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TMI Blog2004 (9) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... tor attached to this Court as Liquidator and directed him to take possession of the assets of the company. In pursuance of the said order, on 11-2-2004, the Official Liquidator deputed his officers to take possession of the assets of the company in liquidation, who reported that the machinery stored in 128 wooden cases is under seizure and custody of the Central Excise and Customs Department. Pursuant thereto, he addressed a letter dated 23-2-2004 to the authorities of the Central Excise and Customs Department, Kurnool, to furnish him the details relating to the seizure proceedings. Complaining that the respondents failed to furnish the details, he filed the present application, seeking a direction to the respondent to furnish him the details relating to the alleged seizure and custody of the machinery in question and to handover possession of the machinery to him on the grounds to be recorded infra. 3.Before proceeding to make a note of the rival submissions and contentions, it is appropriate to record the events that preceded the seizure of machinery by the Central Excise and Customs Department, and they run thus : M/s. Sri Vishnupriya Industries Limited (hereinafter referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02. Subsequently, on the basis of the instructions dated 22-2-2002 issued by the Deputy Commissioner, respondent No. 1, on 27-2-2002 once again passed order of detention, purportedly exercising powers under Section 72(2) of the Customs Act, for detention and sale of the warehoused wooden cases for recovery of customs duty of Rs. 22,20,38,112/-. When the company did not pay the demanded duty due, the wooden cases warehoused by it were seized under two different panchanamas - one containing 81 wooden cases and the other containing 47 wooden cases on 14-3-2002, and steps for auctioning the machinery were initiated. Therefore, respondent No. 1 vide O.C. No. 402/2002, dated 17-6-2002 informed the company that if they fail to pay the customs duty due, he would be compelled to proceed ahead with the auction of the detained machinery for recovery of the customs duty and interest thereon. Even after receipt of the said letter, when the company failed to pay the customs duty, respondent No. 1 proposed to conduct auction of the detained wooden cases for sale, and accordingly conducted the first auction on 30-10-2002 and the second auction on 30-12-2002, through the authorized Government Aucti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance on the judgment of the Apex Court in M.A. Jackson v. Collector of Customs - 1997 (96) E.L.T. 23 (S.C.) = (1998) 1 SCC 198. (3) He submits that if the amount allegedly demanded under Section 72(1) (a) to (d) of the Customs Act is not paid by the company, the proper officer is empowered to cause to detain and sell the goods, only after notice to the owner of the goods. Inasmuch as no notice whatsoever calling upon the owner to explain as to why the machinery should not be caused to be detained and sold, has been issued to the owner of the goods, the Assistant Commissioner of Central Excise could not have passed, and at any rate two orders of detention one on 19-12-2000 under Section 72(2) read with Section 142 of the Customs Act, in relation to the 1st and 2nd consignments of 81 wooden cases, and another on 27-2-2002 under Section 72(2) of the Act, in relation to the 1st, 2nd and 3rd consignments of 128 wooden cases and, without there being any show cause notice nor order-in-original in relation to the 3rd consignment, and, proceeded in pursuance thereof to put the machinery to public auction, and therefore, the alleged orders of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wooden cases is Rs. 30,28,42,541/-, whereas the sale notice mentions that 128 wooden cases are put to sale, whose value is shown as Rs. 48.30 lakhs. When as per Condition No. 2 of the Warehouse Licence granted to the company, the machinery to be held at any time in the warehouse shall be such that the duty leviable thereon does not exceed Rs. 4,00,00,000/-, it is not known how the 2nd consignment of 45 wooden cases imported by company and warehoused on 9-10-1998, whose value is Rs. 22,35,16,017/- and involves a duty of Rs. 10,48,29,017/-, was allowed to be warehoused by the company whose duty is far higher than what is allowed by Warehouse Licence. (8) He submits that as per the provisions of Rule 272 of the Rules, any sale of the properties of the company in liquidation shall only be subject to sanction and confirmation by this Court, and inasmuch as the sale of the machinery alleged to be under seizure and custody