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2021 (2) TMI 524 - HC - CustomsSeeking to demand duty on the lost quantity of the mixed scraps - loss of seized goods kept in warehouse of the petitiooner - re-export of goods in violation of Letter of Permission and In Bond Manufacturing License - benefit of Customs N/N. 53/97-Cus dated 3.6.1997 denied - HELD THAT - The petitioner, a 100% Export Oriented Unit had imported 1914.256 metric tons of scrap under 77 Bills of Entry and had allegedly cleared the same in violation of Letter of Permission and In Bond Manufacturing License and that the imported goods did confirm to the description of the items allowed to be imported by the petitioner as per the aforesaid Letter of Permission/In Bond Manufacturing License issued to the petitioner. Therefore, benefit of Customs Notification No.53/97-Cus dated 3.6.1997 extended at the time of import of 1609.326 metric ton of scrap cleared under various bills of entry were sought to be denied to the petitioner. The petitioner was therefore called upon to pay an amount of ₹ 1,64,80,526/-of 1156.326 Metric ton of scrap cleared under various Bills of Entry by the petitioner. It was incumbent on the part of the petitioner to have brought to the Notice of the CESTAT that apart from 53 metric tons of imported scrap which missing, 297.06 metric ton out of 453 metric tons of the seized and confiscated had gone missing during the pendency of the appeal before the Tribunal. Instead, the petitioner suppressed these facts and has later filed an application for compensation before the respondent - It must be also recalled that, on the date of the Mahazer (24.1.2003), the Managing Partner of the petitioner was informed to not to deal with the seized goods except with the prior written permission of the Special Investigation and Intelligence Branch of the Customs Department. The market value of the seized goods was estimated to be approximately 3 crores on the date of the seizure. The seized quantity of the scrap was allegedly in the custody of the petitioner at the petitioner s premises between 3.12.2002 and 28.12.2002 when the petitioner s premises was inspected on a suspicion that about 59 metric tons of bonded goods had been allegedly diverted into the local market without payment of Customs duty by the petitioner and therefore a seizure was effected on 24.1.2003. It is not clear when the seized goods went missing - the finding arrived the CESTAT as far as the quantity are concerned are not conclusive especially when a party who seeks compensation on the ground that out of the seized quantity of 453 metric tons of imported scrap, 297.06 metric ton of scrap was missing before the said order was passed. The petitioner has not made out of the case for interference with the impugned Order in Original No.12417 of 2010 dated 15.7.2010 passed by the respondent. The control over the warehouse was with the petitioner. It should be also recalled that earlier, the bonded warehouses of 100% Export Oriented Units were a physical control of the Department. However, after 1998 the physical control was removed and therefore the responsibility of safe keeping of imported goods was with the petitioner - As the respondent had not taken physical control of the seized quantity and that seized quantity which was ordered to be confiscated continued to be in possession of the petitioner, petitioner was responsible for the loss of such seized/confiscated goods. In any event, as mentioned above the jurisdiction of this court under Article 226 of the Constitution of India cannot be abused by converting it into a Civil Court to order compensation for the alleged loss with recording of evidence. A Writ Court cannot be converted into a Civil Court to determine disputed question of facts and the extent of compensation to be paid to the petitioner. To claim compensation for the alleged loss suffered by the petitioner, a proper trial and recording of evidence is a sine-qua non and it is only thereafter a Court can order compensation to the plaintiff. A writ Court under article 226 of the Constitution of India is not competent to decide such disputed questions of facts. The petitioner should have therefore filed a civil suit in the first instance instead of inviting an order from the respondent in the impugned Order - Even otherwise, seized/confiscated goods were allegedly lost during 2005. Therefore, it was incumbent on the part of the petitioner to have filed a suit within the period of limitation prescribed in the Limitation Act. Instead, the petitioner merely proceeded to lodge a private complaint which culminated in an FIR No.732 of 2005 dated 11.7.2005 of the Judicial Magistrate Court No.1 which was eventually closed by the Judicial Magistrate based on the report of the police on 24.11.2006. Petition dismissed.
Issues Involved:
1. Legality of the Order-in-Original No.12417/2010. 2. Entitlement of the petitioner to compensation for the loss of imported scrap. 3. Responsibility for the loss of seized goods. 4. Jurisdiction of the writ court under Article 226 of the Constitution of India. Detailed Analysis: 1. Legality of the Order-in-Original No.12417/2010: The petitioner challenged the Order-in-Original No.12417/2010 dated 15.07.2010, which was passed following directions from the High Court in W.P.No.26948 of 2008. The petitioner had previously appealed against the confiscation order (Order-in-Original No.2119/2004) before the CESTAT, which set aside the order. However, the petitioner later discovered that the confiscated goods were missing and sought compensation. 2. Entitlement of the Petitioner to Compensation for the Loss of Imported Scrap: The petitioner claimed compensation for the loss of 297.06 metric tonnes of scrap, arguing that as per Section 126 of the Customs Act, 1962, the seized goods vested with the Central Government upon confiscation, and thus, the petitioner should not be liable for the theft. The petitioner cited the Bombay High Court decision in Giridharlal Kalyandas Advani Vs. Union of India, which held that the government must compensate for lost seized goods if they are not returned post-adjudication. 3. Responsibility for the Loss of Seized Goods: The respondent argued that the petitioner was the custodian of the seized goods, and the loss could not have occurred on a single date. The petitioner was responsible for the safe keeping of the goods, which were under their control. The court noted that the petitioner had suppressed facts about the missing goods during the appeal before the CESTAT and had not informed the tribunal about the loss of 297.06 metric tonnes out of the 453 metric tonnes of seized scrap. 4. Jurisdiction of the Writ Court under Article 226 of the Constitution of India: The court emphasized that a writ court under Article 226 cannot be converted into a civil court to determine disputed facts and award compensation. The petitioner should have filed a civil suit to claim compensation, which requires a proper trial and recording of evidence. The court also noted that the claim was time-barred, as the alleged loss occurred in 2005, and the petitioner failed to file a suit within the limitation period prescribed by the Limitation Act. Conclusion: The court found no merit in the writ petition, holding that the petitioner was responsible for the loss of the seized goods, which were under their control. The court dismissed the writ petition, emphasizing that the petitioner should have pursued a civil suit for compensation rather than seeking relief through a writ petition. The court also highlighted the importance of timely action and proper legal procedures in such cases.
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