Case Law Details

Case Name : D.R. Enterprises Ltd. Vs Assistant Collector of Customs and ORS. (Supreme Court of India)
Appeal Number : Civil Appeal No. 4417 of 2003
Date of Judgement/Order : 12/08/2015
Related Assessment Year :
Courts : Supreme Court of India (933)

Brief of the Case

In the case of D.R. Enterprises Ltd. Vs. Assistant Collector Of Customs And Ors, it was held by Supreme Court that the powers of the High Court  under  Article 226 of the Constitution, while issuing appropriate  writs,  are  very  wide. Even if there is an alternate remedy available that may not preclude the  High  Court from exercising the jurisdiction in a  particular  case.   In  the  face  of alternate statutory remedies, when the High Court declines to  exercise  the jurisdiction under Article 226 of the Constitution, it  is  a  self  imposed restriction only.

Brief Facts

The appellant herein had imported  one  printing  machine  of   ‘Harris Graphic V-15H Model’  which arrived at Mumbai airport on 24.10.1987.  Custom house agent of the appellant filed Bill of Entry for Home Consumption  under OGL on 13.11.1987 and claimed concessional rate of duty  under  Notification No. 114/80-CUS.

On 26.11.1987, the Appraiser of Customs House, Bombay issued  a  query  memo with regard to the printing capacity of the imported machine which had  been shown in the import invoice as 36,000 copies per  hour,  but  was  shown  as 25,000 in the leaflet furnished along with the Bill  of  Entry. The appellant answered the issue on 21.01.1988.

Having not been satisfied with the reply furnished by  the  appellant,  the customs authorities directed it to warehouse the goods under Section  49  of the Customs  Act,  1962  (hereinafter  referred  to  as  the  ‘Act’),  after depositing the admitted customs duty. Accordingly, the imported machine was warehoused.

Thereafter, some queries regarding the output of  the  machine  were  raised and the appellant tried to meet them. It also filed communications received from the manufacturer  explaining  that  the  machine  was  custom-made  for Indian purposes, i.e., for the appellant enhancing  its  capacity  to  36,000 copies per hour as against normal capacity of 25,000 copies,  which  is  the normal product manufactured by the said manufacturer.  On  that basis,  the appellant  wrote  to  the  customs  authorities   for   arranging   physical examination of the consignment to satisfy themselves  that  the  machine  in question was capable of giving output of 36,000 copies  per  hour.  However, no action was taken by the customs authorities thereafter.

Taking note of the inaction of the customs authorities to get  the  imported consignment physically inspected and proceeding with the  clearance  of  the same, on 24.04.1988, the appellant filed a writ petition before  the  Bombay High Court (being Civil Writ No. 2229/1988) praying for a  declaration  that the  imported  machine  was  covered  by  OGL  and  was  entitled   to   the concessional rate of customs duty under Notification No. 114/80-CUS and  for directing the respondents to permit clearance of the same.   Interim  relief of release of the machinery was also prayed for.

The appellant herein is aggrieved by the impugned  judgment of the High Court whereby the High Court has refused to allow the  appellant import of Web Printing Machine on concessional  rate  of  custom  duty.  The appellant had endeavoured to avail the concessional rate of  custom  duty  on the import of the  aforesaid  machine  under  Open  General  Allowance  (for short,  ‘OGL’)  with  the  aid  of  Notification   No.   114/80-CUS,   dated 19.06.1980. The High Court has held  that  the  said  Notification  is  not applicable in the instant case  as  the  appellant  has  not  been  able  to satisfy one particular eligibility condition contained therein.  To  put  it pithily, one  of  the  conditions  needs  to  be satisfied  to  avail   the concessional rate of duty @ 35% ad valorem under the aforesaid  Notification is that the machine is having output of 30,000  or  more  copies  per  hour. Whereas the appellant contends that the  machine  in  question  churned  out 36,000 copies per hour, the High Court has found it otherwise.  As  per  the High Court the output of the machine was 25,000 copies per hour,  which  was reflected in the leaflet of the manufacturer of the machine,  which  leaflet was filed along with Bill of Entry.

