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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 ..... s will sell by public auction various items listed in the Catalogue published. The petitioner accordingly participated in the public auction held on 24th October, 2002 and adjudged highest bidder for the goods known as "Die Blocks pertaining to Quality Din 1.274" (Assorted Sizes and Weights) weighing 179.838 M.T. at the rate of Rs. 56,205/- per M.T. and paid sum of Rs. 25,27,000/- as earnest money and thereafter paid balance amount of Rs. 75,80,795/-. Thus, the petitioner paid total sum of Rs. 1,01,07,795/- towards the value of the goods purchased in the public auction held on 24th October, 2002. 3. The petitioner vide its letter dated 25th October, 2002 approached the Municipal Corporation for moving and shifting the goods bought in public auction. In reply, the Corporation vide its letter dated 27th October, 2002 refused to issue escort pass asked for by the petitioner for want of payment of octroi payable on the goods since goods were not cleared within a period of one year from the date the goods lodged in the warehouse. The petitioner in reply did not accept its liability to pay the octroi duty contending that it was the liability of the Customs Department and/or that of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Customs Pune stated on oath that the total amounts realized from the auction of the goods were Rs. 1,01,07,795/-. The Auctioneer was paid a sum of Rs. 2,70,905/- towards commission charges, whereas the demand of the Central Warehousing Corporation on account of warehousing charges payable was in the sum of Rs. 14,05,750/- and that the customs duty on the subject imports worked out to Rs. 61,53,887/-. It was further mentioned that under Section 61 of the Customs Act, interest on delayed payment of duty was required to be calculated and recovered at the rate applicable from time to time for the period 1996 to 2003, however, in absence of the importer, this amount could not be finally worked out. It is further stated that large amount of customs duty is due and recoverable from M/s. Patheja Forging & Auto Parts Manufacturers Ltd. (the Importer), as such it was sought to be stated that the balance amount after adjusting all the liabilities shall be either paid or adjusted against their liability. In short, the Customs Department denied its liability to pay octroi and tried to fasten the liability on the auction purchaser/the petitioner. 9. The respondent No. 2 Warehousing Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Counsel appearing for the petitioner urged that the respondent No. 2 was granted permission to warehouse goods without payment of octroi subject to the liability to pay octroi on the goods, if goods were not removed within the period of one year. By notice dated 4th June, 2001 the respondent No. 2 was called upon by the Corporation to pay octroi dues on the said goods. The respondent No. 2 did not controvert the said notice dated 4th June, 2001. He, thus, submits that it was the liability of the Warehousing Corporation to pay octroi since goods were allowed to remain in the Warehouse for a period of more than one year. He relied upon Rule 22(10)(b) of the Octroi Rules framed by the Corporation, wherein if the goods are retained in the Boded Warehouse for more than one year, full duty is required to be paid by the Importer and if not paid by the Importer then the same becomes payable by the license holder. According to Mr. Sonpal, in the circumstances and facts of this case the liability to pay octroi duty was that of the respondent No. 2 and not of the petitioner. He further submits that the cause of action or incidence of tax occurred on 4th June, 2001 i.e. on the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be on account of the auction purchaser. He placed reliance on the affidavits filed by Shri S.D. Pradhan, S.L Ghule, S.K. Patil, B.D. Chikhale and S.S. Ahmed in support of this submission 20. Ms. Shah, the learned Counsel appearing for the respondent No. 2, Warehousing Corporation while reiterating the contentions canvassed by Mr. Jetly went on to urge that the Warehousing Corporation is entitled to recover their warehousing charges and that by no means it can be said to be the liability of the Warehousing Corporation to recover octroi charges from the Customs Department and to pay it to the Corporation or that Warehousing Corporation was in no way liable to the octroi duty. The Warehousing Corporation thus refused to accept any liability to pay octroi to the Municipal Corporation. 21. In nutshell, Mr. Jetly and Ms. Shah appearing for contesting respondents jointly and severally disowned their liability to pay octroi and tried to thrust said liability on the petitioner. 22. In order to deal with the rival submissions, it is necessary to turn to the relevant statutory provisions impeaching upon the issue involved in the petition with regard to the determination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 455 of the Act provides that the Corporation can frame its own Rules and after framing such Rules, it is the duty cast upon the Corporation to seek sanction from the State Government to such Rules before its implementation. 