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TMI Blog2010 (6) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... of their interest liability. In the aforesaid manner, the respondent No. 3 shall distribute that sale proceeds held by it within four weeks from the date of the judgment, failing which octroi liability shall carry interest @ 18% p.a. from the date of failure till payment in full and final which the respondent No. 3 shall have to discharge. Thus The respondent Nos. 2 and 3 shall pay the amount of cost to the petitioner quantified in the sum of Rs. 20,000/- to be shared by them in the ratio of 50 : 50. - Writ Petition No. 6739 of 2002, - - - Dated:- 18-6-2010 - V.C. Daga and K.K. Tated, JJ. S/Shri V.A. Sonpal with Sanjay Udeshi, Advocates, for the Petitioner. S/Shri D.R. More, S.I. Shah and P.S. Jetly, Advocates, for the Respondent. [Judgment per : V.C. Daga, J.]. This petition is filed by the auction purchaser under Article 226 of the Constitution of India raising a question as to who should bear the liability of the payment of octroi payable to the Pimpri Chinchwad Municipal Corporation (the Corporation) on the goods auctioned by the Commissioner of Customs, which were stored with the Central Warehouse Corporation (Warehousing Corporation), Mumbai for a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the auction was conducted through one M/s. Shankar Ramchandra Auctioneer Pvt. Ltd., Pune on behalf of the Customs Department. That the Catalogue along with terms and conditions giving details of the goods to be auctioned on 27th October, 2002 were circulated to all the prospective buyers/bidders which specifically contained a clause reading as Octroi as applicable to be paid by the tenderer for all Lots. Bids will be exclusive of all the tax structure , the copy of which was placed on record along with affidavit of one Shri S.L. Ghule, dated 17th March, 2004. 6. One more affidavit duly affirmed by one Shri S.K. Patil on behalf of the Customs was filed reiterating the same contentions and once again reliance was placed on the catalogue containing the terms and conditions of the auction sale said to be conducted on 23rd July, 2003 carrying identical clause reading as the octroi as applicable to be paid by the tenderer for all Lots. Bids will be exclusive of all the tax structure . 7. One more affidavit duly affirmed by Mr. B.D. Chikhale on 17th March, 2004 was filed on behalf of the Customs again reiterating the aforesaid identical terms and conditions meant for auction said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng therein that there was no announcement or oral or otherwise made by anyone muchless by the auctioneer informing the parties that they would be required to pay the octroi duty. 12. At this juncture, it is also relevant to note that the respondent No. 1 Corporation also filed their affidavit in reply to the petition reiterating the liability of the petitioner to pay octroi with further contention that the liability to pay octroi was also that of the Warehousing Corporation considering one of the conditions of the license under which they were permitted to operate Warehouse within the limits of Municipal Corporation. 13. With the aforesaid rival pleadings on record, when the petition was heard, this Court vide order dated 12th April, 2010 was required to direct the respondent No. 3-the Commissioner of Customs to indicate on oath, the amount realized, expense incurred and the disbursements made from and out of the sale proceeds realized by them, together with the exact liability of the customs duty on the goods sold through public auction. At the same time, the Warehousing Corporation was also directed to state on oath as to whether or not their warehousing charges were received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers in support of his submission. 17. Per contra, Mr. Jetly, the learned Counsel appearing for the Customs Department mainly sought to place reliance on the terms and conditions circulated for the auction sales which were to be conducted on 23rd and 27th July, 2003 and placed reliance on one of the terms mentioned therein reading as under :- Octroi as applicable will have to be paid by tenderer, he has to make sure to himself from concerned octroi authorities before tender/auction as to what amount of octroi is applicable on goods under tender sale. 18. Mr. Jetly, further urged that the Customs Commissioner is entitled to recover customs duty on the value of the goods as reflected in the chart filed by Mr. Jetly, without putting his signature or that of any responsible officers representing Customs Department. The customs duty worked out therein gives two calculations, one in the sum of Rs. 44,19,940/- with interest liability calculated thereon in the sum of Rs. 59,86,561/- in the first chart, whereas for the same bills of entry the Customs liability has been worked out to Rs. 61,53,887/- with interest liability thereon is worked out in the sum of Rs. 83,34,209/- in the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edure prescribed under the provision of Section 128. The relevant provision of the said Section 128 of the Act reads as under :- 128. Manner of recovering the Municipal Tax The Municipal Tax may be recovered by the following processes in the manner prescribed by Rules. (1) (2) (3) (4) (5) In case of octroi and toll, by seizure and sale on goods and vehicles. The aforesaid provisions enable the Corporation to levy tax and also provide the manner in which taxes are to be recovered. The Corporation under the provisions of the Act is entitled to frame its rules as specifically provided and contemplated under Chapter 29 of the said Act. Under Section 453 of the Act, it has been provided that Rules in Schedule of the Bombay Provincial Municipal Corporation Act to be part of the said Act. The said Section reads as under :- 453. Rules in Schedule to be part of the Act The Rules (Schedule D ) as amended from time to time shall be part of this Act. Under Section 454 of the Act, the Corporation is empowered to add to the (Schedule D ) rules not inconsistent with the provisions of the Act to provide for any matter dealt with or for any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the various aspects including the matter pertaining to octroi. As provided in octroi rules of the Corporation Definition No. 2(m) specifies as to who can be termed as an Importer and Rule 6 thereof provides for maintenance of the warehouse. The relevant part of the Rules is reproduced hereinbelow for immediate reference. 2(m) Importer means a person who imports any goods and includes a person who owes goods at the time of import. 2(g) of the Rule(s) means the rule or rules made by Corporation for levy and recovery of octroi under Section 454 and Section 456 of the Bombay Provincial Municipal Corporation Act, 1949, and sub-sections (7) and (17) of Section 457 of Bombay Provincial Municipal Corporation Act, 1949, and sub-section (1) of Section 49. 