Case Law Details

Case Name : M/s Overseas Enterprises Vs Union of India through the CC of Customs (Patna High Court)
Appeal Number : Civil Writ Jurisdiction case no. 13382 of 2014
Date of Judgement/Order : 30/11/2015
Related Assessment Year :
Courts : All High Courts (1346) Patna High Court (2)

Brief of the Case

Patna High Court held In the case of M/s Overseas Enterprises vs. The Union of India through the CC of Customs that there was absolutely no justification at all either on fact or in law in not giving effect to the order of the provisional release dated 28.03.2013. The plea of the respondents that they had received some adverse report with regard to adulterated quality of the betel nuts dated 04.04.2013, could not be given them any power to review or recall the order of provisional release passed by the competent authority in exercise of power under Section 110(A). Further after the adjudication in confiscation proceedings, in terms of Section 122, had been brought to an end in favour of the petitioners on 29.11.2013 and there was no order of either confiscation or paying fine by the petitioners and, in fact, the proceedings itself was dropped, the authorities of the Custom Department, in any view of the matter, whether in the name of the pendency of the testing report or otherwise, could not have kept the seized consignment of the petitioners in their possession even for a day.

By now, the law is well settled that the public officers have to be also held accountable for their acts of omission and commission. Accordingly, a loss of at least Rs.14,69,650/- along with interest on account of complete deterioration of quality of split betel nuts solely on account of deliberate laches on the part of the officials of the Custom Department need to be paid by custome officials. Hence, a direction issued to CBDT to conduct an enquiry to fix the personal accoutability of custom officials.

Facts of the Case

It is the case of the petitioners that they had imported 15.470 MT of processed betel nuts from Bangladesh through Land Customs Station, Petrapole under a valid bill of entry dated 28.01.2013. It is also claimed that upon clearance of payment of the prescribed amount of import duty, the goods imported by the petitioners were examined and after assessment and clearance of the goods, they were loaded in West Bengal registered vehicles and were brought to a place Bangaon by these trucks from where the goods were transferred/loaded to the trucks provided by the Transporter M/s SRC India Movers enroute to their business premises at New Delhi. The petitioners, in this regard, have also asserted that the goods, namely, betel nuts imported by them, were also got tested and nothing spurious was found in the test report of the Export Inspection Agency at Kolkata.

It is the further case of the petitioners that while transporting the betel nuts from Bangaon to its destination at New Delhi, its one of the consignment by Truck No HR46C3697 was intercepted on 16.02.2013 and seized by the officers of the Customs on the allegation that the recovered consignment split betel nuts were illegally imported to India from Bangladesh and were liable for confiscation under Section 111 of the Act. Such seized articles thereafter were brought to Patna where it was weighed and found to be 15.470 MT. The Custom officials, while seizing the goods, had also valued the same at Rs. 14,69,650/- apart from the value of the truck at Rs 12,00,000/-.

The authorities of Custom Department after recording of the statement of petitioner no. 2 in terms of Section 108 of the Act on 06.03.2013 as well as on 027.03.2013 and on verification of the papers relating to its valid import produced their prayer for provisional release of the seized goods, in terms of Section 110 of the Act, was also allowed by the Additional Commissioner of the Customs vide his order dated 28.03.2013. They had made possible efforts for getting release of the goods in terms of the aforesaid order of the provisional release dated 28.03.2013, but the same was still not released by the authorities of the Custom Department who under a design and mala fide intention, in order to block the release of the seized goods on 2.4.2013 had sent the sample of goods (betel nuts) for testing to Central Food Laboratory, Kolkata Camp, Raxaul (hereinafter referred to as ‘the C.F.L.’) which on 03.04.2014 had submitted a report that the sample was found to be adulterated and unsafe as per the Food Safety & Standards Act, 2006.

According to the petitioners, the confiscation proceedings in the meantime was decided in their favour by the final order of Additional Commissioner (Adjn.) Customs, Patna dated 29.11.2013 dropping the confiscation proceedings. The petitioners, in this regard, have also stated that after the aforesaid final order in adjudication proceedings dated 29.11.2013, they had again requested the Superintendent, Customs to release the seized goods weighing 15.740 MT of betel nuts to the petitioner no. 2 but the authorities of the Custom Department, vide letter dated 7.12.2013, had informed the petitioners that the request for release of the goods cannot be considered in view of the case being presently pending for departmental review before the reviewing authority. The petitioners have also explained that after this communication nothing more was communicated to them and the department consumed a period of almost four months in only filing its appeal on 25.3.2014 against the final order of adjudication dated 29.11.2013.

