BUDGE BUDGE COMPANY LTD Vs. COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) This Writ Application was moved against the order dated 16th February 1987 passed by Shri G. Sarengi, Collector of Customs, Calcutta whereby two complete systems of second hand jute frames valued at Rs. 5,76,054/- was confiscated under Section 111 (d) of the Customs Act, 1962 - alleging that the same was imported unauthorisedly. But keeping in view of the fact that the machines were meant for 100% export-oriented unit and specially the fact that the Ministry of Industry decided to waive the condition of import to old machineries. The said Shri G. Sarengi: it is stated - allegedly took a lenient view and gave the Petitioner option to redeem the goods on payment of fine of Rs. 60,000/- plus payment of usual customs duty thereon. This case has a cheduered carrier.

(2.) On July 2,1981 the petitioner received from the Ministry of Industry, Government of India, a letter of Indent (Intent ?) for the purpose of manufacture and export of 3353 metric tonnes of jute hessians and fine yarn per month and on February 25,1985 the said letter of Indent (Intent ?) was converted into an industrial licence by the Government of India. The Export Commissioner, New Delhi also issued a green card on 10th April, 1984 in favour of the petitioner. The said green card was re-validated upto 8th May, 1988. In or about 1981 the petitioner imported machinery for its 100% export-, oriented unit which consisted of the complete running unit on a lot basis from Italy. The said imported machine was commissioned and put into Commercial Production in March 1986. In accordance with the import policy of the Government of India under which the said 100% export-oriented unit, the petitioner was allowed to be set up under the direct control and supervision of the officers of the Customs department of the Government of India. In terms of the order under which the said 100% export-oriented unit was allowed to be set up, the entire factory premises comprising of the said unit was deemed to be the Customs bonded warehouse. All the finished products were meant for export only which were under the direct control and supervision of the Customs authorities. All the finished products under the said scheme were exemptedfrom excise duties and other Central levies. The said undertaking was only permitted to sell into the domestic tariff area of not more than 5% of the rejected goods and that on such sale into domestic tariff area Custom duty, Central Excise duty and other levies were payable. The petitioner after starting the factory found that the said factory was unable to manufacture required products and accordingly the petitioner approached the Government of India through the Ministry of Industry, New Delhi and sought permission for further importation of machineries. In the meantime in or about January 1985 the petitioner came to know that two second hand drawing systems both of which were manufactured in or about 1976 in United Kingdom in good condition was available for sale at a comparitively low price and on the impression that as the petitioner was 100% export-oriented unit working under the supervision and control of the Customs department and further being encouraged on the basis that if any improvement in the production is made with the help of the said imported machine. There would be more export and the country would earn a good amount of foreign exchange, the petitioner placed the order for purchase of the said machines and ultimately the said two machines reached in the Calcutta Port in or about May 1986. But the Customs authorities refused to clear the said goods on the allegation that under the existing import policy the petitioner was allowed to import machineries upto 10 years old in age and that the machineries having respected (reached ?) the residual life less than 5 years and more than 7 years old could not be allowed. The petitioner was certified by foreign expert that the said machines would have any expected life of 10 years. Because of the refusal of the Customs authorities to clear the goods, the petitioner has been suffered to damage to the extent of 42,160/- by way of demmurage and thereafter the goods were transferred to the bonded warehouse. The Collector of Customs by the order dated 25th August 1986 confiscated the said goods under Section 111(d) of the Customs Act alleging that the said old machines were unlawfully imported and gave an option to the petitioner to redeem the goods on payment of fine of Rs. 2 lakhs and imposed the penalty of Rs. 5,000/- and before clearance the petitioner was also liable to pay customs duty. Before the Collector of Customs Shri G. Sarengi the Chairman and the Secretary of the petitioner company stated that as the machines in question had been imported for use in jute industry for the purpose of earning foreign exchange and were expecting a favourable decision from the Government of India for validating such import of machines and prayed for two months time to produce necessary authorisation in this behalf. But the said Collector of Customs held that the said goods have been imported under OGL in clear violation of the law in this behalf and as such the same was liable for confiscation. The petitioner made a representation before the Government of India for relaxation of the provisions in this behalf for removing the defects if any, in the matter of importation and that as the said representation was not disposed of the petitioner moved this Court for disposal of the said representation by the Central Government and also challenging the validity of the said order of confiscation passed by the said G. Sarengi, Collector of Customs whereupon A.K. Sengupta J, by the order dated 21st November 1986 directed the Central Government to dispose of the representation of the petitioner for validating the said import by 15th December 1986 and stayed the collection of fine and penalty in terms of the order of the Collector of Customs. On 15th December 1986 the Government of India disposed of the representation