COLLECTOR OF CUSTOMS Vs. CALCUTTA CYCLE SYNDICATE

JUDGEMENT

(1.) This is an appeal from an order of Sinha, J., dated the 19th May, 1960, making a, Rule issued under Article 226 of the Constitution absolute.

(2.) The respondent Calcutta Cycle Syndicate is a registered partnership firm carrying on business at No. 3, Bentinck Street Calcutta as dealers in cycles and parts and accessories of cycles including auto cycles. Between 20th December, 1956 and 31st December, 1956, the respondent entered into a contract with Rajdhani Motors carrying on business at Kashmere Gate, Delhi, for purchase of about 60,000 pieces of auto cycle chains measuring 1/2" x 3/16" x 104 links of Japanese manufacture at the rate of Rs. 24/- per dozen. Under the terms of the said contract which was entered into by correspondence, the respondent agreed to pay the amount of the bank drafts on Rajdhani Motors and to look after the formalities regarding the clearance of the consignment from the customs at the Calcutta Port and also to pay the customs duty and clearing charges on behalf of Rajdhani Motors. It was further provided, under the said contract that all the documents would be sent to Rajdhani Motors after the clearance of the consignment with a statement of payment made on their behalf. At or about the same time, the respondent entered into another contract with Messrs. S. Nath and Co., of 6, Esplanade Road, Delhi, upon substantially similar terms for the supply of further 60,000 pieces of auto cycle chains of the same description. This contract was entered into verbally between the parties. On or about 24th December, 1956, S. Nath and Co., placed an order for the said goods with Messrs. Nigam Brothers of Calcutta, who are the agents in India of a Japanese company carrying on business in Osaka, Japan, under the name and style of Asia Machinery Trading Co., Ltd. On the same date S. Nath and Co., opened a letter of credit with Hind Bank Ltd., in favour of the Asia Machinery Trading Co., Ltd., for the invoice value of the said goods in terms of the contract between S. Nath and Co. and the said Japanese Company. The respondent guaranteed to the Hind Bank Ltd., that it would make payment of the drafts drawn against the said letter of credit. On or about 10th January, 1957, Rajdhani Motors similarly placed an order with Nigam Brothers for supply of the said auto cycle chains by the said Asia Machinery Trading Co., Ltd. On 16th January, 1957, Rajdhani Motors opened a letter of credit with the Hind Bank Ltd., in favour of the Japanese Company for the full invoice value of the goods and the respondent similarly guaranteed payment of drafts drawn against the said letter of credit. The Japanese company shipped 250 cases of the said goods in part fulfilment of its contract with S. Nath and Co., and on or about 31st January, 1957 the respondent made payment to the Hind Bank of the bill of exchange drawn by the Japanese company for the price of the said 250 cases. It appears that the payment made by the respondent as guarantor was credited to the ac- count of S. Nath and Co., and thereafter appropriated by the bank towards payment of the bill of exchange drawn by the Japanese company on S. Nath and Co. Upon such payment the bank released the shipping documents to the respondent as agent of 5. Nath and Co., and the respondent instructed the clearing agent Messrs. Nalini Bandho Ray and Co. to clear the goods on behalf of S. Nath and Co. On 2ist February, 1957, the said goods were cleared and the respondent paid the customs duty after 10 cases of the said 250 had been selected at random by the customs authorities for examination. Thereafter the Japanese company shipped a further 53. cases in completion of the deliveries under the contract with S. Nath and Co., and drew a further bill of exchange against the said letter of credit for, the price of the said 53 cases. On, or about 25th March, 1957, the respondent paid the amount of the bill of ex-change as guarantor and obtained the shipping documents relating to the said 53 cases and instructed Messrs. Akshoy Kumar Ghosh as dealing agent to clear the said consignment of 53 cases on behalf of S. Nath and Co. The said Means. Akshoy Kumar Ghosh thereupon completed the bill of entry with respect to the 53 cases and submitted the same to the customs authorities. The Shed Appraising Staff of the customs upon instruction received from the Scrutinising Appraises of the customs opened 5 cases at random and checked the goods and the duty on the said good was thereafter calculated at 471/4% and returned the bill of entry to the clearing agent on or about 5th April, 1957. But before the clearing agent actually cleared the goods, the customs authorities reviewed the classification and assessment and made arrangement for all the 53 cases to be opened for examination of their contents. This examination was completed on or about 28tb June, 1957, and only 3 of the said 53 cases were found to contain goods of the contract description conforming to the description declared in the bill of entry and stated in the invoice of the Japanese supplier and other documents. The remaining 50 cases were found to contain cycle chains of size 1/2" x1/2" x 104 links on which the proper duty payable was 731/2 and the import of which was prohibited except under a licence under Serial No. 301/IV of the schedule to the Import Control Order. But the import licence of S, Nath and Co., was not under the said serial number and did not cover the said goods. In or about 1957 the Japanese company shipped a further 303 cases of good's in fulfilment of the contract with Messrs. Rajdhani Motors, The said consignment arrived in Calcutta on or about 5th April, 1957, by s. s. "State of Travancore-Cochin". On or about 16th April, 1957 the respondent as guarantor paid to the Hind Bank She amount of the bill of exchange drawn by the Japanese company on Rajdhani Motors against the Letter of Credit opened by Rajdhani Motors with the bank. The amount was first credited to the account of Rajdhani Motors and thereafter appropriated by the Bank towards payments of the bill of exchange. Thereafter the respondent obtained from the bank the Bill of Lading and other shipping documents relating to the consignment and instructed Messrs. Akshoy Kumar Ghosh to clear the said goods. The said clearing agent completed the Bill or Entry with respect to those cases and submitted it to the Customs authorities. The Shed Appraiser's Staff opened 5% of the said 303 cases at random for appraisement and checking and assessed the duty at 47 1/4%. But before the goods were actually cleared, there was review of assessment and classification by the Customs authorities and upon such examination it was found that only 15 cases contained goods of the description entered in the Bill for Entry and the documents of the supplier and the remaining 288 cases contained cycle chains of size 1/2" x 1/8" x 104 links, the import of which was prohibited without a licence and the import licence of Rajdhani Motors did not cover the said goods. Thereafter on 26th March, 1958 notices were issued by the Assistant Collector of Customs to Messrs. Rajdhani Motors and Messrs. S. Nath and Co., to show cause why action should not be taken against them under Section 167 (8) of the Sea Customs Act read with Section 3 of the Import and Export Control Act and Section 19 of the Sea Customs Act and the relevant Ministry of Commerce and Industries Order No. 17/55 dated the 7th December, 1955. Similarly notices were served upon the" respondent to show cause why action should not be taken against the respondent under Section 167 (8) of the Sea Customs Act as a person concerned in the alleged offence of illegal importation. The respondent duly replied to the said notice and asked for a personal hearing and pointed out that they were neither importer nor supplier and stated as follows: -