26. Section 457 of the Act deals with the matters in respect of which rules may be made and as per the provisions of Section 457(7) of the Act, the Corporation is specifically empowered to make rules with regard to the Municipal Taxes. The relevant provisions under Section 457 is reproduced below : "457. Matter in respect of which Rules may be made. In particular and without prejudice to generality of the powers conferred under Section 454 of the Bonnbay Provincial Municipal Corporation Act, 1949, & Rules made hereunder may provide for or regulate all or any of the following purposes and matters viz. (7) Municipal Taxes (a) Assessment and recovery of Municipal Taxes. (b) The conditions on which representatives of Municipal Taxes shall be allowed. (c) In respect of tax leviable under sub-section (2) of Section 127, the matters referred to in sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intended for temporary detention in an eventual export thereof from the octroi limits. (2) The Commissioner may subject to standing orders made in this behalf under Section 466 of the Bombay Provincial Municipal Corporation Act, 1949, permit any importer to maintain and provide bonded warehouse for keeping the goods which are imported by such importer for temporary detention & eventual export and grant license to such importer for that purpose subject to conditions and restrictions laid down in such licence, fee shall be charged for such licence at the rate fixed by the Commissioner from time to time." Reading of the above rules also make it clear that it provides for maintaining licensed bonded warehouse, meant for temporary detention of goods which are brought within the limits of the Corporation which are meant for eventual export. 29. The rules also provides for applicability of standing order framed under Section 466 of the Act. As per the definition incorporated in the standing order, the definition No. 2(6) the 'Transporter' shall mean any person or establishment or agency dealing in goods transport business and who has obtained bonded warehou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich cannot be granted for a period more than 90 days. If the goods are not exported within the said specified period then the transporter is liable to pay octroi at the prevailing rate on such goods. As per Clause 22(13) of the Standing Order, the license of the transporter is liable to be suspended in the event of breach of any of the rules or standing orders and if so required, amount of deposit kept for in on license is liable to be forfeited. It is, thus, clear that the liability to pay octroi is a responsibility of the Transporter i.e. Warehousing Corporation as per the license condition. Section 150 of the Customs Act, 1962 provides for procedure for sale of goods and application of sale proceeds thereof. The said Section thus reads :- "(1) Where any goods not being confiscated goods are to be sold under any provisions of this Act, they shall, after notice to the owner thereof, be sold by public auction or by tender or with the consent of the owner in any other manner. (2) The proceeds of any such sale shall be applied - (a) firstly to the payment of the expenses of the sale, (b) next to the payment of the freig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 thereon. All the three officers of the Customs department tried to mislead this Court pressing into service terms of auction sales which were not applicable to the auction in question, needs to be considered for prosecution under Section 340 read with Section 195 of the Code of Criminal Procedure, 1973. We strongly deprecate such misleading or false affidavits on the part of the Customs Department. The details of the such falls statements are as under :- (i) Mr. Shantaram Laxman Ghule, Deputy Commissioner of Customs container Freight Station, CWC, MIDC, Pimpri, Pune filed affidavit dt. 17-3-2004 and annexed misleading document referred to therein marked as Exhibit A and Exhibit 1 respectively. (ii) Mr. B.D. Chikhale, Inspector, Customs, Pune filed an affidavit dt. 17-3-2004 annexing the very same misleading document to his affidavit referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etly 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 material is on record to indicate that any such instructions were given to the auctioneer by the Customs department and that in turn auctioneer had made any such announcement in the matter of payment of octroi by the auction purchasers. It also does not stand to logic that only one condition relating to the octroi liability would be orally made known to the participants, when all other terms relating to the other taxes were in black and white. Submission made in this behalf by Mr. Jetly holds no water. 38. Having said so, let us turn to the submissions advanced by Ms. Shah, learned Counsel for the respondent No. 2, the Warehouse Corporation, who urged that it was a liability of the petitioner to discharge liability of octroi payable to the Municipal Corporation and went on to submit that, as per the terms and conditions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 permission of the Commissioner as contemplated under the Standing Order 22(12) of 2001 framed by the Corporation. It was also expected on the part of the Corporation to enforce the terms and conditions of its Standing Order. It appears that the Corporation was lethargic in implementing sub-clause (10) of Clause 22 of its own Standing Order. As a matter of fact as per Clause 22(13) of its Standing Order, in the event of infringement of any rule of Standing Order by the Transporter/Warehousing Corporation, their license is liable to be suspended. If so required, amount of deposit kept for such license is also liable to be forfeited. Had the Corporation been serious in implementing its Standing Order, the present litigation would not have come before this Court. We expect the Municipal Corporation to take fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 auction held by the Customs Department in the sum of Rs. 1,01,07,795/-. Out of this amount the sale proceeds shall have to be distributed. Firstly as per Section 150(a) an amount of Rs. 2,70,905/- will go to the auctioneer towards its charges treating it as expenses of the sale. Thereafter, the next payment under Section 150(2)(d) shall go to the Warehousing Corporation by way of the warehousing charges amounting to Rs. 10,27,659/- and octroi duty being the liability of the Warehousing Corporation. The octroi duty payment shall have to be treated as liability of the Warehousing Corporation, which shall in turn will go to the Municipal Corporation. According to the Municipal Corporation the said liability is in the sum of Rs. 4,26,454/-. The Customs shall discharge this liability for and on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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