2010 (3) TMI 488 - HC - Customs

Canceling the sale of goods - This writ application challenges the action of the customs authorities in cancelling the sale of goods, sold to the writ petitioner in an auction. The delivery order was issued on 23rd March 2007 but the delivery was not allowed by them. The ground taken by the customs authorities is that the respondent No.3, Central Warehousing Corporation, who conducted the sale had no authority to do so. Held that - this is the loss to be suffered by the writ petitioner which is to be compensated by the government of India, if the respondents are unable to deliver the goods. Therefore, the Government of India through the Commissioner of Customs Calcutta is directed to pay a sum of Rs. 7,20,000/- to the writ petitioner within a period of three months from the date of communication of this order, in the event they are unable to deliver the goods to him. The writ is allowed to that extent.

Summary

Issues:
Challenge to customs authorities canceling sale of goods in an auction; Authority of Central Warehousing Corporation to conduct the sale; Confiscation of goods by customs authorities; Failure to deliver goods to writ petitioner; Compensation for losses suffered by writ petitioner.

Analysis:
The writ application challenged the customs authorities' action in canceling the sale of goods in an auction, specifically lot No. 28/06, purchased by the petitioner. The customs authorities claimed that the Central Warehousing Corporation, who conducted the sale, lacked the authority to do so. The goods in question, fabrics, were confiscated by the customs authorities on 19th December 2005, leading to the property being vested in the Central Government. The sale was conducted under Section 48 of the Customs Act, with the goods stored in a warehouse owned by the Central Warehousing Corporation. Despite the petitioner paying Rs. 48,10,000 for the goods, delivery was not allowed, prompting the writ application for delivery.

The customs authorities and the Central Warehousing Corporation were involved in a dispute regarding the authority to sell the confiscated goods. The customs had knowledge about the sale as evidenced by failed auctions and correspondence between the parties. The Central Warehousing Corporation, acting as an agent of the customs, conducted the sale with the customs' approval. Despite the internal dispute, the rights of the innocent buyer, the writ petitioner, should not be affected. The court noted that the customs authorities could not confirm the availability of the goods for delivery to the petitioner, raising doubts about the possibility of delivery.

The court held that the respondents were obligated to deliver the goods to the petitioner upon repayment of the original price and duties paid. If delivery was not possible, the respondents were directed to compensate the petitioner for the losses suffered. Relying on Supreme Court decisions, the court estimated the petitioner's potential profit from reselling the goods and directed the Government of India to pay Rs. 7,20,000 to the petitioner within three months if the goods could not be delivered. The writ was allowed to that extent, ensuring compensation for the petitioner's losses.

In conclusion, the judgment addressed the dispute over the sale of confiscated goods, the authority of the Central Warehousing Corporation, and the rights of the writ petitioner to receive the purchased goods or compensation for the losses incurred. The court's decision provided a remedy for the petitioner in case of non-delivery of the goods, emphasizing the importance of protecting the rights of innocent parties involved in such disputes.