UNION OF INDIA Vs. KUMAR TRADING CO.

JUDGEMENT

(1.) THIS is an appeal directed against the order dated 1st February 1999 passed by the Learned Single Judge in W.P. No. 1650 of 1998 whereby the Learned Single Judge has allowed the writ petition filed by the petitioner and set aside the order of seizure and show cause notice dated 14th August, 1998 and directed the respondents to permit the petitioner to re -export the subject consignment to their original destination, Dubai. The petitioner filed the present to re -export his two containers to their original destination being No. CRXU for 4638054, Seal No. 122200, Seal No. 20673, AI -81, containing one 40 ft. STD. Contr. STC. 81 (43 cases and 38 pallets), another bearing No. POCU, 1197581, Seal No. B -303669, Seal No. 122163, J -157, containing one 10 ft. STD. Contr. STC 57 pallets and bearing lying at Calcutta Port originally despatched to M/s. Nitu Enterprises, Kathmandu of Nepal. It was prayed that the order of seizure of the said containers by respondents and show cause notice dated 14th August, 1998 be quashed. The case of the petitioner is that M/s. Nitu Enterprises of Nepal placed an order to M/s. Kumar Trading Co. for the supply of ball -bearing in question. They were shipped from Dubai to Nepal via India. A contract was entered into between M/s. Kumar Trading Co. and M/s. Nitu Enterprises in June, 1997. In pursuance of the contract the petitioner received a Letter of Credit bearing No. BNR/T/32/629 for US 3100 and BNR./T/32/630 for US 3500 from the said M/s. Nitu Enterprises of Nepal for supply of aforesaid consignment. After the aforesaid contract M/s. Nitu Enterprises requested the petitioner to ship 10 times quantity of the goods of the value of the Letter of Credit with a promise that M/s. Nitu Enterprises will send the revised Letter of Credit to the petitioner for the enhanced quantity of goods. On this assurance the said quantity of goods were shipped and the goods were in transit to Nepal for M/s. Nitu Enterprises and it reached Calcutta Port there it was seized by the Customs Authorities. The goods were not got cleared by M/s. Nitu Enterprises in terms of the Letter of Credit for both the consignments and they ultimately refused to take delivery of these consignments. Since M/s. Nitu Enterprises declined to take the delivery of the consigned goods the petitioner approached the Calcutta Customs Authorities for permission to re -ship the said consignments to its original destination i.e. Dubai. The petitioners were ready and willing to give the necessary charges and requested to permit the petitioner to re -ship the goods back to Dubai. The Customs Authorities instead of permitting the petitioner for re -shipment seized the goods and issued a show cause notice as to why the goods should not be confiscated as the goods contained in the containers are unauthorised import for purpose of deflection and consumption in India. The petitioner submitted before the Customs Authorities that since the goods were despatched to M/s. Nitu Enterprises in pursuance of the order placed by them and the same were shipped to the Calcutta Port to be transported to Nepal but since M/s. Nitu Enterprises has refused to take the consignment therefore the petitioner be permitted to re -export the goods to its original destination. This was not permitted. Hence the petitioner chose to file the present writ petition challenging the seizure and the show cause notice. The petition was opposed by the respondents and they tried to seek a support from the fact that the original Letter of Credit which sent for required quantity of the ball bearing was in the sum of US 3100 and 3500 but the goods supplied was to the tune of US 31000 and 35000. The Customs Authority therefore recorded some statements and also prima facie were of the opinion that in fact the goods were not meant for transhipment to Nepal but it was subterfuge employed by the petitioner or by M/s. Nitu Enterprises for being deflected to India and for consumption in India. The Learned Single Judge after examining the materials came to the conclusion that though courts normally would not interfere in a writ jurisdiction against a show cause notice but the Court felt that in fact the issue of the show cause notice was totally without jurisdiction. The Learned Single Judge further found that the goods were meant for shipment to Nepal and there was an International Treaty between Nepal and Government of India and under that Treaty goods meant for Napal shall be permitted after the Customs Transit Declaration and a detailed procedure has been laid down and on that basis the Customs Authorities could not have seized these goods. The Learned Single Judge found that there is no reason disclosed for issuance of the show cause notice with regard to these goods which are being imported by a Nepalese party through Calcutta Port under the Transit Treaty of the India and Nepal Government. More so, the Learned Single Judge also found that there was no material on record to show that the goods were in fact meant for consumption in India. The Learned Single Judge found that since the petitioner who has exported these goods to the party in Nepal and the party in Nepal has not honoured the commitment they are entitled to take back the goods to their original destination and therefore the seizure and the show cause notice issued by the Customs Authority is totally without jurisdiction. Accordingly, the Learned Single Judge set aside the seizure and the show cause notice. Hence the present appeal has been filed by the Union of India against the order passed by the Learned Single Judge.

(2.) WE have heard the learned Counsels for the parties and perused the records. The first and foremost question which calls for determination in the case is that under what provision of the Customs Act, 1962 the authority can issue show cause notice. The learned Counsel for the appellant has invited our attention to Section 124 and Section 111(d) and Section 111(o). Section 124 contemplates issuance of show cause notice before confiscation of goods which reads as under: Section 124. Issuance of show cause notice before confiscation of goods, etc. - -No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such persons, - - (a) is given a notice in writing informing him of the grounds on which it is purposed to confiscate the goods or to impose a penalty; (b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and (c) is given a reasonable opportunity of being heard in the matter: Provided that the notice referred to in Clause (a) and the representation referred to in Clause (b) may, at the request of the person concerned be oral.

(3.) THE Learned Counsel for the Union of India has submitted that any goods which are imported or attempted to be imported to India contrary to any prohibition imposed by this Act or any other law for the time being in force such goods can be subject to confiscation under Section 111(d). Likewise, under Section 111(o) if any goods are exempted and they are subject to any condition from duty or any provision in respect of the import thereof under this Act or under any other law for the time being in force or if such condition have not been observed unless the non -observance has been permitted by the appropriate authority then the goods are entitled to be confiscated. However, after some deliberations the learned Counsel did not press Section 111(d) in service and bank upon Section 111(o). A close scrutiny of Section 111(o) pre -supposes that goods should be of exempted category, but there is no exemption notification pertaining to these goods has been brought to our notice. Section 111(o) in the present case is wholly inapplicable. Exemptions are granted under the Act under certain conditions and if they are violated then the question of confiscation arises. It has not been shown to us that any such exemption relates to these goods which are being imported by one of the citizen of another country and the facility of Calcutta Port is being permitted under International Treaty. In fact, the goods were imported under the Letter of Credit issued by M/s. Nitu Enterprises of Nepal from another contracting party M/s. Kumar Trading Co. of Dubai. Goods were being transhipped from Dubai to Kathmandu via Calcutta Port. Therefore, the Customs Authority could not have checked these goods as there is no such provision for such goods being confiscated on a mere apprehension that they are not bona fidely meant to be transhipped to Nepal but for consumption in India. In fact goods are being transhipped through Calcutta Port in pursuance of the Transit Treaty which has been entered into between Nepal and Government of India. In pursuance of this transit treaty goods have to be cleared by the Customs Authorities and they can ensure that the goods are transported from Calcutta Port to the destination at Nepal. As per clause 5,6,7 and 8 of the Customs Transit Treaty entered into between two Sovereign Nations, India and Nepal, the Customs Authority should not have caused any hurdle in such transportation. Appropriate case has been taken in the Treaty and it will be useful to reproduce the same here, which reads as under: