Sprint Rpg India Ltd. vs The Commissioner Of Customs
2001 Latest Caselaw 1903 Del

JUDGMENT

S.B. Sinha, C.J.

1. Whether the Customs Authorities or the International Airport Authority of India would be liable to pay the price of imported goods which had been sold on auction by the later, is the question involved in this writ petition.

Facts

2The petitioner imported GS software in India. The assessed value of the said software was Rs. 67 lakhs . A sum of Rs. 711,388/- was paid by the petitioner by way of Customs Duty. The first respondent however held that the goods were hard disk drives and not software loaded on hard disk drivers whereupon a show cause notice was issued to the petitioner demanding additional duty of Rs. 24,00,933/-. The petitioner replied to the said show cause notice. The goods were specified as software in terms of Chapter 8471.93 read with notification No. 59/95 dated 16th March, 1995 attracting customs duty @ 25%. Against the said order the petitioner preferred an appeal before the CEGAT which was marked as Appeal No. 161/96/92. The appeal was dismissed by an order dated 14.2.1999. The goods in question, in the meantime, were handed over to International Airport Authority. It appears that said goods were put to auction on 24-4-1998.

3. The petitioner in the meanwhile had preferred an appeal to the Supreme Court in terms of Section 130E of the said Act which was marked as Civil Appeal No. 5582/1999. The said appeal was allowed by the Apex Court vide order dated 20-1-2000 holding that the software imported were assessable at the rate of ten percent as per Heading 8.24.

4.The petitioner prayed for release of the goods pursuant to the directions of the Apex court of the said goods on 9th February, 2000, 15th and 31st March, 20000 but only on 18th April, 2000, the petitioner received a reply to the effect that it would have to approach the second respondent for obtaining delivery of the goods. The petitioner as per advice of respondent No.1 approached the second respondent on 1st May, 2000 but no reply to its letter was received. The petitioner thereafter addressed another letter dated 29th May, 2000 to the first respondent and having received no response in relation thereto, a notice of demand was issued on 8th September, 2000. On or about 20th October, 2000 in its letter the petitioner lamented the silence on the part of the respondents and communicated that their continued silence would amount to contempt of the Supreme Court of India where after only respondent No.2 vide letter dated 31st October, 2000 sought for further detail as regards the goods imported which was promptly furnished by the petitioner on 31st October, and 4th November, 2000. To its dismay a communication was received by the petitioner on 15.11.2000 from respondent No.2 that the goods had been sold in auction on 24.4.1998. In the aforementioned situation this writ petition was filed.

Submission

5.Learned counsel for the petitioner would urge that the first respondent was primarily responsible for return of the seized goods. In support of the said proposition the petitioner has placed reliance on Ashok Dhawan v. UOI (1990) 47 ELT 218, Singhal Paints v. Collector of C.Ex Allahabad and (1999) 106 ELT 16. The value of the goods, according to the learned counsel should be assessed in July, 1995 which would be to the tune of Rs. 65 lakhs.

6.Mr Sood, learned Addl Solicitor General, however, would submit that the petitioner could have got the goods cleared by paying differential amount of customs duty. Mr Sidhu, learned counsel appearing for the second respondent would contend that his client was not a necessary party. According to him, the second respondent being a bailee having regard to the provisions of Section 148 of the Indian Contract Act, even in case of any breach on its part, was liable to pay damages only to the bailor and the customs authorities only are liable for payment of value of the goods to the assessed.

FINDINGS

7.It is not in dispute that in a case of this nature, the doctrine of restitution must be applied.

