1961 (5) TMI 1 - HC - Customs

Summary

Issues Involved:
1. Jurisdiction of Customs authorities under Section 30 of the Sea Customs Act.
2. Nature of the order passed by Customs authorities and its justiciability under Article 226 of the Constitution.
3. Compliance with the principles of natural justice in the hearing process.
4. Legality of the valuation and confiscation order.
5. Entitlement to refund of penalty and increased duty.

Issue-wise Detailed Analysis:

1. Jurisdiction of Customs Authorities under Section 30 of the Sea Customs Act:
The petitioner contended that the Customs authorities had no jurisdiction to apply Section 30(b) without exhausting the provisions of Section 30(a) of the Sea Customs Act. The Court held that the Customs authorities could not invoke Section 30(b) without first fulfilling the conditions of Section 30(a). The Court emphasized that the real value under Section 30(a) must be unascertainable before Section 30(b) could be applied. The reliance on letters by T.S. Narang without proper evidence was deemed insufficient to establish the real value under Section 30(b). The Court concluded that the Customs authorities acted without jurisdiction by directly applying Section 30(b).

2. Nature of the Order Passed by Customs Authorities and its Justiciability under Article 226:
The Customs authorities argued that the order was administrative and not justiciable under Article 226. However, the Court held that the order was quasi-judicial in nature since it involved the assessment and imposition of penalties. The Court cited precedents indicating that orders made in a quasi-judicial capacity are subject to judicial review, and a writ of Certiorari would lie if there was an excess of jurisdiction or a lack of evidence.

3. Compliance with Principles of Natural Justice in the Hearing Process:
The petitioner argued that the hearing was conducted by the Assistant Collector of Customs, but the order was passed by the Deputy Collector without hearing the petitioner. The Court found this procedure violated principles of natural justice. It was emphasized that personal hearing connotes a direct interaction between the person heard and the person deciding. The Court cited the Supreme Court's decision in Gullapalli Nageswara Rao's case, which held that such divided responsibility defeats the object of personal hearing and is destructive of judicial hearing.

4. Legality of the Valuation and Confiscation Order:
The Court scrutinized the evidence relied upon by the Customs authorities, particularly the letters marked as Exts. B and C. The Court found these documents lacked essential details such as the time, place of importation, and the wholesale cash price. The absence of these details rendered the valuation under Section 30(b) invalid. The Court held that the Customs authorities' order was illegal and without jurisdiction, as there was no finding that the price under Section 30(a) was unascertainable.

5. Entitlement to Refund of Penalty and Increased Duty:
Given the conclusion that the order was illegal, the Court addressed the petitioner's entitlement to a refund. Citing the Supreme Court's decision in Universal Imports Agency v. Collector of Customs, the Court affirmed that it had the power to order a refund of penalties and increased duty imposed under an illegal order. Consequently, the Court made the Rule absolute in terms of the petitioner's prayers for quashing the order, forbearing the respondents from enforcing it, and directing a refund of the amount mentioned in the petition.

Conclusion:
The Court quashed and set aside the impugned order, declared it illegal and without jurisdiction, and directed the Customs authorities to refund the sum of Rs. 20,818.25 within six weeks. The petitioner was also awarded the costs of the application.