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.
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.