2005 (3) TMI 145 - HC - Customs

Valuation - Confiscation of goods - Precedent - Strictures - Whether the injured party is entitled to payment of the market value of the goods prevalent at the time of the seizure valued at by the revenue in lieu of the goods having already been sold during the pendency of the appeal - HELD THAT - The sale of the goods might cause immense loss to the petitioner, but when the petitioner himself valued the goods at Rs. 2,40,000/- all by himself in a statement u/s 108 which has an evidentiary value, he is estopped from claiming anything more than that as market value unless otherwise established. But at the same time, we cannot but observe that the Department had committed an error in selling the goods during the pendency of the appeal for which the Department ought to have fixed liability and taken appropriate steps for the purpose of keeping its house in order by awarding exemplary punishment and recovering the loss fixing the liability against the persons responsible after holding proper enquiry, if necessary, even after lapse of such a long time. From the record, it is clear that the respondent is entitled to the market value of the goods as declared by him u/s 108 viz at Rs. 2,40,000/-, in the absence of any authenticity of the seizure value given in the seizure document by the Department having been established and in the absence of any adjudication with regard to the market value. Having regard to the loss suffered by the dealer having been successful in the proceeding ultimately, the dealer cannot be made to suffer without the interest. As such, he would be entitled to interest on the market value given by him @ 9% per annum simple on the principle enunciated in the case of Kailash Ribbon Factory Ltd. 2002 (3) TMI 57 - HIGH COURT OF DELHI and the decision by a learned Single Judge of this Court in the case of Bhogilal Mehta v. Union of India, 2003 (11) TMI 95 - HIGH COURT AT CALCUTTA in which the principle of grant of interest was upheld. Such interest should be payable from the date of the judgment by the learned Tribunal, namely, 25th March, 2000. Thus, the appeal is allowed. The order of the learned Tribunal is hereby set aside. The Department shall refund/pay to the dealer/respondent the sum of Rs. 2,40,000/- as principal together with interest calculated thereon @ 9% per annum payable from 25th March, 2000 till the date of payment within a period of 3 (three) months from date. The reference is answered in the affirmative in favour of the Department.

Summary

Issues:
1. Confiscation of goods and subsequent sale without following legal formalities.
2. Determination of the price to be paid to the dealer by the Customs Authority for the seized goods.
3. Interpretation of Section 130 of the Customs Act, 1962 regarding payment of market value for goods already sold during appeal.
4. Binding nature of decisions by jurisdictional High Court and Supreme Court on valuation of goods.
5. Effect of Section 108 declaration on valuation of goods and estoppel.

Issue 1:
The case involved the confiscation of goods by the Customs Authority, which were later successfully challenged by the dealer. The goods were sold by the department during the appeal without following legal formalities, leading to a dispute over the return of goods or payment of their value.

Issue 2:
The main question was the determination of the price to be paid to the dealer by the Customs Authority for the seized goods, considering the discrepancy between the dealer's declared value of Rs. 2,40,000 and the seizure value of Rs. 9,09,200.

Issue 3:
The reference under Section 130 of the Customs Act, 1962 was admitted to decide whether the dealer is entitled to the market value of the goods at the time of seizure, even though the goods had already been sold during the appeal process.

Issue 4:
The High Court emphasized the binding nature of decisions by the jurisdictional High Court and Supreme Court on the valuation of goods, stating that the market value, not the seizure value, should be returned to the owner.

Issue 5:
The Court discussed the effect of Section 108 declarations on the valuation of goods, highlighting that the dealer's own valuation of Rs. 2,40,000 under Section 108 binds him unless overruled in a proper adjudication proceeding. The Court concluded that the dealer is entitled to the market value declared by him, along with interest, due to the department's error in selling the goods during the appeal.

In conclusion, the High Court allowed the appeal, set aside the Tribunal's order, and directed the Customs Department to refund/pay the dealer Rs. 2,40,000 as principal, along with 9% interest per annum from the date of the Tribunal's judgment. The Court emphasized the importance of following legal procedures and ensuring fair compensation for parties involved in such cases.