2010 (2) TMI 1241 - HC - Customs

Summary

Issues Involved:

1. Legality of the confiscation and valuation of imported goods.
2. Compliance with the orders of the Commissioner of Customs (Appeals).
3. Maintainability of writ petitions under Article 226 of the Constitution.
4. Entitlement to compensation for demurrage and storage charges.

Issue-wise Detailed Analysis:

1. Legality of the Confiscation and Valuation of Imported Goods:

The petitioners, being work contractors and traders in digital office equipment, imported old and used digital multifunction machines and photocopier machines. The third respondent, the Deputy Commissioner of Customs, seized the goods under the Customs Act, 1962. The goods were purchased from suppliers in Germany and Dubai, and their values were declared in the bill of entry for assessment. Upon examination by Docks Officers and an approved Chartered Engineer, the values of the goods were enhanced. The petitioners agreed to pay the enhanced values to avoid additional charges. The second respondent, the Additional Commissioner of Customs, confiscated the goods under Section 111(d) of the Customs Act and imposed fines and penalties. The petitioners appealed, and the Commissioner of Customs (Appeals) reduced the fines and penalties but upheld the confiscation.

2. Compliance with the Orders of the Commissioner of Customs (Appeals):

The Commissioner of Customs (Appeals) passed orders reducing the fines and penalties. Despite this, the respondents did not release the goods, leading to mounting detention and storage charges for the petitioners. The petitioners offered to clear the goods by paying the applicable duty and furnishing a bank guarantee for 50% of the fine and penalty. The third respondent's letter dated 7-1-2010 required the petitioners to furnish a bank guarantee for 50% of the fine and penalty imposed by the original authority, in addition to remitting the assessed duty and penalty. The petitioners contended that the detention of goods without a stay order from a higher forum was unjustified and caused them significant losses.

3. Maintainability of Writ Petitions Under Article 226 of the Constitution:

The respondents argued that the writ petitions were not maintainable as the petitioners had an alternative statutory remedy of appeal. The petitioners countered that the respondents were obligated to obey the orders of the Commissioner of Customs (Appeals) unless stayed by a higher forum. The Court held that the orders of the appellate authority should be followed unless suspended by a competent court, as emphasized in the Supreme Court judgment in Union of India v. Kamlakshi Finance Corporation Ltd. The Court found that the impugned orders were contrary to the appellate authority's orders and were liable to be set aside.

4. Entitlement to Compensation for Demurrage and Storage Charges:

The petitioners sought compensation for the demurrage and storage charges incurred due to the delay in releasing the goods. The Court noted that the issue of compensation required appreciation of evidence and materials, which could not be done under Article 226 of the Constitution. The Court left it open for the petitioners to pursue their remedy in the appropriate forum, such as filing a regular suit or approaching competent forums.

Judgment:

The writ petitions were ordered, and the impugned orders dated 7-1-2010 were set aside. The respondents were directed to release the goods upon the petitioners furnishing a bank guarantee for 50% of the redemption fine and penalty imposed by the original authority along with payment of applicable duty, or by complying with the orders of the Commissioner of Customs (Appeals). The claim for compensation was rejected, with liberty to the petitioners to work out their remedy in the appropriate forum. The connected miscellaneous petitions were closed.