According to the petitioners, on 09.04.2014, the sample of the betel nuts was again sent to C.F.L, Raxaul for its being tested and when on 24.04.2014 a negative test report of betel nuts was received by the Custom Department from the C.F.L., Raxaul, the authorities of the Custom Department had still not released the seized betel nuts of the petitioners whereafter they had been compelled to file this writ application on 05.08.2014.

Taking the aforementioned submissions into consideration, this Court, on 02.12.2014, had directed the authorities of the Custom Department to disclose the reasons for such an enormous delay in the release of the seized articles of the petitioners and the Commissioner of the Customs (Prev.) in person was directed to file an affidavit giving explanation as to why it had taken almost one and half year to act upon the provisional order of release dated 28.03.2013 and whether for such laches on the part of the concerned officers/employees any action had been taken against them or was proposed to be taken.

Contention of the Petitioner

The ld counsel of the petitioner had submitted that only when this Court in course of its hearing of the case on 6.8.2014 had taken a serious view the seized articles of the petitioners were released on 09.08.2014, but then this Court should look into the aspect as to why such goods were not released in favour of the petitioners for a period of more than sixteen months despite an order of provisional release dated 28.03.2013. Learned counsel for the petitioners, in fact, was of the view that in the period of almost one and half year, since the date of seizure to the date of release, the quality of the seized split betel nuts had deteriorated to such an extent that if become wholly useless and thus causing huge financial loss to the petitioner.

Contention of the Revenue

The ld counsel of the revenue submitted that though the goods were already released in favour of the petitioners on 09.08.2014 pursuant to the release order passed by the authorities on 08.08.2014 on furnishing of Bank guarantee by the petitioners but on account of dismissal of appeal filed by the department, the Bank guarantee furnished by the petitioners were also sought to be returned back to them.

Held by High Court

High Court held that from supplementary counter affidavit, it thus became very clear to this Court that the seized articles of the petitioners, being the split betel nuts and the truck, on 17.02.2013, even though were directed to be released on an application filed by the petitioners on 06.03.2013 under the order of the competent authority, namely, the Superintendent (Adjn.), Customs (Hqs.) Patna, on 28.03.2013, the release was not made. Thus, it would become clear that the aforesaid order of provisional release dated 08.08.2013 on furnishing Bank guarantee as was also even earlier directed in the order of provisional release dated 28.03.2013 came to be passed only because of filing of the writ petition by the petitioners on 5.8.2013 and an explanation sought by this Court on 6.8.2013, inasmuch as such release even otherwise could have been made earlier in terms of the aforesaid order of provisional release dated 28.3.2013.

Thus, when this Court was not at all satisfied with the aforementioned explanation in the supplementary counter affidavit filed by the Commissioner of Customs, an assurance was given by him in person to this Court on 16.12.2014 by filing a second supplementary counter affidavit that he had instituted an inquiry to be conducted by Mr. K.Ramamurti, Additional Commissioner, Customs for fixing responsibility on the concerned officials who had caused abnormal delay in the release of the consignment of the petitioners. This Court on perusal of the all the documents referred above as also after hearing the learned counsel for the parties is fully satisfied that there is no justifiable reason for not releasing the seized betel nuts of the petitioner and in fact, it is a classic case of highhandedness and arbitrary exercise of power by the officials of the Custom Department at Patna.

This Court is thoroughly disappointed with the conclusions arrived by Mr. K. Ramamurthy in his inquiry report as already quoted above in paragraph no. 23 of this judgment. His all three conclusions is bereft of his awareness of the provisions of the Customs Act, inasmuch as when there was an order of provisional release dated 28.3.2013 in terms of Section 110A of Customs Act in favour of the petitioners, his finding that there was no deliberate attempt not to release the seized articles of the petitioners is absolutely a perverse finding. The help taken by him of the provisions of Prevention of Food Adulteration Act, 1954 in no view of the matter could have become a factor after the order of the provisional release dated 28.03.2013 was passed and unless such order was set aside by the higher authority the same had to be essentially acted upon. As against such statutory order if the department had not filed any appeal it could not have taken a shortcut by sending the seized articles, namely, betel nuts for its test report by the CFL. Raxaul and in fact such recourse itself smacks of malafide on the part of officials of Custom Department.

