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TMI Blog2002 (5) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... il 2000 the petitioner received another consignment of 51 containers. These were inspected by the Custom Authorities from April 22, 2000 to April 24, 2000. Initially, these were detained. However, on April 29, 2000 twenty four containers were released. On May 2, 2000 the competent authority passed an order under Section 110 of the Customs Act, 1962. The goods contained in 27 containers were ordered to be seized. The petitioner represented that the pipes were old and used. These were rusted and pitted. These could not be used as pipes. Thus, it prayed that the goods be released. Despite repeated representations, the needful was not done 3.While the matter was pending with the authorities, the Shipping Corporation informed the petitioner that in case the containers were not released, recourse to Section 48 of the Customs Act shall be made and the goods may have to be sold. Despite that, neither the goods nor the containers were released. Ultimately, on July 10, 2000 the petitioner approached this Court with the prayer that the orders regarding levy of duty and payment of demurrage etc. passed by the respondents on June 1, 2000, June 6, 2000 and June 27, 2000, copies of which have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spection by the counsel for the parties. A specific order was passed by the Bench (G.S. Singhvi and Nirmal Singh, JJ.) on September 18, 2000. Thereafter, the goods were released after a few days. 8.The main controversy in the case relates to the nature of the goods. Mr. H.L. Sibal, learned counsel for the petitioner, contends that the goods were old and used pipes. These were imported as scrap for the purpose of being melted and made into mild steel ingots. The respondents had illegally detained the goods and demanded duty on the basis that these could be used as pipes. On the other hand, Mr. Rajesh Gumber, learned counsel for respondent Nos.1, 5 and 6 has contended that the goods did not fall within the definition of "Waste and Scrap" as contained in clause 8 of Section XV relating to "Base Metals and Articles of Base Metal" of the Customs Tariff Act, 1975. Thus, the action of the authorities in detaining the goods and ordering the seizure was legal and valid. 9.The short question that arises for consideration is - were the goods scrap or usable pipes? 10.In the normal course of events, the precise nature of goods has to be determined by the authority at the spot. A writ cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to types 'A' 'B'. These are also pitted all around. These constitute the rest 40-50% of the total number of pipes". 13.Even the ends of the pipes were examined. It was reported that these were "either machine cut or flame/weld cut". Some were found to have smooth ends while others were uneven and irregular. It was also reported that the "ends were totally corroded and showed loose scale, debris and peeled surface as seen in photograph nos. 3 4". The Local Commissioner had also noticed certain other features. He pointed out that "approximately 5% of the pipes possessed weld patches indicating repair during use. Some had even two patches on them". About 2 to 3% of the pipes "in some containers were fitted with reducers to lower the cross-section at one of their ends". 5 to 10% of pipes "mostly of type 'C' had one side of these more rusted and pitted in comparison to remaining peripheral surface", 20 to 30% of the total pipes consisted of small pieces mostly varying from 2 feet to 10 feet in length. Some pipes had T-joints with varying cross-sectional area which is invariably provided for change of the direction of fluid flow. The pipes were perforated length-wise. Photographs 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were actually mutilated in the presence of the authorities. The Local Commissioner had found that the goods were not serviceable pipes. Thus, the issue of show cause notice during the pendency of the petition is only a Device to delay the proceedings and to avoid the inevitable. 20.Mr. Gumber submits that even if the goods could not have been used as pipes, these still do not fall within the definition of 'waste and scrap' as given in Clause 8 of Section XV of the Schedule. Thus, the orders for levy of duty were valid, Mr. Sibal controverts this claim. 