(3.) A somewhat similar reply was given by the respondent with regard to the show cause notice relating to the consignment of the 53 cases of goods purchased through S. Nath and Co. On 28th May, 1958, a personal hearing was given to the respondent by the Deputy Collector of Customs, Calcutta. Thereafter the respondent also appeared before the Collector of Customs and had a farther personal hearing before the said officer. But no order was made so far as the respondent was concerned in respect of the said, proceeding for adjudication. About a year later the respondent received a further notice dated 27/29th June, 1959 from tbe Collector of Customs to show cause why penal action should not be taken against the respondent under Section 167 (8) of the Sea Customs Act as a person concerned in the unauthorised importation of the said 53 and 303 cases and another consignment of 218 cases which is not the subject-matter of the present appeal. The respondent duly replied to the said notice to show cause and asked for a personal bearing. This notice to show cause issued by the Collector of Customs suggests that there was a pre-planned conspiracy to import chains of size 1/2" x 1/8" x 104 links and that the respondent was a party to the alleged conspiracy and tbe said notice did not call upon the respondent to show cause why goods should not be confiscated. It appears that on or about 4th July, 1959, the Collector of Customs purported to pass two orders against Messrs. S. Nath and Co., and Messrs. Rajdhani Motors for confiscation of all the said 53 and 303 cases of goods without any option to pay fine in lieu of confiscation on the ground that all the said goods were unclaimed and all the parties concerned disclaimed ownership. The respondent challenged the legality of these orders of confiscation by a letter written to the Customs authorities on 18th September, 1959, on the ground that the notice should have been issued to the respondent as the respondent had paid for the said goods and was the owner thereof before any order of confiscation had been made. On or about 24th September, 1959, the respondent moved this Court under Article 226 of the Constitution and obtained a Rule Nisi. This Rule finally came up for hearing before Sinha, J., who by his judgment and order dated 19th May, 1960, made the Rule absolute. It is against this order of Sinha, J., that the present appeal has been preferred.