of the petitioner dated 16th July 1986 and observed that in view of the circumstances explained by the petitioner in the representation and the inspection certificates issued by the foreign Chartered Engineer, the Government of India decided to allow the petitioner to import two complete systems of jute drawing frames for manufacture of jute goods under 100% export-oriented scheme relaxing the import policy requirement about the age and residual life of the machines so that the petitioner could lawfully import the said old machines with those years of manufacture. Thereafter, (by) the order dated 7th January 1986 A.K. Sengupta J. of this Court was pleased to set aside the order of confiscation made by the Collector of Customs dated 6-8-1986 and directed the Collector of Customs to hear the matter afresh after taking into consideration of the order of relaxation passed by the Ministry of Industry Government of India dated 15th December, 1986. Thereafter by the impugned order dated 16-2-1987 the Collector of Customs reiterated the stand already taken by him in the order dated 6-8-1986 and held that the goods were imported unlawfully ignoring and/or bye passing the order of the Central Government dated 15-12-1986, on the ground that the importation was made earlier than the order of relaxation made in this behalf by the Central Government. It was stated that importation took place in April 1986, whereas relaxation in respect of such importation was made by the Ministry of Industry on 15-12-1986 and as such according to Shri G. Sarengi, Collector of Customs, the importation at the material point of time was unauthorised and the goods were liable for confiscation. The learned Advocate appearing on behalf of the petitioner contended on the first place that when the Government of India through the Ministry of Industry made such relaxation taking into consideration, (that) the petitioner is manufacturing goods for 100% importation (exportation ?) under a special scheme in which the goods were manufactured under the supervision and control of the Customs department, such an action on the part of the Collector of Customs was wholly mala fide. It was further pointed out that in terms of the order of the Ministry of Industry under which the licence was granted, the petitioner had undertaken to export the entire production 100% for a period (of) 10 years which would be extended to (by ?) 5 years at the discretion of the Government of India and for that purpose the petitioner had to execute bonds and guarantees and had to manufacture under strict condition and restriction. It was further submitted that the petitioner never intended to smuggle goods like ordinary smuggler in contravention (of) the provision of Customs Act inasmuch as the imported machinery was required for the purpose of earning foreign exchange in the interest of the country and not for the personal interest of the petitioners and further whole operation was being conducted under the supervision and control of the Customs department whereunder not a single piece of goods can be sold in home market for home consumption except a portion of rejected goods. Such being the position the Collector of Customs acted in a manner which was wholly unwarranted and proceeded in the matter from the very beginning with a baised and closed mind. It was further pointed out that the Collector of Customs Mr. Sarengi initially gave an option to redeem the goods on payment of fine of Rs. 2 lakhs with penalty of Rs. 5,000/- and this time the said redemption fine was reduced to Rs. 60,000/- and in the facts and circumstances of the case the Collector of Customs acted arbitrarily and contrary to public interest in confiscating the goods on the alleged plea that order for relaxation was issued after the importation was made. It was further stated that in the application filed by the Government of India, the whole thing was explained and the Government of India after careful consideration of all the relevant factors issued, such order of relaxation regarding age of machine and under such circumstances the said order was binding upon the Collector of Customs who had no authority to sit over in judgment of a decision taken by the Government of India in the Ministry level and ignore it at his sweet will. It was further pointed out that because of the mala fide proceedings in this behalf the said plants and machineries were getting rusted which is frustrating the very purpose of importation and production for the purpose of exports. In substance, it was stated that the stand taken by the Collector of Customs had caused national loss and that such an action on the part of the Collector of Customs was malicious and passed in colourable exercise of the pretended power. The learned Advocate appearing on behalf of the respondent stated that against this order of the Collector of Customs, the petitioner had a right of appeal and this writ Court should not interfere with the order of Collector of Customs.

(3.) Considering the facts and circumstances of the case and considering the fact that the position of the petitioner company is something peculiar as the petitioner is engaged for manufacture of jute goods for exports only under a special scheme framed by the Government of India and thereby through the petitioner the country is earning foreign exchange and considering the fact the Government of India through its Ministry of Industry had relaxed the provisions and that the second hand imported machineries in respect of which requirement of the rules was relaxed, are getting rusted and becoming useless by the. legal tussle which is frustrating the very object for which the said machines were brought namely for increasing production for the purpose of increasing exports and thereby earning a good amount of foreign exchange. This is not a simple case of importing any contraband goods. The position of the petitioner as it appears was not properly appreciated by the Collector of Customs who had been acting as an instrumentality for the purpose of earning foreign exchange.