1993 (3) TMI 361 - HC - Customs

Summary

Issues Involved:

1. Confiscation of imported goods (cassia) under the Customs Act.
2. Requirement of a specific license for importing cassia.
3. Legitimate expectation and past practice of import clearance.
4. Application of Article 14 of the Constitution of India.
5. Discretion under Section 125 of the Customs Act.
6. Judicial precedents and administrative consistency.
7. Non-application of mind by the adjudicating authority.
8. Appeal and alternative remedy under Article 226 of the Constitution.

Issue-wise Detailed Analysis:

1. Confiscation of Imported Goods (Cassia) under the Customs Act:
The petitioners imported cassia from Singapore and filed bills of entry for clearance. The customs authorities confiscated the goods, citing that cassia appears on the negative list of restricted items and requires a specific license. The authorities imposed penalties of Rs. 1,50,000/- and Rs. 1,51,000/- respectively on the petitioners.

2. Requirement of a Specific License for Importing Cassia:
The customs authorities argued that cassia is listed as a restricted item under the Import and Export Policy of 1992-1997, requiring a specific license. The petitioners did not possess such licenses, leading to the confiscation of goods under Section 111(d) of the Customs Act.

3. Legitimate Expectation and Past Practice of Import Clearance:
The petitioners contended that the Madras Customs House had previously allowed the clearance of cassia upon payment of redemption fines and penalties. They argued that this past practice created a legitimate expectation that similar treatment would be extended to them, and the sudden change in approach violated their rights.

4. Application of Article 14 of the Constitution of India:
The petitioners claimed that the differential treatment in their cases, compared to other importers of cassia, violated Article 14 of the Constitution, which guarantees equality before the law. They argued that the orders of adjudication were arbitrary and discriminatory.

5. Discretion under Section 125 of the Customs Act:
The petitioners argued that Section 125 of the Customs Act allows the adjudicating officer to offer an option to pay a fine in lieu of confiscation. They contended that the authorities failed to exercise this discretion fairly and reasonably, leading to absolute confiscation without considering the option of redemption.

6. Judicial Precedents and Administrative Consistency:
The petitioners cited previous judgments where similar imports were allowed upon payment of fines. They referenced cases from the Calcutta High Court and Bombay High Court, which held that customs authorities should follow precedents and consistent past practices to avoid arbitrary decisions.

7. Non-application of Mind by the Adjudicating Authority:
The court found that the adjudicating authority did not apply its mind to the facts and circumstances of the cases. The reasoning provided for the absolute confiscation was deemed perverse, especially considering the liberalized exchange rate management system by the Reserve Bank of India, which contradicted the claim of foreign exchange drain.

8. Appeal and Alternative Remedy under Article 226 of the Constitution:
The respondents argued that the petitioners had filed appeals before the appellate authority, and thus, the court should not interfere under Article 226. However, the court held that the existence of an alternative remedy does not bar the court from entertaining writ petitions, especially when the orders of adjudication were found to be arbitrary and capricious.

Conclusion:
The court set aside the impugned orders, remitting the matters to the Collector of Customs to reconsider the quantum of redemption fine and penalty. The respondents were directed to pass fresh orders within two weeks after giving notice to the petitioners. The writ petitions were allowed, and no order as to costs was made.