Contentions of the Assessee

The Assessee contended that  the  High  Court  was  not competent to  go  into  this  issue  when  the  Act  provides  for  complete adjudication machinery to adjudicate  this  issue.  The assessee referred to the provisions of Section 28  of  the  Act,  as  per  which  the authorities are supposed to issue show cause  notice  to  the  importer  and after giving opportunity to the importer  to meet the allegations  contained in show cause notice, the Adjudicating  Officer  is  to  pass  an  Order-in- Original deciding the case stated in the show cause notice. The assessee further contended that against the order of the Adjudicating Authority there is a provision for appeal before the Customs, Excise and Service Tax Appellate Tribunal (for short, ‘CESTAT’). Against the order of the CESTAT, appeal is provided to the Supreme Court. The Authority and Tribunal are the fact   finding   authorities,   which   are   supposed   to   take evidence/material on record and arrive at a finding on that basis. In this backdrop, it was submitted that  not  only  this  procedure  was  sidelined thereby causing great prejudice to the appellant, even otherwise,  the  High Court, while exercising its extraordinary writ  jurisdiction  under  Article 226 of the Constitution, was not competent to decide the disputed  questions of facts.

Contentions of the Revenue

The Revenue contended that that it did not behave well on the part  of  the  appellant  to now question the jurisdiction and competence of the High Court  to  go  into the issue when the High Court was requested and persuaded by  the  appellant itself to decide the  issue,  as  is  reflected  in  the  impugned  judgment itself. The appellant was estopped from  raising  such an  issue  when  the  appellant  itself  invited  the  judgment  on  merits. This fact would also negate the contention of the appellant predicated on limitation. The appellant had itself  raised  this  issue  in  the  High  Court  in  its petition which was  pending  adjudication.   That  was  a  reason  that  the Revenue authorities did not initiate any  action  as  per  the  adjudicatory mechanism provided in the Act. Therefore, the appellant was not entitled to rake up the issue of limitation as well.

Held by Hon’ble Supreme Court of India

The Hon’ble Supreme Court held that it is necessary in the first instance to take note of  the  scope  of the writ petition that was filed by the appellant in the  High  Court  which is dismissed by the judgment impugned.  A  copy  of  the  said  judgment  is placed on record and  a  perusal  thereof  would  show  that  the  appellant contested and disputed  the  position  taken  by  the  Department  that  the imported machine did not fulfil  the  aforesaid  requirement  of  exemption Notification No.   114/80-SC.  The  appellant  enclosed  copies  of  various documents procured from the  manufacturer  and  others  in  support  of  its submission on the basis of which it was claimed that the appellant was  able to establish that the speed of the  imported  printing  machine  was  36,000 copies per hour.  On that basis, contention raised in the writ petition  was that action of the Department in not allowing the  appellant  to  clear  the machine was illegal. The appellant also alleged failure and refusal  on  the part of the customs authorities in not permitting the  appellant  to  effect clearance for an inordinately long period of  time  after  the  machine  was landed.

No doubt, when the High Court passed the interim  order  in  favour  of  the appellant, the High Court could  dispose  of  the  writ  petition  with  the observation that the aforesaid issue involved on merit can be gone  into  by the appropriate authority  by  putting  the  machinery  of  adjudication  in motion via Section 28 route.  For some reason, that was not done and it  was more so as the appellant had itself prayed for declaration  to  this  effect in the writ petition, which means it called upon the High  Court  to  decide this issue.

In the aforesaid scenario, when the writ petition was pending, wherein  this issue was raised, probably for this reason the Department  also  stayed  its hands off. No doubt, there was no stay of adjudication proceedings  and  the competent authority  could  go  ahead  with  the  adjudication  proceedings.

However, if there was a show cause notice  in  the  year  2002,  whether  it would have been time barred or not is not even required  to  be  gone  into. Such a guess game is not needed because of  one  simple  reason.   When  the writ petition came up for  final  hearing  in  the  year  2002,  it  is  the appellant who is responsible for inviting the decision on  merits. Even at that stage, the appellant could have simply withdrawn the writ petition  as with the passing of interim order it had got the  printing  machine  cleared from the customs authorities and was using the same.  However, it  did  not choose to do so. Had it done so, and thereafter received show  cause  notice under Section 28 of the Act, it could have defended that notice raising  the plea of limitation as well.  Only then question  would  have  arisen  as  to whether the period during which the writ petition remained  pending  had  to

be excluded  or  not,  for  the  purpose  of  computing  limitation  period.

The Hon’ble Court further stated that High Court was not oblivious of Section  28  of  the  Act  and that determination of such an issue is  to  be  more  appropriately  in  the hands of Adjudicating Authority. It also appears that High Court might  have disposed of the writ petition with liberty to the Adjudicating Authority  to initiate proceedings under Section 28 of the Act. Curiously, such an  action was not taken at the instance of the appellant  who  contended  otherwise.

