1995 (7) TMI 80 - HC - Customs

Summary

Issues:
1. Allegation of collusion between petitioners and foreign supplier leading to customs duty demand.
2. Demand for customs duty due to failure to produce end-use consumption Certificate.

Analysis:
1. The petitioners imported a vital drug under a contract with a German Supplier, free of duty, but faced issues with the quality of the goods upon arrival. The Collector of Customs alleged collusion between the petitioners and the foreign supplier to remit foreign exchange, leading to the confiscation of 200 kgs of the drug and a penalty under the Customs Act. The petitioners contended that there was no collusion and took immediate steps to address the quality concerns, including stopping payment to the supplier and requesting re-export. The High Court found in favor of the petitioners, stating that the Collector's findings of collusion were unfounded as there was no evidence to support such claims. The court noted that the petitioners' actions were in line with rectifying the quality issue, and the order of confiscation was set aside due to lack of basis.

2. Additionally, the Assistant Collector of Customs demanded Rs. 6,94,260 as customs duty for not producing an end-use consumption Certificate. The petitioners argued that they were unable to produce the certificate as they had applied for re-export upon discovering the quality discrepancy in the imported goods. The court agreed with the petitioners, stating that under the circumstances where the goods did not conform to the description, and the petitioners had taken steps for re-export, demanding the full duty amount for failure to produce the certificate was unjust. The court highlighted the contradiction in the notice issued by the Assistant Collector and ruled in favor of the petitioners, quashing the demand for customs duty.

In conclusion, the High Court allowed the writ petition, setting aside the order of confiscation and the demand for customs duty. The court found no evidence of collusion between the petitioners and the foreign supplier and deemed the demand for customs duty unreasonable given the circumstances of the case. The ruling favored the petitioners, and no costs were awarded in the case.