21.Learned counsel for the petitioner appears to be right. The provision referred by the counsel for the respondents describes 'waste and scrap'. Clause 8 provides as under :- In this Section, the following"8. expressions have the meanings hereby assigned to them : (a) Waste and scrap Metal waste and scrap from the manufacture of mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons." 22.A perusal of the above provision shows that metal goods which cannot be used "as such because of breakage, cutting-up, wear or other reasons" fall within 'waste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le High Court and all of them have collectively rendered themselves liable for punishment for committing contempt of court. In a way, they put all impediments in my duty to carry on the work, which was assigned by Hon'ble Punjab and Haryana High Court and thus, tried to defeat the very purpose, for which I was appointed observer by the Hon'ble Punjab and Haryana High Court". He further observes that he had got the containers opened in his presence. The numbers were got noted by Mr. Chhatwal and Mr. Sanjay Surpal. These officials had remained present at the scene. Therefore, the "intention right from the beginning was to delay the process." It has been observed that "the officials should be hauled up for interfering with the process of the Court." 24.On a perusal of the report, we find that departmental officials had failed to render assistance to an officer of this Court. Their effort was only to delay the proceedings and the harass the persons. Why this reluctance? The sequence of events speaks. 25.On an examination of the material as placed before us, it is clear that the petitioner had not imported usable pipes for melting and making mild steel ingots. The action of the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue of clearance of Steel scrap which also contained serviceable material and issued instructions that if serviceable goods are noticed, they should be mutilated to such an extent to become steel scrap for availing the benefit of end use notification and the consignments are assessed as steel scrap as held in the (case) of Sujana Steels Limited v. Commissioner." 27.A perusal of the above would show that the authority was dealing with the case of the petitioner and M/s. Datt Multi Metals Private Limited. It was clarified that the goods should be mutilated to such an extent that these become steel scrap so as to enable the party to avail the benefit of the "end use notification and the consignments are assessed as steel scrap...." 28.On a consideration of these instructions issued vide letter dated June 16, 1995, it is clear that whenever the authority entertains any doubt regarding the goods, it has the option to get them mutilated so that the importer is not put to any harassment and the Revenue does not suffer any loss. Thus, even if the authority had suspected any irregularity, it could have immediately got the goods mutilated and ordered the release thereof. 29.Why did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been complied with by the Deputy Commissioner of Customs. 31.D.D. Sharma, points out that the Directorate of Revenue Intelligence had issued instructions vide letter dated May 2, 2000. In fact, even the goods were ordered to be seized. Thus, the Deputy Commissioner of Customs is not to blame. 32.Indeed it is true that instructions had been issued. A perusal of the order shows that the Directorate of Revenue Intelligence, Amritsar had informed the Deputy Commissioner of Customs, Ludhiana (CFS, Ludhiana) that it had been decided to convert the Detention into seizure under Section 110 of the Customs Act, 1962. However, the question is - Did the Directorate of Revenue Intelligence have any evidence? Did it act arbitrarily or on the basis of some information? Despite being repeatedly asked, Mr. Gumber has not been able to refer to any material on the record of this case or on the departmental file which may remotely show that there was any basis for the detention or seizure of the goods. 33.In view of the above, it is clear that the goods as imported by the petitioner were metallic scrap. These were not serviceable pipes. In any case, in view of the instructions issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hypothesis that the goods were serviceable pipes. The petitioner had to furnish bank guarantee for Rs. 42 lacs at the time of release of the goods. It had also to furnish a bank guarantee for an amount of Rs. 6½ lacs regarding the payment on account of demurrage to the Punjab State Warehousing Corporation. The petitioner had to furnish a surety bond also. As a result, a substantial amount of money had to be paid by the petitioner to the Bank on account of interest etc. 36.It is clear that the petitioner has been unduly harassed. If the petitioner had imported goods different from those as described in the import documents, it may have been possible for the respondents to justify the demand for 'duty' or even demurrage etc. However, in the present case, it is clear that the goods were scrap. These were not serviceable pipes. Thus, the department itself is responsible for the charges on account of the delay in release of 'containers' and demurrage on account of the delay in the release of goods. The petitioner is not responsible in any manner whatsoever. Thus, the petitioner shall be entitled to the reimbursement of the amount deposited by it on account of payment of charges i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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