2001 (11) TMI 82 - SC - Customs

Whether it was a case of fraud or not? Held that - The merits of the case were not gone into because the Collector accepted the first submission regarding the applicability of principles of constructive res judicata. Further, the High Court in the impugned judgment and order has observed that the order of the Collector dated 22nd October, 1993 was not the subject matter of challenge before it. It was in this light that the observations of the High Court that the Collector was right in holding that he had no jurisdiction to pass afresh order of adjudication in view of the earlier order dated 10/15th January, 1991 covering the consignment in question had to be seen. Those were only prima facie observations as at that stage the appeal against the order of the Collector dated 22nd October, 1993 was pending before the Tribunal. Under these cirumstances, the investigation permitted by the High Court could not be brushed aside and the matter had to be taken to its logical conclusion. For the aforesaid reasons, it is not possible to uphold the impugned order of the Tribunal as also the order of the Collector dated 22nd October, 1993. For the same reasons, the impugned judgment and order of the High Court directing the release of the goods cannot be sustained till it is finally decided as to whether there is any substance or not in the allegations made against the importer in the show cause notice dated 18th February, 1991 on examination of the merits of the case. As already noticed, the merits were not examined by the Collector in view of his conclusion that the second order of adjudication could not be made. The High Court has directed that the Custom Department would pay the demurrage, container charges and ground rent to the Corporation from 16th January, 1991.

Summary

Issues Involved:
1. Legality of the High Court's direction to release imported goods.
2. Validity of the Collector of Customs' order dated 22nd October 1993.
3. Responsibility for payment of demurrage, container charges, and ground rent.

Detailed Analysis:

1. Legality of the High Court's Direction to Release Imported Goods:
The High Court directed the release of the imported goods held by the Central Warehousing Corporation Limited, with the importer paying charges until January 15, 1991, and the Collector of Customs paying thereafter until the release date. The Supreme Court found that the High Court's direction was premature as the merits of the case had not been fully examined. The High Court had allowed the investigation to be completed within a week and permitted the issuance of a show cause notice, but the Collector of Customs' subsequent actions were not in compliance with the principles of natural justice. The Supreme Court remanded the matter back to the Collector for a fresh decision, emphasizing the need to examine whether the allegations of fraud against the importer had substance.

2. Validity of the Collector of Customs' Order Dated 22nd October 1993:
The Collector of Customs had discharged the show cause notice dated 18th February 1991, citing the principle of constructive res judicata, based on an earlier order dated 10/15th January 1991. The Supreme Court disagreed, noting that the test report dated 26th November/4th December 1990, which was the basis of the show cause notice, was not considered in the earlier adjudication. The Supreme Court held that the principles of res judicata or constructive res judicata did not apply, as the test report could not have been considered in the earlier order. The Supreme Court set aside the Tribunal's dismissal of the government's appeal and the Collector's order, remanding the case for fresh adjudication on the merits.

3. Responsibility for Payment of Demurrage, Container Charges, and Ground Rent:
The High Court had directed the Customs Department to pay these charges from 16th January 1991. The Supreme Court found this direction contrary to its decision in International Airport Authority of India & Ors. v. Grand Slam International & Ors., which held that the Corporation is entitled to recover its charges from the importer. Consequently, the Supreme Court set aside the High Court's direction for the Customs Department to pay these charges and dismissed the importer's appeal (CA No. 7931/95) regarding the payment of charges.

Conclusion:
The Supreme Court allowed Civil Appeal Nos. 767-768 of 1995 and the appeal arising out of SLP (C) No. 1663 of 2000, remanding the matter back to the Collector for a fresh decision on the show cause notice, while maintaining the status quo. Civil Appeal No. 7931 of 1995 was dismissed, with no order as to costs.