2015 (9) TMI 340 - HC - Customs

Cancellation of LEO grant Furnishing of bank guarantee Second respondent cancelled LEO granted to petitioner, thereby, petitioner was prevented from exporting river sand to Maldives Single Judge passed order of interim direction by which, petitioner was directed to furnish Bank Guarantee for value of entire sand, which has been loaded in vessel and direction was issued to 1st and 2nd respondents to issue necessary sail order to Vessel subject to furnishing Bank Guarantee Held that - Admittedly petitioner complied with order and has furnished Bank Guarantee Export of quantity of 3,750 MT of river sand has already been completed Therefore there is no necessity to pass any orders since export has already been completed subject to certain conditions, which was not questioned by Customs Department No further order is required to be passed Petition closed. Selling of unshipped quantity of goods Petitioner challenges order passed by 2nd respondent to sell unshipped quantity of 250 MT of River sand If second respondent is of opinion that sand, which was sought to be exported and presently lying in Karaikal Port premises has been quarried elsewhere other than Karaikal, that should have been ascertained after proper adjudication into matter for which purpose, petitioner should have been afforded opportunity Since this procedure having not been followed, prima facie conclusion arrived at by 2nd respondent have to be faulted However, in order to safeguard interest of Revenue, Court inclined to issue directions without setting aside impugned proceedings Petition disposed of.

Summary

Issues:
Challenging order of District Collector to sell river sand, Allegations of sand purchase, Export of river sand to Maldives, Compliance with interim direction, Validity of District Collector's conclusion.

Analysis:
In W.P. No. 2987 of 2010, the petitioner contested the order issued by the District Collector to sell 250 MT of river sand lying in Karaikal Port area. The petitioner argued that they had legally purchased sand from traders in Karaikal, questioning the authority of the District Collector to issue such a directive. The District Collector's conclusion that the sand was not quarried in Karaikal without proper adjudication was criticized for not affording the petitioner an opportunity to present their case. The court found fault with the District Collector's prima facie conclusion, leading to the impugned orders of 9-9-2009 and subsequent dates. Despite this, the court aimed to protect revenue interests and issued specific directions without annulling the impugned proceedings.

Regarding the export of river sand to Maldives, a previous case, W.P. No. 12301 of 2009, involved challenges against the Deputy Commissioner of Customs' order canceling the LEO granted to the petitioner. An interim direction was issued for the petitioner to furnish a Bank Guarantee, allowing the export to proceed subject to certain conditions. The District Collector filed an appeal against this interim direction, resulting in a modification specifying the Bank Guarantee amount. The petitioner complied with this order, completed the export, and challenged the subsequent order to sell the remaining sand.

The court closed W.P. No. 12301 of 2009 due to the completed export, rendering the challenge to the Deputy Commissioner's proceedings academic. However, in W.P. No. 2987 of 2010, the court directed the Executive Engineer to sell the sand through public auction within Tamil Nadu, allowing the petitioner to participate. The court also instructed the District Collector to issue a show cause notice to the petitioner, seek a reply, hold a hearing, and pass orders based on merits and law. The petitioner was required to maintain the Bank Guarantee, and the sale proceeds were to be retained until the District Collector's decision, emphasizing that the Collector should decide independently.

In conclusion, the court closed W.P. No. 12301 of 2009 and disposed of W.P. No. 2987 of 2010 with detailed directions to safeguard interests and ensure a fair adjudication process, emphasizing the independence of the District Collector's decision-making.