of the respondents has not been effected, the company having gone into liquidation, the respondents have no right whatsoever to sell the machinery, which vests in the custody of the Official Liquidator. (9) &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion orders, for detention and sale of 81 and 47 wooden cases. Accordingly, they were detained for sale, under two different panchanamas on 14-3-2002. The said orders attained finality. Consequent thereupon, the Superintendent of Central Excise, vide letter dated 17-6-2002 informed the company that if the duty along with interest thereon is not paid, they will put the machinery to auction. (3) He denied the contention of the Official Liquidator, that there was no demand, as required under sub-section (1) of Section 72 of the Customs Act, before passing order of detention under Section 72(2) of the Customs Act. According to him, no notice is required to be given to the owner of the goods before passing order of detention. He submitted that since the company failed to pay the excise duty in terms of the bonds executed by them, wherein they undertook that they shall on or before the date or dates specified in the notices of the demand pay to the proper officer of Central Excise, all duties, rent and charges claimable whether by way of customs duties etc., the respondents passed the detention order dated 27-2-2002 under Section 72(2) of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the rival arguments advanced, the following questions do crop-up for consideration by this Court in this application. They are - (1) Whether, in fact, there is demand made by the proper officer under sub-section (1) of Section 72 of the Customs Act, and if so, whether the proceedings dated 7-1-2002 is a demand made by the proper officer or is merely a letter? (2) Whether, the proper officer before proceeding to cause to be detained and sold the goods warehoused, under sub-section (2) of Section 72 of the Customs Act, is required to issue notice to the owner of the goods? (3) Whether the orders of detention passed without complying the provisions of Section 72 of the Customs Act, would render the proceedings ab initio void and non est in the eye of law? (4) Whether in the sale of the machinery allegedly detained, the respondents are required to follow the procedure contemplated under Sec. 72(2) read with Section 142 of the Customs Act and the guidelines in the CBEC Circular issued thereunder, or are required t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty amounting to Rs. 3,27,22,191/- on 36 cases of goods imported as determined under Section 15 of the Customs Act, 1962 as raised in the show cause notice dated 17-2-2000. (ii) I demand interest @ 20% on the above duty for the period starting from the date of expiry of six months from the date of warehousing till the date of clearance of goods on payment of duty as required under Sec. 61(2) of the Customs Act, 1962 read with Section 47 of the Act ibid. (iii) I order that if the assessees fail to pay the duty and the interest as specified in (i) and (ii) above, within one week of receipt of this order, such sufficient portion of the impugned goods will be liable for detention and sale under Sec. 72(2) of the Customs Act, 1962 read with Section 142(1) of the Customs Act, 1962 so as to recover the amounts due from them. 9.Though in the aforesaid orders-in-original, it was ordered that if the duty and interest as specified in (i) and (ii) is not paid within one week, the impugned goods would be liable for detention and sale under Section 72(2) read with Section 142(1) of the Customs Act, to recover the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wenty lakhs thirty eight thousand one hundred and twelve only) along with interest vide this office letter C. No. Vlll/16/1/ 2000-Arrears, dated 7-1-2002 issued as required under sub-section (1) of Section 72 of the Customs Act, 1962. They have acknowledged the receipt of the said letter on 10-1-2002. Till date, they have failed to pay the duty and interest. I therefore, order for detention of the goods warehoused by M/s. SVIL at the warehouse at Panyam, under sub-section (2) of Section 72 of the Customs Act, 1962 for the purpose of sale of the impugned goods so as to recover the amounts due from them. 11.Pursuant to the above said order of detention, the respondents on 14-3-2002 appear to have seized 128 boxes of machinery under two panchanamas - one panchanama comprising of 1st and 2nd consignments and the other panchnama comprising the 3rd consignment. Thereafter, the Superintendent of Central Excise, addressed letter to the company, informing that if the duty amount demanded along with interest is not paid immediately, they will be compelled to go ahead with auction of the machinery detained for recovery of duty and interest. Inasmuch, as there was no demand notice issued unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy, cause to be detained and sold, after notice to the owner (any transfer of the goods notwithstanding) such sufficient portion of his goods, if any, in the warehouse, as the said officer may select. 