The second reasoning of Mr. K. Ramamurthy in his conclusion of enquiry report is equally bad, inasmuch as under the provisions of the Customs Act if the adjudication in confiscation proceedings is decided in favour of the person concerned alleged to have violated the provisions of the Customs Act, the seizure made itself becomes illegal from that very date of the final order. Thus, if there was an order of provisional release in favour of the petitioners dated 28.3.2013 and the confiscation proceedings had also ended in favour of the petitioners on 29.11.2013, there could be no justification whatsoever in law including under any provisions of the Customs Act in not releasing the seized articles either on the ground of pendency of review or the appeal. Such recourse of mere pendency of a review or filing of an appeal amounting to staying the final order of confiscation proceeding is at least not contemplated under the provisions of the Customs Act.

Section 110-A of the Customs Act lays down the power of the adjudicating authority for directing the provisional release of the seized goods on obtaining a bond with security and also imposing any conditions. Thus, when in exercise of this power under Section 110-A of the Customs Act and order of provisional release in favour of the petitioners had already been passed on 28.03.2013, this Court would not be in a position to buy the defence, being sought to be advanced by the learned counsel for the Customs Department or the Commissioner of Customs himself, that after passing of the provisional order of release on 28.3.2013, the Department had felt necessity of sending the seized split betel nuts of the petitioners to the C.F.L., Raxaul for finding out its edible quality. That seems to be a layman explanation and in fact a burning example of red tapism prevailing in the office of the Custom Department. It must be borne in mind that such order of provisional release dated 28.3.2013 was a statutory order under section 110A of the Customs Act and could not have been ignored on a mere ipsi dixit of the officials of Custom Department.

This Court in fact has no iota of doubt that there was absolutely no justification at all either on fact or in law in not giving effect to the order of the provisional release dated 28.03.2013. The plea of the respondents that they had received some adverse report of C.F.L., Raxaul with regard to adulterated quality of the betel nuts dated 04.04.2013, could not be given them any power to review or recall the order of provisional release passed by the competent authority in exercise of power under Section 110(A).

What would still make the matter worse for the authorities of the Custom Department is that after the adjudication in confiscation proceedings, in terms of Section 122 of Custom Act, had been brought to an end in favour of the petitioners on 29.11.2013 and there was no order of either confiscation or paying fine by the petitioners and, in fact, the proceedings itself was dropped, the authorities, in any view of the matter, whether in the name of the pendency of the report of the C.F.L. or otherwise, could not have kept the seized consignment of the petitioners in their possession even for a day. the appeal was filed by the Department against the order of the confiscation dated 29.11.2013 only on 25.03.2014 i.e. after a period of 04 months and in this period there was no stay of any court or any authority not to release the seized goods of the petitioners.

Having thus regard to the findings of the adjudicating authority in confiscation proceedings dated 29.11.2013 which also stands fully affirmed by way of dismissal of appeal filed by the department, this Court would find it difficult to accept any of the plea of Custom Department with regard to non-release of the seized articles of the petitioners for a period of nearly one and half year commencing from 28.03.2013 till 09.08.2014. This Court, therefore, would not be required to say anything more about the events which have taken place after releasing of betel nuts on 09.08.2014, inasmuch as, the appeal filed against the adjudicatory final order in confiscation proceedings dated 29.11.2013 was also eventually dismissed on 29.11.2013 some time in November, 2014 which led to return of bank guarantee to the petitioners in view of the order dated 11.11.2014.

The matter in fact become still worse for the authorities of the Custom Department because they had consumed a period of more than one year in only getting the test report of the Laboratory with regard to edible quality of the betel nuts and despite a negative test report of betel nuts dated 16.4.2014, the seized betel nuts of the petitioners was released by the Custom Department only on 9.8.2014. In fact, there could be no logic or justification whatsoever in not releasing the seized goods of the petitioners at least after receiving this negative test report of the betel nuts from the C.F.L. on 24.04.2014, holding the same to be neither spurious nor contaminated nor even adulterated but that also was not done till the petitioners filed the writ application on 05.08.2014 and in fact till echo of first order of this Court passed on 06.08.2014 was heard by the officials of Custom Department directing the authorities of the Custom Department to explain as to why the goods of the petitioners were not released despite an order of provisional release dated 28.03.2013 and the final order of the adjudicating authority dropping the proceedings itself on 29.11.2013.