2(h) Standing Order means standing orders made by Municipal Commissioner under Clause (A)(1) of Section 466 of the Act. As per the Rules which are so framed in force, the Rule 6 of the said Rules provides the manner of maintenance of bonded warehouse. Rule 6. Maintenance of Bonded Warehouse. (1) The Commissioner may maintain the bonded warehouse for detaining dutiable goods for which octroi is not paid or keeping th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver that the original time limit for such imported goods shall be the same as 30 days and for every 30 days thereafter it may be extended by the written permission of the Commissioner or the Officer deputed by him in this behalf, on payment of prescribed fees therefor. For such extension of time limit the prescribed fees may be paid either in stages of 30 days each independently or for the full one year. Full octroi shall be charged on the goods remaining in he godown after the period of one year. (c) .. (13) Thus the above standing order makes it amply clear that in the event goods are detained in a bonded warehouse beyond a prescribed period of one year as provided and contemplated by the aforesaid provisions, the Corporation is entitled to recover the amount of octroi on such goods which are detained in bonded warehouse presumed to have been brought within the limits of the Corporation for the purpose of sale, use or consumption. 31. It is, thus, clear that under Standing Order 22(10)(a), if goods are to be kept in Warehouse beyond a period of 30 days, then permission of the Municipal Commissioner is necessary which cannot be granted for a period more than 90 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere sold in public auction held on 24th October, 2002 by the Customs Department through its authorised auctioneer and that Rs. 1,01,07,795/- were realised as sale proceeds. 34. It is also not in dispute that the catalogue containing terms and conditions of the public auction, which was scheduled on 24th October, 2002 was published and relevant term relating to the tax liability was as under :- Note : 1. 2. Sale Tax, Turnover tax @ 1.5% Surcharge 10% will have to be born by the successful bidder. (Emphasis supplied) No other condition relevant to the issue is to be found in the catalogue placed on record. No stipulation regarding octroi liability is to be found in the above term. 35. At this juncture, it is relevant to mention that the respondent No. 3-Customs Commissioner, Mumbai filed five affidavits on record and went to the extent of placing misleading documents on record annexing terms and conditions relating to some other auction sales held on 23rd July, 2003 and 17th March, 2004 projecting it as part of the catalogue containing terms and conditions meant for the auction sale held on 24th October, 2002 and placed heavy reliance the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng this Court have very often relied on the statements made by the high ranking government officers. Reliance of the Courts on their statements is based on confidence that the Courts have reposed on them and the instances like one with which we are confronted with, are likely to shake our confidence on them. Therefore, we feel it is high time that this department, one of the wings of the government puts its house in order before it is too late. In order to send proper message to the other officers, we expect the Commissioner of Customs, Pune, without making any attempt to shield his officers, to initiate disciplinary action following principles of natural justice against them for making false and misleading statement and producing documents not relevant to the facts of the case in hand. 37. One more submission made by Mr. Jetly needs reference merely to reject that orally it was informed by the authorized auctioneer to all the participants that octroi liability shall be on account of the tenderers. Needless to mention that neither any record confirming this fact is produced on record nor any affidavit of the auctioneer or the person making such statement is filed on record. No ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roi. If this be so, it was the liability of the respondent No. 2 to pay octroi to the Municipal Corporation. 41. The goods were allowed to be retained in the Warehouse for a period more than one year as such deeming provision under sub-clause (c) of sub-clause (10) of Clause 22 of the Standing Order operated and the Municipal Corporation became entitled to recover octroi duty from the respondent No. 2, the Warehousing Corporation as such we have no hesitation to hold that liability to pay octroi was the liability of the Warehousing Corporation, which they could recover from the person claiming custody of the goods by giving notice in this behalf. But no such attempt in the case in hand was made by the respondent No. 2. The petitioner was never informed of this liability as such it cannot be made liable to pay octroi duty. Had it been a term of auction sale, then the things would have been quite different. 42. Needless to mention, it was also obligatory on the part of the respondent No. 1 Municipal Corporation to take action against the respondent No. 2 for permitting the imported goods to remain in the Warehouse beyond a period of thirty days without obtaining prior written per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record by the Customs Department determining assessable value in the sum of Rs. 89,18,677/- and determining customs duty liability thereon in the sum of Rs. 61,53,887/-. No order assessing duty liability under Section 17 of the Customs Act is to be found on record. It was expected on the part of the Customs Department to pass a specific order under Section 17 assessing duty liability if it wanted to reject the value declared by the Importer in the bills of entry. No such order is on record. As such in our considered view the Customs Department cannot rely on their own valuation and recover duty liability in the sum of Rs. 61,53,887/- in absence of any order of assessment under Section 17 of the Customs Act. The valuation of the bills of entry and the determination of the customs duty thereon as per Bills of entry filed by the Importer works out to Rs. 44,19,940/- to which the Customs Department would be entitled. As per Section 2(15) of the Customs Act, 1962 duty means a duty leviable under this Act. It does not include interest liability. 46. Having said so, one has to turn to Section 150 of the Customs Act for the application of the sale proceeds realised through public aucti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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