13.A plain reading of the aforementioned Section, would make it clear that in respect of cases mentioned in clauses (a) to (d) of sub-section (1), namely where any warehoused goods are removed from a warehouse in contravention of Section 71 or where any warehoused goods have not been removed from a warehouse at the expiration of the period during which such goods are permitted under Section 61 to remain in a warehouse or where any warehoused goods have been taken under Section 64 as samples without payment of duty or where any goods in respect of which a bond has been executed under Section 59 and which have not been cleared for home consumption or exportation are not duly accounted for to the satisfaction of the proper officer, the proper officer may demand, and the owner of such goods shall forthwith pay, the amount of duty chargeable on account of such goods together with all penalties, rent, interest and other charges payable in respect of such goods, and if any owner fails ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustries Ltd., (SVIL), Panyam. The following amount along with interest as applicable, are pending recovery from you for the importation of capital goods without payment of customs duty : Sl. No. B/E No. Order-in-Original No./Date Duty involved 1. 29334 1/2000, dated 15-9-2000 Rs. 2,27,22,191/- 2. 51569 2/2000, dated 10-10-2000 Rs. 10,48,29,017/- 3. 68456 Rs. 8,44,86,904/- The above dues may be paid along with interest within 10 days of receipt of this letter failing which appropriate action will be initiated as per law. Yours faithfully, Sd/- Assistant Commissioner 16.A reading of the above proceedings dated 7-1-2002, would make it obviously clear that the same is in the form of a letter addressed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of the Customs Act, before causing to be detained and sold the goods warehoused, the proper officer has to give notice to the owner of the goods, which has not been done so. It is required to be noted that, in the instant case, there is neither proper demand made under sub-section (1) of Section 72 of the Customs Act nor any notice issued by the proper officer to the owner of the goods under sub-section (2) of Section 72 of the Customs Act, before passing the order dated 27-2-2002, causing to be detained and sold the warehoused goods. Further, the detention order in respect of the 3rd consignment came to be passed without any show cause notice, order-in-original, demand made, and notice to the owner of the goods. On that ground, also, the alleged detention order dated 27-2-2002 cannot be sustained. Therefore, it has to be held that the order of detention dated 27-2-2002 passed by the Assistant Commissioner of Central Excise is non est in the eye of law and ab initio void, and therefore, cannot be acted upon. This apart, the earlier order of detention dated 19-12-2000 passed by the Assistant Commissioner of Central Excise under Section 72(2) read with Section 142 of the Customs Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods, and they should be in appropriate forms. In the absence of any procedure provided for sale of the detained goods under Section 72(2) of the Customs Act, it has to be held that once the goods are detained for sale under Section 72(2) of the Customs Act, they have to follow the procedure contemplated under Section 142 of the Customs Act and the CBEC Circulars governing thereof. This apart, in the instant case, it may be noticed that the respondents while granting Warehousing Licence under Section 59(2) of the Customs Act, got executed a bond on 28-8-1989, wherein it is inter alia, agreed that any amount due under the bond may be recovered in the manner laid down in sub-section (1) of Section 142 of the Customs Act without prejudice to any other mode of recovery. The respondents having taken a bond from the company at the time of issuing Warehousing Licence that the amount due thereunder may be recovered in terms of the procedure laid down in sub-section (1) of Section 142 of the Customs Act, now cannot contend that for recovery of the dues, they need not follow the procedure contemplated under Sec. 142 of the Customs Act, which deals with recovery of sums due to Government, or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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