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TMI Blog2003 (9) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... e conclusion that the entire transaction was undertaken subsequent to the issuance of public notice dated 29th November, 1988. It is no doubt true that irrevocable letter of credit was not established by the petitioners but that by itself cannot be a ground to say that the concluded contract which was entered into by the petitioners was not a genuine contract. The condition relating to the opening of the irrevocable letter of credit put in the public notice was to prevent the importers entering into an import contract subsequent to the public notice but if on the strength of the genuine material available and accepted by the CEGAT if the petitioners have to establish that their transaction to import goods was genuine transaction and was not based on any manipulation then, in that event, the CEGAT was not justified in levying redemption fine, though reduced to the extent of 50%. We do not propose to base our judgment on the basis of M/s. B. Vijaykumar Co.[ 1988 (12) TMI 336 - SUPREME COURT] because that case was decided by the Apex Court on the peculiar facts of that case. However, once the finding of fact is reached that the goods were handed over for export to India to a Shipper o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t writ petition, the petitioners filed bills of entry for ex-bond clearance for home consumption. However, at that stage, the respondents insisted on charging interest on the customs duty payable by the petitioners on the ground that the said goods remained in bonded warehouse beyond the period of three months. As the petitioners were in urgent need of the said goods, it appears that the petitioners paid interest of Rs. 75,056/- in respect of bill of entry No. 003527. As a matter of fact, in our opinion, the said amount of interest could not have been recovered by the respondents from the petitioners on the face of interim order passed by this Court. If at all the respondents wanted to levy interest, then, they ought to have approached this Court and ought to have got the interim order modified. It was not open for them to read something more in the interim order and insist upon payment of interest, especially, when the matter was sub-judiced. In this view of the matter, the demand for interest was unjustified. Even, otherwise, since we have quashed and set aside imposition of redemption fine and directed refund of fine paid by the petitioners we also hold that the respondents were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers had imported a consignment of citric acid from the same Suppliers somewhere in January, 1988 on payment on document basis i.e. without a letter of credit, the Supplier agreed to ship Cassia without insisting upon the letter of credit being opened by the petitioners. On 29th September, 1988, the Supplier issued proforma invoice in favour of the petitioners for 4 containers aggregating 52 M.T. of Cassia of Chinese Origin being confirmation of the order placed on behalf of the petitioners. 4.On the basis of the said proforma invoice dated 29th September 1988, the petitioners made applications to the Plant Protection Advisor to the Government of India and Directorate of Plant Protection Quarantine and Storage, Faridabad, as required under Para 104 of the said Policy. The requisite permits were issued to the petitioners on 26th October, 1988 and 3rd November, 1988 much prior to the issuance of public notice dated 29th November, 1988. 5.The petitioners state that on 28th November, 1988 the said goods were shipped on vessel "Ocean Strength" as 4 different consignments under respective bills of lading and covered by 4 separate invoices of the Suppliers. The said goods arrived at Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the shipping company M/s. Orient Shipping Agency Private Limited, Bombay. 8.On 20th March, 1989, the petitioners by their Advocate's letter replied to the said show cause notice, inter alia, submitting that the letter dated 18th February, 1989 on which the Customs Authorities were relying upon revealed that the said goods were delivered to the agents of shipping company on 27th November, 1988 and were due for shipment to Bombay on vessel "City of Edinborough", but on account of force majeure circumstances, the same were shipped on 19th December, 1988 by vessel "Ocean Strength". 9.The respondent No. 2, the Additional Collector of Customs vide order-in-origina1 dated 23rd March, 1989 rejected the contention of the petitioners and held that the import of the said goods was unauthorised and not permissible under OGL. He, however, gave an option to the petitioners to redeem the said goods on payment of fine of Rs. 9 lakhs and also imposed penalty of Rs. 2 lakhs on the petitioners. 