UNION OF INDIA Vs. C KRISHNA REDDY

JUDGEMENT

(1.) This appeal by special leave has been preferred by Union of India against the judgment and order dated 22-9-1999 of a Division Bench of Madras High Court in a writ appeal whereby the order passed by a learned single Judge on 22-9-1998 directing payment of Rs. 25 lakhs in addition to the sum of Rs. 10 lakhs already paid by way of reward for giving information to custom authorities was partly modified.

(2.) The respondent-C. Krishna Reddy filed a writ petition in the High Court of Madras claiming an amount of Rs. 1,71,43,272/- by way of reward for having given information to the concerned officers of the Department of Customs and Central Excise. The case set up in the writ petition, in brief, was that M/s. Sanjeevani Fodder Products Pvt. Ltd. (hereinafter referred as 'Sanjeevani') and M/s. FOMETA India Machines Pvt. Ltd. (hereinafter referred as 'FOMETA') had evaded Customs duty amounting to approximately Rs. 3 crores by contravening the conditions of ad hoc exemption Order No. 103/87 dated 30-3-1987 as amended. M/s. Sanjeevani had got the said exemption order from the Government of India exempting 50 Fodder Production Units to be imported by them subject to the condition that they would donate these machines to Bharat Krishak Samaj (BKS) within 15 days from their clearance and BKS would use them only for demonstration purposes and would not sell, transfer or dispose of these machines for a period of five years. M/s. Sanjeevani had imported and cleared these machines through the Port of Madras free of duty in terms of the said exemption order. Though M/s. Sanjeevani had produced documents before the Customs authorities showing donation of these machines to BKS but the same remained in their control and possession at their own sites and also at the site of M/s. FOMETA and were being utilised for commercial production of fodder and hence both the conditions of the ad hoc exemption order were contravened. The exemption order was for 50 machines but actually 56 machines had been imported and 5 out of them had been sold to some Government Departments. The case of the writ petitioner (respondent herein) further was that on the basis of the information furnished by him and inquiries made by the authorities of the Department they came to know that M/s. Sanjeevani had started selling the Fodder Production Units. After the import of the machines in CKD condition, M/s. Sanjeevani got the Fodder Production Units assembled at Gummidipoondi at the work place of M/s. FOMETA and thereafter 12 units were installed in Bolaram, 12 in Bulandshahir, 12 in Bagru and the balance 14 FPUs were to be stationed at Jaisalmer. Some of the units were operational as per the investigation. The Department thereafter issued a show cause notice dated 12-2-1990 and proceedings were initiated for confiscation of the goods. The case was adjudicated by Collector of Customs (Judicial), Madras who passed an order on 5-3-1993 directing for confiscation of the goods with an option for redemption of the same on payment of fine and a penalty of Rs. 50 lakhs was imposed upon M/s. FOMETA and personal penalty was imposed upon some Directors of the company. After the decision of the Commissioner of Customs (Madras) the writ petitioner sent a letter dated 15-4-1993 to the Deputy Director, Directorate of Revenue Intelligence, Madras, to sanction him the reward keeping in view the duty, fine and penalty levied in the case. The Department sanctioned an amount of Rs. 5 lakhs on 6-11-1993 as an advance reward which was paid to him and thereafter another sum of Rs. 5 lakhs was sanctioned on 26-4-1995 and in this manner he received only Rs. 10 lakhs. The writ petition was accordingly filed claiming the balance amount of reward in terms of the guidelines issued by the Department.

(3.) Counter-affidavit on behalf of the respondent was filed by Shri R. Mohan Doss, Assistant Director in the Directorate of Revenue, Intelligence, Madras wherein it is stated that on the basis of the information received, investigation was done and it was found that M/s. Sanjeevani and M/s. FOMETA had evaded customs duty amounting to Rs. 3 crores by contravening the conditions of ad hoc exemption Order No. 103/87 dated 30-3-1987. The details of the manner of import, misutilisation of the machines, contravention of the exemption order, the proceedings initiated by the Collector of Customs and the orders passed by him have also been given. It is averred in paras 7 and 10.7 of the counter-affidavit that only one party namely, Indian Grass Land and Fodder Research Institute, Jhansi, deposited the redemption fine of Rs. 2 lakhs in respect of one confiscated unit but in respect of remaining 55 units nobody came forward to clear the same on payment of redemption fine and duty and the penalty amounts could not be recovered from the persons concerned. The seized articles could not be auctioned as M/s. Sanjeevani had taken loans against the Fodder Production Units from financial institutions and such financial institutions have also claimed the units which had been hypothecated to them. Even though no duty, fine or penalty could be realised from the persons concerned but an amount of Rs. 10 lakhs was sanctioned and disbursed to the writ petitioner by way of reward.