1992 (3) TMI 68 - HC - Customs

Summary

Issues Involved:
1. Nature and classification of Public Bonded Warehouse and Private Bonded Warehouse.
2. Jurisdiction and authority of the Assistant Collector of Customs under Section 57 of the Customs Act, 1962.
3. Legitimacy of the cancellation of the petitioner's licence.
4. Allegations of discrimination between the petitioner and Bengal Bonded Warehouse.
5. Validity of the Customs Department's policy and executive instructions.

Issue-wise Detailed Analysis:

1. Nature and Classification of Public Bonded Warehouse and Private Bonded Warehouse:
The petitioner has been running a Public Bonded Warehouse since October 1980. The confusion arises from the Customs Department's internal misclassification between Public and Private Bonded Warehouses. The petitioner was initially granted a licence for a Private Warehouse under Section 58, which was later renewed as a Public Bonded Warehouse under Section 57. The inconsistency in the licence forms led to the petitioner's challenge.

2. Jurisdiction and Authority of the Assistant Collector of Customs under Section 57 of the Customs Act, 1962:
The core issue is whether the Assistant Collector of Customs had the jurisdiction to grant licences for Public Bonded Warehouses. According to Section 57, the Assistant Collector of Customs is empowered to appoint public warehouses. The Collector of Customs, however, argued that only the Collector could appoint public warehouses based on a letter from the Government of India dated 7th July 1980. The judgment clarifies that the Central Government cannot divest the statutory power of the Assistant Collector through executive instructions. The Assistant Collector retains the statutory jurisdiction under Section 57, and the Collector's reasoning was deemed erroneous.

3. Legitimacy of the Cancellation of the Petitioner's Licence:
The petitioner's licence was cancelled on the grounds that the Assistant Collector had not followed existing instructions, conditions, limitations, and restrictions. The judgment highlights that the non-renewal of an existing licence is more serious than the initial refusal. The petitioner had a legitimate expectation of renewal, and the arbitrary cancellation without proper grounds was unjustified. The judgment emphasizes that the government should not refuse to extend a licence arbitrarily, especially when the business was established based on the issued licence.

4. Allegations of Discrimination between the Petitioner and Bengal Bonded Warehouse:
The petitioner alleged that the cancellation was to benefit the Bengal Bonded Warehouse, a private organization also running Public Bonded Warehouses. The judgment notes that the Customs Department's stand was inconsistent, as it allowed Bengal Bonded Warehouse to operate while denying the petitioner the same right. The court found no justification for this discrimination, especially since both entities were private organizations. The respondent's claim that they were rectifying a mistake by not renewing the petitioner's licence was not accepted, as they continued to allow Bengal Bonded Warehouse to operate.

5. Validity of the Customs Department's Policy and Executive Instructions:
The judgment scrutinizes the executive instructions and policies issued by the Customs Department. It concludes that the Central Government's letter and subsequent public notices did not have the statutory authority to override the Assistant Collector's jurisdiction under Section 57. The guidelines mentioned in the letter dated 7th July 1980 were policy directions and did not legally bind the statutory powers conferred by the Customs Act.

Conclusion:
The writ petition was allowed, and the court ordered in favor of the petitioner, stating that the Customs Department must reconsider the petitioner's application for a licence in accordance with the law. The judgment emphasized that the petitioner and Bengal Bonded Warehouse were equally circumstanced, and any decision must be applied uniformly. The court did not grant the petitioner a right to run a public warehouse but invalidated the Collector's decision on jurisdictional grounds and discriminatory practices. The Customs Department was directed to pass a fresh order after reviewing all facts and circumstances. The petition was disposed of without any order as to costs, and a stay of the operation of the order was refused.