CANNON STEELS PVT LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The main writ petition is taken up with the consent of parties and heard.

(2.) The first petitioner is a private limited company and the second petitioner is a shareholder and director of the said company. The petitioners are manufacturers of dying equipments and have their factory at Kup District, Sangrur (Punjab). They are using stainless steel for the manufacture of their products and as it is cheaper, they buy seconds and detectives rather than prime stainless steel for use in their factory. They placed an order with Flotec Co., Ltd., Taiwan for the supply of 60 M.T. of seconds/defective stainless steel seamless tubes/pipes. The suppliers despatched a quantity of 58.808 M.T. on board the ship Stamfort V-41W. The agreed price was $ 1170 per Metric Tonne. As per the invoice dated 14.5.1992, the petitioners were charged with 68,805.36 U.S. $. The goods arrived on board the feeder ship Tiger Bridge on 30.5.1992 due to transhipment, under cover of bill of lading No. 5319134 dated 14.5.1992. The petitioners filed a bill of entry on 29.5.1992. An order was passed on 1.6.1992 for inspection of the cargo and on 5.6.1992 there was an inspection. There was a reinspection on 8.6.1992 with the help of a Metallurgical expert. According to the petitioners, a detailed reexamination was carried out on 19.6.1992 and on 26.6.1992, the Additional Collector passed an order for assessment on the value declared in the bill of entry and release of goods, which was approved by the Collector. It is stated by the petitioners that the matter was referred to SIB in the Customs Department on 1.7.1992 as the matter was being delayed, the petitioners wrote to the Collector on 15.7.1992 requesting for early release of the consignment. It is stated that there is no reply to the said letter. It is also stated that the SIB inspected the cargo on the instructions of the Collector and returned the bill of entry on 18.7.1992 after it was thoroughly satisfied. According to the petitioners, the Collector directed that the shipment be assessed and cleared accepting the invoice value, on 22.7.1992 and thus the assessment was completed. It is alleged in the affidavit that some disgruntled persons in the Department, who did not want the goods to be released, made a complaint to the Directorate of Revenue Intelligence, the fourth respondent herein, who entered the scene on 22.7.1992 and collected the bill of entry from the Customs Department. There was an examination by the fourth respondent on 27.7.1992 in the presence of the Additional Director and a further examination on 1.8.1992 and 3.8.1992 along with metallurgical experts. The affidavit of the petitioners proceeds to state as follows:-The assessment having been completed under Section 17 of the Customs Act, it has become final and the fourth respondent has no jurisdiction to override the decision of the Collector, the Additional Collector or the Assistant Collector and the Customs Department is an independent Department not subject to the jurisdiction or authority of the fourth respondent. The fourth respondent is exercising its powers mala fide. There is no dispute about the validity of the imports as prime as well as defective stainless steel could be imported. Nor is there any dispute about the rate of duty payable. The only apparent doubt in the mind of the fourth respondent appears to relate to the correctness of the value declared. Unless the fourth respondent has reason to believe that goods are liable for confiscation and any documents are required in respect of such proceedings, it has no jurisdiction to seize the documents from the Customs Department and in this case, there has been a seizure of the documents without any seizure memo. Hence, the fourth respondent had acted without any jurisdiction and its action is mala fide in law. The goods are not of prima quality and they are not bought from one particular manufacturer. They are collected from various suppliers, being seconds/detectives, as various manufacturers have rejected them. The fourth respondent is only causing harassment to the petitioners by preventing the release of goods. The goods are urgently required by the petitioners and they are suffering heavy demurrage. The action of the fourth respondent is arbitrary and capricious. The Customs Department is the only authority which has to take a decision and it has already taken a decision. The fourth respondent cannot interfere with the same. Generally, goods will be released on the basis of provisional assessment even if investigation is gong on and that procedure has not been adopted in this case. Hence, the petitioners are obliged to approach this Court with a prayer for issue of a writ of mandamus directing respondents 2 to 4 to release the goods, viz., seconds/defective stainless steel seamless tubes, pipes weighing 58.808 M.T. covered by bill of entry No. 18444 dated 29.5.1992 to the petitioner.

(3.) The first respondent is the Union of India represented by the Secretary, Ministry of Finance, New Delhi, the second respondent is the Collector of Customs and the third respondent is the Assistant Collector. The fourth respondent is the Directorate of Revenue Intelligence, Zonal Unit, Madras. Respondents 2 and 3 have filed a counter-affidavit. The following is pleaded in the said counter-affidavit: The goods were loaded in containers and they were not destuffed at the time of inspection on 5.6.1992 and 8.6.1992. But, the inspection was carried out by checking the materials available to view when the container was opened. On the basis of the opinion of the A.O. Metallurgical Expert, the Additional Collector opined with the approval of the Collector that the value as declared in the bill of entry could be accepted and accordingly the bill of entry was assessed by the Appraiser/Assistant Commissioner (sic) concerned. But, before further steps for clearance were taken out and issuance of the said bill of entry to the petitioners, the fourth respondent informed the third respondent that an investigation was being conducted in the matter by them and they would require the bill of entry and connected documents for the said investigation. The contention of the petitioners that there was a completed assessment, which had become final, is not correct. Completion of assessment involves various stages. Even after a decision as to assessment is taken, concurrent audit, licence audit, working out of quantum of duty and entering the same on the bill of entry are necessary before returning the bill of entry to the parties for the purpose of payment of duty. Even if the duty is paid, the goods cannot be released unless an order is passed by the competent Officer under Section 47 of the Customs Act. Even if it is assumed that there is a completed assessment, it is not a bar in law to reopen the matter if the facts and circumstances of the case warrant and particularly in a case of fraud or suppression of facts.