9911796707
TMI Blog1989 (8) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... s the authority acting under the Customs Act. Respondent No. 3 is the Union of India. The petitioners through their indenting agents viz., M/s. Priya Chemicals, Bombay, placed a particular indent in December 1977 on the foreign suppliers viz., Messrs Phillip Overseas Incorporated, U.S.A. for about 40 M.Ts. of defective stainless steel sheets having 22 and 23 gauges. In pursuance thereof they opened the letter of credit on the foreign suppliers through the State Bank of Patiala for a particular amount of U.S. Dollars. That letter of credit was amended. The suppliers under the bills of lading which are four in number all dated 31st January, 1978 and corresponding invoices dated 21st February 1978 supplied approximately each of the aforesaid documents. This was confirmed by the office of the Regional Iron and Steel Controller, Bombay, by letter dated 7th February, 1978 that the item of stainless steel sheets defective would fall in the category of non-canalised items with the stipulation that the petitioners would be entitled to import as actual users in terms of the policy in question. All the said letters of credit, invoices and bills of lading etc., are placed on record. After obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cleared within the stipulated time. The petitioners claim that this was in spite of their protest not to sell the goods until the dispute was resolved by the Customs Department becuase it was on account of that dispute that they could not clear the goods. That a notice was received by the petitioners before such an auction sale effected by the Bombay Port Trust is controverted on behalf of the petitioners. 5. Ultimately, the goods were actually sold by the Bombay Port Trust under Sections 61 and 62 of the said Act on 6th July, 1980. The total amount under different heads was claimed to be Rs. 18,96,226.56, out of which expenses of sale amounted to Rs. 1,00,515.48 while the other two items related to Customs duty and I.T.C. fine and the 4th item of Rs. 1,23,024.99 related to BPT charges. The gross proceeds collected were to the tune of Rs. 12,36,065.00 and that is how a balance of Rs. 6,60,161.56 was held to be outstanding and recoverable from the petitioners under Section 131 of the Major Port Trusts Act. 6. After this order was passed it was the turn of the Customs Department to have a follow up action and that is how the impugned order was recorded on 1st September, 1979 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Port Trust to resort to Sections 61 and 62 of the Major Port Trusts Act. Thus, it would be clear that under Section 48 of the Customs Act, the Customs Officer concerned has to satisfy himself that it is necessary to sell the goods; the ground for such satisfaction is reflected in that provision itself such as the goods are not cleared for home consumption or warehoused or have been relinquished etc. Then comes the third clause under which he has to take the permission of the concerned authority of the Customs Department and under the last clause the goods are to be sold. It is actually the mode of sale that is prescribed under the last clause that the goods are to be sold by the person having the custody thereof. 9. Shri Deshpande, learned Counsel for the petitioners, sought to argue that by reading all these clauses together and especially clause 4 it would mean that the goods are to be sold by the Port Trust authority only under the permission of the Customs Officer. Obviously that is an incorrect reading of this provision because the Customs Department has an independent discretion to direct the sale of the goods; the only requirement is that the goods are to be sold in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with that aspect including the imposition of fine. It is worth noting that even in the order recording the auction and the sale proceeds the BPT has referred to an item of Customs duty which could be recovered by the Customs Department. Both these documents when read together make it clear that this order of 1st September, 1979 has nothing to do with the actual auction sale which was effected expressly by the B.P.T. authorities but the Customs Department addressed themselves more to the resultant consequence vis-a-vis the sale proceeds for the purpose of recovery of Customs duty and that is made very clear in the order. Further, the substantive part of the order unmistakably shows that it was out and out an order of confiscation under Section 111 of the Customs Act which was according to them was post sale because the sale was to be held on 28th and 3lst August, 1979. Clearly, therefore, this plank of the argument advanced by Shri Desphande has also no substance. 11. Then, however, comes the main question and it is more germane to the question in this proceeding about the validity of the impugned order dated 1st September, 1979 issued by the Collector of Customs, Bombay. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use it is well settled apart from observance of principles of natural justice. In this case it was equally necessary because under this notice the petitioners would have been given an opportunity to explain that these goods are not liable for confiscation because they do not fall under the label of prime stainless steel sheets and those do not fall under the description of Section 111(d). The petitioners were also not heard and obviously the ultimate order was passed outright behind their back. This assumes importance in view of the petitioners' contention right from the beginning that these are the defective stainless steel sheets in contrast to the department's contention that these are the prime sheets. A valuable forum to agitate that point was thus lost. The impact, therefore, is obvious and the impugned order is, therefore, liable to be set aside on this ground alone. 12. As stated the petitioners are entitled to succeed even on the second point as canvassed by Shri Deshpande. This impugned order was recorded on 1st September, 1979. Learned Counsel, however, submits that this order was never served on the petitioners at any time and in fact the petitioners learnt about it a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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