10.Being aggrieved and dissatisfied by the above order dated 23rd March, 1989, the petitioners preferred an appeal to CEGAT. In the meantime, the petitioners by letter dated 13th April, 1989 addressed to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of India, were dated 26th October, 1988 and 3rd November, 1988. These permits were mandatory and condition precedent for import of the said goods. Besides this, there were third party documents in the form of letters of steamer agents, carriers and forwarders and the correction advice of the shipping company to show that the said goods had left China, which in the country of origin, for their destination i.e. Bombay on 27th November, 1988 and were in fact due to be loaded and shipped on the same date per vessel "City of Edinborough", however, on account of force majeure circumstances like shut out of cargo, which is common in international shipping, the same could be loaded only on 19th December, 1988. The learned Counsel, therefore, submits that prior to the issuance of impugned public notice dated 29th November, 1988 and even much prior to the date of availability of the said public notice i.e. 7th December, 1988, the contract between the petitioners and the Suppliers had been entered into and in furtherance thereof certain irreversible steps had taken and non-fulfilment of the contract on the part of the petitioners would have entailed civil and penal consequences and damag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r transaction relating thereto is genuine, real and based purely on commercial considerations, the petitioners cannot be compelled to open an irrevocable letter of credit and face penal consequences for failure to do so. 17.Learned Counsel for the petitioners further submits that admittedly the said goods are of Chinese origin. It is also evident, that the said goods had left Sherzan in China for the destination to Bombay on 27th November, 1988, as such 27th November, 1988 is the correct date of shipment of the said goods. Therefore, the import of the said goods is prior to the issuance of the impugned public notice and not affected by the amendment made thereunder. In his submission, the import of the said goods is valid, proper and authorised under OGL in terms of Serial No. 62(ii) of Appendix 6, List 8, Part II of the said Policy. Learned Counsel for the petitioners submits that the said goods were handed over to the steamer agents/shipping company at Hong Kong on 27th November, 1988, as such the date of issue of bills of lading as 28th November, 1988 is correct. This is also corroborated by the correction advice of the shipping company (Exh. 'P' to the petition) which only corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he correct date of the "loaded on Board Bill of Lading" should be read as 19th December, 1988 which was the date on which the imported goods were loaded on Board "Tokyo Bay under the Voy No. 90530". In the circumstances, he submitted that the goods imported by the petitioners were shipped on the said date i.e. 19th December, 1988 that is to say after the date of the said public notice dated 29th November, 1988. In this premise, learned Counsel for the Revenue submits that the import of Cassia by the petitioners was hit by the public notice dated 29th November, 1988, as such the petitioners were not entitled to import Cassia under OGL. He, therefore, submits that the order of the Additional Collector dated 23rd March, 1989 confiscating the goods imported by the petitioners but allowing them to redeem the said goods for home consumption on payment of redemption fine is proper and valid order. For the same reasons and on the strength of the same submission, he also tried to support the order of the CEGAT dated 9th November, 1989 and strongly refuted the submissions advanced by the learned Counsel for the petitioners and contended that the petitioners deliberately presented ante-dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce redemption fine from Rs. 9 lakhs to Rs. 4.5 lakhs. In this backdrop, if there is a bona fide mistake on the part of the Shipper or the clerk of the shipping agency, we fail to understand as to how the petitioners can be penalised for that even by reducing the redemption fine. Secondly, if there was no attempt on the part of the petitioners to present ante-dated bills of lading, and on the face of the finding of fact recorded by the CEGAT that the goods were received by the Shipping Lines as early as in the month of November, 1988, how one can reach to the conclusion that the entire transaction was undertaken subsequent to the issuance of public notice dated 29th November, 1988. It is no doubt true that irrevocable letter of credit was not established by the petitioners but that by itself cannot be a ground to say that the concluded contract which was entered into by the petitioners was not a genuine contract. The condition relating to the opening of the irrevocable letter of credit put in the public notice was to prevent the importers entering into an import contract subsequent to the public notice but if on the strength of the genuine material available and accepted by the CEGA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners were seriously challenging legality and validity of the said instruments on the touch stone of Article 14 of the Constitution of India. 25.Since we are allowing the petition, it will be necessary to make consequential order. Under interim order of this Court dated 21st February, 1990 the petitioners were directed to pay redemption fine of Rs. 2.25 lakhs and furnish security by way of bank guarantee in the sum of Rs. 2.25 lakhs of the nationalised bank. The petitioners would be entitled to refund of Rs. 2.25 lakhs and shall also be entitled to return of bank guarantee with necessary endorsement for cancellation thereof, so as to enable them to submit it to their bankers. Accordingly, we direct the respondents to refund the amount of Rs. 2.25 lakhs and to return bank guarantee to the petitioners with necessary endorsement for cancellation, within six weeks from today. In the event of delay in refund, the same shall carry interest at the rate of 6% per annum after expiry of six weeks till refund in full and final. 26. W.P. NO. 1551/1990 : So far as the second petition filed by the petitioners being Writ Petition No. 1551 of 1990 is concerned, the petitioners are chall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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