The Hon’ble Court further stated that after inviting the High Court to decide the matter  on  merits  and  finding that the decision has gone  against  the  appellant,  contrary  argument  is nothing but a desperate attempt to chicken out of  the  situation  which  is appellant’s  own  creation.  This  kind  of  somersault,  taking  completely reverse stand before us, cannot be countenanced.

The position would have been different if it was a case of inherent lack  of jurisdiction.  That is not so.  The powers of the High Court  under  Article 226 of the Constitution, while issuing appropriate  writs,  are  very  wide. Even if there is an alternate remedy that may not preclude  the  High  Court from exercising the jurisdiction in a  particular  case.   In  the  face  of alternate statutory remedies, when the High Court declines to  exercise  the jurisdiction under Article 226 of the Constitution, it  is  a  self  imposed restriction only. In the instant case, what is pertinent is that it  is  the appellant which not only made a prayer in the  writ  petition  for  deciding the issue in question, even at the time of hearing (as noted above),  it  is the appellant which pressed  for  the  decision  with  the  submission  that existence of alternate remedy should not  deter  the  Court  to  render  the decision on merits.  In such a situation, the  objection,  if  any,  to  the maintainability  of  the  writ  petition  could  have  been  taken  by   the respondent and it does not behove the appellant to raise this  objection  in the present appeal after pleading in the  High  Court  that  the  matter  be decided on merits.

Order of  the  High  Court  clearly  records that the appellant had requested the High Court to decide the issue  on  the basis of material on record.

The issue as to whether the import of Web Printing Machine  was  covered  by Notification No. 114/80-CUS dated 19.06.1980 was pending in the  High  Court in respect of which petition was filed by the appellant itself way  back  in the year 1988 raising this issue.  The appellant even got the interim  order in its favour.  When the writ  petition  came  up  for  final  hearing,  the appellant impressed  the  Court  to  decide  the  said  issue.   In  such  a situation, question of limitation does not arise inasmuch as  it  is  not  a case where proceedings under Section 28 of the Act  were  taken  out  giving any show cause notice under the said section.  The  question  of  limitation would have arisen only in case the respondent had issued show  cause  notice under Section 28 of the Act.  Further, it is not that  the  High  Court  was oblivious of the provisions of Section 28.  That is  categorically  recorded in the impugned judgment.

As pointed out above, the case of the appellant is that the High  Court  has given undue weightage to the two leaflets as  against  the  other  material, including the certificate of  the  manufacturer  clearly  stating  that  the machine in question which was supplied to  the  appellant  was  an  upgraded version capable of producing 36,000 prints  per  hour. However,  from  the reading of the impugned judgment, it  becomes  clear  that  each  and  every document which  was  filed  and  relied  upon  by  the  appellant  has  been discussed.  The High Court observed that insofar as  the  documents  of  the appellant are concerned, they can conveniently be divided into  parts.   One part of the document consists of two leaflets furnishing technical data  and description of the printing machine in question along  with  Bill  of  Entry and certificate showing date 08.02.1987 issued by the  manufacturer  of  the machine M/s. Harris Graphics Corporation,   USA.   The  other  part  of  the document is  nothing  but  a  correspondence  made  by  the  appellant,  its Clearing and Holding Agent and one M/s. S.L. Kulkarni & Co., which deals  in printing machinery, projecting themselves to be the  Indian  agent  of  M/s. Harris Graphics Corporation, USA.  The said second  part  of  the  documents can well  be  described  as  self  serving  evidence.   Likewise,  documents produced by the respondent  were  also  divided  in  two  parts.   One  part represents the  document  in  the  nature  of  Inspection  Report  based  on examination of the entire consignment which  was  completed  on  28.09.1988, while complying with the part of the directions issued by the High Court  by order dated 02.09.1988, and the other part of  documents  is  basically  the reproduction of documents supplied by the appellant itself.

Thereafter, the High  Court  formulated  the  question  as  to  whether  the appellant had discharged its burden  to  prove  that  the  subject  printing machine imported by it under OGL was having an output of  more  than  35,000 copies per hour so as to entitle it to claim  exemption  under  Notification No. 114/80-CUS, as amended from time to time.  On that touchstone, the  High Court has examined, appreciated and analyzed all the documents  produced  by both the parties.

The Hon’ble Court stated that the view taken by the High Court on merits is correct,  having

regard to the fact that burden of proof was on the  appellant  to  establish that the machine  imported  by  it  generates  more  than  35,000  composite impressions or copies per hour.  The appellant has failed to do so.

In view of the above, the appeal is dismissed.

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