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2003 (9) TMI 96 - HC - CustomsChallenged the validity and constitutionality of a public notice No. 82(ITC)/PN/88-91 - Import and Export Policy - Redemption fine - duty for goods in bonded warehouse beyond three months - HELD THAT - The finding of fact recorded by the CEGAT that there is no presentation of ante-dated bills of lading is also not challenged by the Revenue. In the result, the CEGAT was pleased to reduce redemption fine from Rs. 9 lakhs to Rs. 4.5 lakhs. In this backdrop, if there is a bona fide mistake on the part of the Shipper or the clerk of the shipping agency, we fail to understand as to how the petitioners can be penalised for that even by reducing the redemption fine. Secondly, if there was no attempt on the part of the petitioners to present ante-dated bills of lading, and on the face of the finding of fact recorded by the CEGAT that the goods were received by the Shipping Lines as early as in the month of November, 1988, how one can reach to the conclusion that the entire transaction was undertaken subsequent to the issuance of public notice dated 29th November, 1988. It is no doubt true that irrevocable letter of credit was not established by the petitioners but that by itself cannot be a ground to say that the concluded contract which was entered into by the petitioners was not a genuine contract. The condition relating to the opening of the irrevocable letter of credit put in the public notice was to prevent the importers entering into an import contract subsequent to the public notice but if on the strength of the genuine material available and accepted by the CEGAT if the petitioners have to establish that their transaction to import goods was genuine transaction and was not based on any manipulation then, in that event, the CEGAT was not justified in levying redemption fine, though reduced to the extent of 50%. We do not propose to base our judgment on the basis of M/s. B. Vijaykumar Co. 1988 (12) TMI 336 - SUPREME COURT because that case was decided by the Apex Court on the peculiar facts of that case. However, once the finding of fact is reached that the goods were handed over for export to India to a Shipper on 27th November, 1988 i.e. well before the issuance of public notice dated 29th November, 1988 and accepted by the Revenue, in that event, there is no justification on the part of the CEGAT to impose redemption fine. The CEGAT having accepted the date of issuance of relevant bills of lading as 28th November, 1988 and also the import of the goods being bona fide and the delay in shipment being totally beyond the control of the petitioners, the redemption fine of Rs. 4.5 lakhs in lieu of confiscation does not meet the ends of justice. In the result, for the reasons recorded hereinabove, the impugned order dated 9th November, 1989 passed by the CEGAT is set aside. Writ Petition No. 315 of 1990 is allowed. Rule is made absolute in terms of this judgment. Since we have set aside the order of the CEGAT, it is not necessary to decide the legality and validity of the public notice dated 29th November, 1988 or the validity of Para 5 of Appendix 6 of the said Policy, though the petitioners were seriously challenging legality and validity of the said instruments on the touch stone of Article 14 of the Constitution of India. Since we are allowing the petition, it will be necessary to make consequential order. Under interim order of this Court dated 21st February, 1990 the petitioners were directed to pay redemption fine of Rs. 2.25 lakhs and furnish security by way of bank guarantee in the sum of Rs. 2.25 lakhs of the nationalised bank. The petitioners would be entitled to refund of Rs. 2.25 lakhs and shall also be entitled to return of bank guarantee with necessary endorsement for cancellation thereof, so as to enable them to submit it to their bankers. Accordingly, we direct the respondents to refund the amount of Rs. 2.25 lakhs and to return bank guarantee to the petitioners with necessary endorsement for cancellation, within six weeks from today. In the event of delay in refund, the same shall carry interest at the rate of 6% per annum after expiry of six weeks till refund in full and final. According to the petitioners, during the adjudication proceeding the petitioners were prevented from getting the goods released and, subsequently, they were not allowed to get the same released, as such the petitioners were required to obtain necessary interim order pending Writ Petition No. 315 of 1990. Pursuant to the order dated 21st February, 1990 passed by this Court in that writ petition, the petitioners filed bills of entry for ex-bond clearance for home consumption. However, at that stage, the respondents insisted on charging interest on the customs duty payable by the petitioners on the ground that the said