MERCHANTS & TRADERS LTD Vs. R K HABBU

JUDGEMENT

(1.) The petitioner is a limited company and carried on business in importing goods such as coconut oil and spices from foreign countries. Prior to August 1949, coconut oil was allowed to be imported against Open General Licences, that is to say, no licence was necessary for its importation into India. On or about August 8, 1949 the petitioner placed an order for import of about 600 tons of coconut oil from Messrs Kajaria Brothers & Co. of Singapore in Malaya. On or about August 25, 1949 the Open General Licence was cancelled but those who had already placed orders were requested to make applications for licences for which they were to receive considerate treatment. The petitioner applied for such licence; and was granted the same. Having obtained the licence the petitioner imported a part of the goods which remained to be imported and it appears that delivery of the goods was taken on March 29, 1950 and April 6, 1950. The goods were thereafter assessed and the petitioner took delivery. In September 1953, long after delivery had been taken, the respondents tried to reopen the matter and they imposed upon the petitioner an additional duty amounting to approximately Rs. 35,000. The short point that has arisen in this case is as follows :

(2.) Under Section 39 of the Sea Customs Act, when customs duties or charges have been short-levied through inadvertence, error etc., or through mis-statement as to real value, quantity or description etc. on the part of the owner, then the person chargeable with the duty or charge, so short-levied, can be made to pay the deficiency, provided however that the demand was made within three months from the date of the first assessment or making of the refund. In other words, the making of demand within three months from the date of first assessment is a condition precedent to the realisation of further duty. In this case, the goods arrived sometime between March and April 1950 and shortly thereafter the assessment was made and goods were taken delivery of. In 1953 the matter was prima facie barred by limitation. The respondents have attempted to save limitation by stating that two demand notices - for Rs. 10,139/- and Rs. 25,348/- had been issued on June 29, 1956 and June 26, 1950 under the provisions of Section 39 of the Sea Customs Act. The allegations appear in paragraphs 7 and 8 of the affidavit in opposition. It will be observed that the department is careful to say that letters had been 'issued' ; it is not said that they had been served. Section 39 as it stood on the relevant date makes it a condition precedent that demand should be 'made' within 30 days, and a demand cannot be made unless it nas been communicated to the person from whom payment is demanded. It is not good writing out a demand and keeping it in one's own pocket because in such a case no demand can be said to have been made. Then again paragraphs 7 and 8 are affirmed as true to information received from the records but no such records have been disclosed or produced at the hearing of the application. It is quite obvious that the petitioners are not in a position to prove that any demand had been made. In fact, I think that it has been deliberately stated that demands were issued because the petitioners are not in a position to prove that any such demand had been communicated. Under the circumstances, it is obvious that the demand of the respondents for additional duty under Section 39 is barred by limitation. Therefore, the impugned demands on the petitioner for payment are bad and cannot be allowed to stand.

(3.) Mr. Mayer has drawn my attention to the fact that in 1951 Section 39 has been amended and the word 'made' has been substituted by the word 'issued', which completely supports what I have stated above, that is to say, it was not enough at the relevant time to have issued the demand but it had to be served. The rule is accordingly, made absolute and there will be a writ in the nature of a certiorari setting aside or cancelling the letters mentioned in paragraph 1(a) of the prayer to the petition. There will be also a writ in the nature of a mandamus directing the respondents not to give effect to the same and not to take any steps for the realisation of the excess duty. There will be no order as to costs.