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77 in respect thereof;

It was submitted that the particulars of the goods as declared by the petitioners were not correct and the goods being not corresponding to the particulars declared, were liable to be confiscated.

13. The investigation is at its very early stage, rather it is at its threshold. The petitioners are seeking the investigation being stalled, rather quashed followed by an order for the release of the goods which have been seized for the purpose of investigation and contemplated confiscation. No decision by the Supreme Court nor any precedent binding on or having persuasive value for this Court, and throwing light on the issue at hand, has been brought to our notice. However, we may usefully draw upon the principles laid down by their Lordships of the Supreme Court in Rashmi Kumar Vs. Mukesh Kumar Bhada, 1997(2) S 397, State of Bihar Vs. Rajender Agrawall 1996(8) S 164, State of Mahrashtra Vs. Ishwar Piraji Kalpatri, 1996(1) S 542, Rupan Deol Bajaj Vs. Kanwar pal Singh Gill, 1995(6) S 194 and State of Haryana Vs. Bhajan Lal & Ors, 1992( Supl1) S 335 and several others decided cases of the Supreme Court which are not otherwise directly applicable to the facts of the case. In our opinion, an investigation commenced under the provisions of the Customs Act may be liable to be interfered with, quashed or set aside only in the following conditions and keeping in view the following principles :

(1) The primary consideration before the Court should be whether the exercise of the power would advance the cause of justice or it would tantamount to abuse of the process of the court. The evasion of customs duty is a white collar crime which seriously prejudices the revenue of the State. The Court would be loath to interfere or intermeddle with the investigation and the power would be exercised very sparingly with circumspection and that too in rarest of the rare cases.

only when the court comes to the conclusion that there would be manifest injustice if such power is not exercised.

(2) At this stage, the court cannot either sift or appreciate the evidence and come to the conclusion that no prima facie case was made out for proceeding against the petitioners. No straight jacket principles or category of cases can be laid down or defined precisely, nor can an exhaustive list of cases be attempted where such power may be exercised. However, the following category of cases can be contemplated where the extraordinary writ jurisdiction of the High Court under Article 226 of the Constitution may be exercised for quashing such investigation:

i) Where the allegations made against the person proceeded against even if accepted at their face value and in their entirety would not make out a case of violation of any provision of the Customs Act;

ii) Where the allegations made against the petitioners are so absurd and inherently improbable that on the basis thereof no prudent person acting reasonably shall ever reach a conclusion that a case for proceeding against the petitioners was made out;

iii) Where there is an express legal bar engrafted in any of the provisions of Customs Act or any other Act, the applicability whereof is attracted to the initiation, continuance of the proceedings or institution of any proceedings at the conclusion of the investigation;

iv) Where the proceedings are manifestly attended with malafides and/or proceedings are maliciously instituted with an ulterior motive for wracking vengeance on the petitioner with a view to spite him due to private or personal vengeance;

v) The allegations of malafides would be relevant only for judging the correctness or probability of the allegations made against the petitioners. However, in spite of the availability of malafides or malice the investigation may not be quashed if on the material available a case of petitioners having breached the provisions of law can be made out. On such facts, in an appropriate case and requisite foundation having been laid, the court may do is to direct the investigation being shifted to the hands of such independent officers who would not be actuated by malafides or malice so as to exclude the likelihood of harassment and creation of false evidence against the petitioners.

14. Having noted the rival contentions of both the parties, we are unhesitatingly of the opinion that the present one is not a case where it may be said that assuming all the allegations against the petitioners to be true, still no case of breach of the provisions of the Customs Act can be said to have been made out. It cannot also be said that the official conducting the investigation against the petitioners do not have jurisdiction to investi-gate. There is no allegation that the officials are actuated with malice or malafides against the petitioners. In short the case of the petitioner does not fall within any one of the clauses of point No. 2 of para 13 above. The petitioners are, therefore, not entitled to the relief of quashing the investigation. So also the present one is not a case where the seizure of the goods may be said to be without jurisdiction prima facie. Hence the relief of release of goods cannot also be allowed to the petitioners.

15. The petition is, therefore, held liable to be dismissed and is dismissed accordingly.

16. However, before parting we would like to make a few observations of our own and by way of abundant caution. Firstly, we expect the respondents and their officials associated with the investigation to be cautious and reasonable in their conduct so as not to give rise to any occasion for complaint of harassment, more so when one of the persons proceeded against is a lady. Secondly, the subject matter of charge against the petitioners is a simple one. It is only a question of finding out whether the goods imported by the petitioners were correctly declared or not and whether the goods are covered by the exemption notification or not. Such investigation should not consume much of time. We expect the respondents to conclude the investigation at the earliest and serve the petitioners with show cause notice and thereafter pass an order of adjudication, if required. We would also like to state that all the observations which we have made hereinabove are solely for the purpose of finding out whether a case for quash sing the investigation and release of seized goods is made out or not. We have not recorded any finding on any of the controversies under investigation. The parties may proceed with the investigation without being influenced by any of the observations made hereinabove.