goods remained in bonded warehouse beyond the period of three months. As the petitioners were in urgent need of the said goods, it appears that the petitioners paid interest of Rs. 75,056/- in respect of bill of entry No. 003527. As a matter of fact, in our opinion, the said amount of interest could not have been recovered by the respondents from the petitioners on the face of interim order passed by this Court. If at all the respondents wanted to levy interest, then, they ought to have approached this Court and ought to have got the interim order modified. It was not open for them to read something more in the interim order and insist upon payment of interest, especially, when the matter was sub-judiced. In this view of the matter, the demand for interest was unjustified. Even, otherwise, since we have quashed and set aside imposition of redemption fine and directed refund of fine paid by the petitioners we also hold that the respondents were not entitled to charge and recover interest in the sum of Rs. 75,056/- in respect of Bill of Entry No. 003527, as such petitioners would be entitled to refund of the same amount of interest. The respondents are, therefore, directed to refund the petitioners the amount of interest paid by them in the sum of Rs. 75,056/- within six weeks from today. In the event of delay in payment of said interest amount, the same shall carry interest at the rate of 6% per annum after expiry of six weeks till payment in full and final. In the result, Writ Petition No. 1551 of 1990 is allowed. Rule is made absolute in terms of the above order. Accordingly, both the petitions stand disposed of with no order as to costs.
Issues Involved:
1. Validity and constitutionality of public notice No. 82(ITC)/PN/88-91 and Para 5 of Appendix 6 of Import and Export Policy April, 1988 - March, 1991. 2. Legality of the order-in-original dated 23rd March, 1989 and the order of CEGAT. 3. Imposition of redemption fine and penalty. 4. Levy of interest on customs duty for goods in bonded warehouse beyond three months. Summary: 1. Validity and Constitutionality of Public Notice and Policy: The petitioners challenged the validity and constitutionality of public notice No. 82(ITC)/PN/88-91, dated 29th November, 1988, and Para 5 of Appendix 6 of Import and Export Policy April, 1988 - March, 1991. The petitioners argued that the condition relating to the opening of a letter of credit was arbitrary, unreasonable, and violative of Article 14 of the Constitution of India. They contended that the classification based on the opening of a letter of credit created two classes of importers without any intelligible differential. 2. Legality of the Order-in-Original and CEGAT's Order: The petitioners contested the order-in-original dated 23rd March, 1989, which held their import unauthorized and imposed a redemption fine of Rs. 9 lakhs and a penalty of Rs. 2 lakhs. They also challenged the CEGAT's order, which reduced the redemption fine to Rs. 4.5 lakhs and set aside the penalty. The petitioners argued that the CEGAT's order was self-contradictory, as it acknowledged the bona fides of the petitioners but still imposed a reduced redemption fine. 3. Imposition of Redemption Fine and Penalty: The petitioners contended that the import of goods was bona fide and that there was no deliberate attempt to present ante-dated bills of lading. They argued that the goods were handed over to the shipping company on 27th November, 1988, before the issuance of the public notice on 29th November, 1988. The CEGAT accepted that the goods were received by the shipping lines in November 1988 and that the date of loading was wrongly shown due to a clerical mistake. The court held that the CEGAT was not justified in imposing a redemption fine, even if reduced, as the transaction was genuine and not manipulated. 4. Levy of Interest on Customs Duty: The petitioners challenged the levy of interest on customs duty for goods that remained in the bonded warehouse beyond three months. They argued that the goods remained in the warehouse due to no fault of their own and that the demand for interest was unjustified. The court held that the respondents were not entitled to charge and recover interest, especially when the matter was sub-judice, and directed the refund of the interest amount paid by the petitioners. Conclusion: The court set aside the impugned order dated 9th November, 1989, passed by the CEGAT, and allowed the writ petition. The court directed the respondents to refund the amount of Rs. 2.25 lakhs and return the bank guarantee to the petitioners. The court also quashed the imposition of redemption fine and directed the refund of the interest amount of Rs. 75,056/- paid by the petitioners. The second writ petition challenging the levy of interest was also allowed.
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