8.Clearance of import and export of goods is dealt with in Chapter 7 of the Customs Act, 1962. Sub- section (1) of Section 45 mandates that the custody of imported goods unloaded in a customs area shall be with such persons as may be approved by the Commissioner of Customs unless they are cleared. 'Customs area' has been defined in Section 2(11) of the Act to mean the area of a customs station and includes any area in which imported goods or exported goods are ordinarily kept before clearance by Customs Authorities. Sub-section (2) of Section 45 requires a persons having custody of such imported goods in a customs area to comply with the matters specified therein, which includes that he would not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer. Airport Authority sought for permission to put the goods on auction. Such clearance was received from the proper officer only on 22.4.2000. Disposal of unclaimed/uncleared cargo is the subject matter of a circular letter dated 11th February, 1998, which inter alia, states as under :

"4. The imported goods lying uncleared may be classified into two categories viz (a) goods confiscated under the customs Act, 1962 and

(b) goods not confiscated but lying uncleared/unclaimed. For the goods of category (a) it is the responsibility of the Customs Department to get them disposed of through the disposal units of the department. The custodian will fully undertake disposal of goods falling under category (b). Every month the custodian shall prepare a list of all imported goods- aircraftwise which are lying uncleared/unclaimed for more than 45 days and will send it to customs on monthly basis. The list shall be delivered by hand and shall be acknowledged with date by the customs. The list would contain complete particulars such as airway bill number, description of goods, weight, name of the consignee/consignor etc. A notice shall simultaneously be issued by the custodian to the consignee at his known address or the through their notice board that if the goods are not cleared within 15 days it will be sold by the custodian under section 48 of the Customs Act, 1962."

9.It is thus beyond any shadow of doubt that for all intent and purport the primary liability therefore is that of the first respondent. The first respondent herein, being a State was expected to deal with the matter fairly and in a reasonable manner. It had, in our opinion, a moral obligation to inform the CEGAT as also the Supreme Court of India that the goods in question have already been sold in auction. It failed and/or neglected to do so. Prior to putting the goods in question to auction, it was expected that the petitioner would at least be put to notice that on payment of additional duty it could get the imported goods cleared. It is really also a matter of great surprise that the Airport Authorities also sold the goods within two days of the receipt of the list of such goods.

10.We also fail to appreciate as to why despite several letters the respondents herein did not give a prompt reply that the goods have already been sold. It did so only upon receipt of a legal notice. It has not been and could not be disputed that the petitioner is entitled to the value of the goods. It is not a case where the principle of res ipsa loquitor can be applied, as regards the loss of goods while in the custody of International Airport Authority as was the case in International Airport Authority of India v. Ashok Dhawan 1999 ( 106) ELT 16.

11The counsel appearing on behalf of the respondent did not dispute that the petitioner is entitled to value of the goods which would be as in July, 1995 i.e. Rs. 65 lakhs.

12The question only is, who is liable therefor? Learned Addl Solicitor General submitted that the first and second respondents have no conflicting interest. He, however, did point out that auction sale was in violation of the directive issued by the Customs Authorities, whereas Mr. Sidhu, learned counsel for respondent No.1 submitted that his client does not have any statutory liability whatsoever.

13.This Court is not concerned with the question whether the first or the second respondent is liable . Ex- facie, respondent no.1 is primarily liable for payment of the value of the goods to the petitioner. It can recover the amount either in whole or in part from the bailee having regard to the provisions of the Indian Contract Act as also any other law for the time being in force. The said matter has to be resolved inter se between respondents 1 and 2.

Respondent No.1, in our considered opinion, cannot avoid its liability by throwing the blame on the second respondent. The second respondent was merely a custodian in terms of sub-section (1) of Section 45. Even if the goods have been sold in violation of the circular letter issued by the customs authority, proper steps can be taken against the custodian of the goods but for that purpose, the petitioner cannot be deprived of its legitimate dues.

14.We, therefore are of the view that interest of justice would be met if a direction is issued to the first respondent to pay the aforesaid amount of Rs. 65 lakhs to the petitioner herein with interest @ 12% p.a. from August, 1995 till the date of actual payment. However, the first respondent will be at liberty to realise the said amount either in whole or part to which it may be entitled to from the second respondent. In the facts and circumstances of the case the petitioner shall also be entitled to costs. Counsel's fee assessed at Rs. 10,000/-.