Thus the fact remains that only after the petitioners had filed writ petition on 05.08.2014 and an order was passed by this Court on 06.08.2014, directing the standing counsel for the Customs Department to disclose the reasons for not releasing the goods by filing the counter affidavit that the conditional order of release on furnishing of taking bank guarantee and bond by the petitioners had been passed on 8.8.2014 which in turn would go to show that this could have been done even on 24.4.2014 if not on 29.11.2013 or 28.3.2013. Thus, the reason for not releasing the goods on account of pendency of the appeal is also a mere hoax and not permissible in law. The manner in which the authorities have in fact sought to keep the petitioners deprived of the seized goods for a period of almost one and a half year, therefore, cannot be approved by this Court.

In such a situation, when no plausible much less acceptable explanation has come forward on behalf of the authorities of the Custom Department, it has to be essentially held that there was gross unreasonable delay in release of the seized articles of the petitioners, which has resultantly caused immense loss to the quality of the seized betel nuts of the petitioners and eventually has become absolutely of no use for the petitioners. The petitioners, in fact, were made to run around the corridors of the office of the Custom Department since 28.03.2013 for getting release of their seized articles and as such when there is also evidence to show both in the final order dropping the confiscation proceedings dated 29.11.2013 as also in test report of CFL dated 24.4.2014 that the seized betel nuts had also become rotten, damaged and discoloured on account of infection/infestation with insects in the period of more than one year primarily due to poor storage condition in the office and godown of Custom Department, this Court will have no difficulty in holding that it was on account of abnormal delay caused in releasing of the seized betel nuts of the petitioners that its utility value had been virtually reduced to Zero.

This Court, therefore, is of the view that had the authorities of the Custom Department released the seized betel nuts in view of provisional release dated 28.3.2013 by accepting the Bank guarantee as granted in the aforementioned order which they eventually did on 9.8.2013, neither the petitioners could have been put to a loss nor the authority of the Custom Department in any way could have been prejudiced in pursuing and completing the confiscation proceedings.

Thus, having an overall picture this court will have no difficulty in coming to the ultimate conclusion that the petitioners on account of abnormal delay of almost 1½ years caused in release of its seized betel nuts have been put to a perennial loss. Since the authorities themselves had valued and quantified the price of the seized articles, namely, split betel nuts weighing 15.470 M.T. to the tune of Rs.14,69,650/- on 17.2.2013, the petitioners would become at least entitled to recover this amount from the officials of the Custom Department.

By now, the law is well settled that the public officers have to be also held accountable for their acts of omission and commission. Reference in this connection may be made to the judgment of the Apex Court in the case of Lucknow Development Authority Vs. M.K. Gupta reported in 1994(1) SCC 243, in the case of State of A.P. Vs. Food Corporation of India reported in 2004(13) SCC 53 and in the case of Delhi Airtech Services Private Limited and Anr. Vs. State of Uttar Pradesh & Anr. reported in 2011(9) SCC 354. A similar view was taken by the Apex Court in the case of Food Corporation of India 2004(13) SCC 53 wherein recovery of costs in the frivolous legal proceeding was sought to be made from the officer concerned for negligence in prosecuting litigation on behalf of the State. Recently, the Full Bench of this Court in the matter of illegal appointment had adopted the same yardstick for fixing responsibility against the government officers in the case of Ram Sevak Yadav & Anr. Vs. The State of Bihar & Anr. reported in 2013(1)PLJR 964.

Thus, when this Court has found that the petitioners have been put to a loss of at least Rs.14,69,650/- on account of complete deterioration of quality of split betel nuts solely on account of deliberate laches on the part of the officials of the Custom Department it would direct respondent no.2 to pay a sum of Rs.14,69,650/- along with interest at the rate of 9% per annum for the period 28.3.2013, the date on which the order of provisional release of the seized article was passed by the competent authority to the order directing release of the seized articles dated 9.8.2014 within a period of three months from today.

It is, however, made clear that such amount, which has to be paid by way of compensation for the loss caused to the petitioners on account of delay of nearly 1½ years in release of the seized articles, shall be recovered from the erring officials and for the purposes of fixing individual responsibility on such erring officials this Court would direct the Chairman of Central Board of Excise and Customs Department of Revenue, New Delhi to get an enquiry conducted by an Officer not below in the rank of Chief Commissioner of Customs who must not be posted and/or associated in any manner with Patna Zone of the Custom Department.

Accordingly appeal disposed of.

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Category : Custom Duty (6183)
Type : Judiciary (8910)