TMI Blog1983 (9) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... f diverse quantities of Indian manganese ore. Such contracts were for dispatching of the concerned ore from the Port of Visakhapatnam to the foreign buyers. It has been alleged that not only the said company but also the other petitioners, at all material times had and still have rights guaranteed under articles 19(1)(g) and 14 of the Constitution of India in the matter of carrying on such business or avocation as mentioned above, without any restrictions which were either not in the interest of the general public or were unreasonable and in fact, they have also claimed to possess the fundamental right to be treated equally along with others, including all companies similarly situate without from being hostile, unequal discrimination or from being treated differentially or prejudicially and/or singled out from the other companies so placed like that of the said company for any hostile, unequal and unequal treatment. 2. It has been stated that in terms of the above the said company entered into several contracts with various foreign purchasers, for the sale of the commodities as mentioned above, after having the requisite licences from the Central Government for the purpose and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the customs duty leviable in respect of different consignments had been assessed on the basis of the value declared by the said company and shipment was allowed accordingly and such question of assessment, on being finalised, was found to have been made on entry on the basis of prices as prevailing at the time of delivery of the shipping bills or the basis as taken was more than the prices stated in the shipping bills, apart from the fact that the correct assessable value was arrived at on the basis of shipment analysis of the manganese content of the concerned ores as declared by the said company in two cases and as determined by M/s. R.V. Briddges and Company Ltd., Calcutta in three cases. It was the case of the petitioners that no copy of the analysis report as made by the customs authorities, was either disclosed or made known to them and everything was done behind their back and contrary to the principles of natural justice. It has also been stated that before the 13th September, 1960, letter as mentioned above, there were other representations made by the petitioners to the authorities concerned, but they were of no avail or assistance and in fact, they produced no fruitful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtation thereof; or (b) where such price is not ascertainable, the cost at which goods of the like kind and quality could be delivered at such place, without any abatement or deduction except as aforesaid." 5. The petitioners have also stated that in between the period of 16th November to 23rd November, 1960, they had preferred five appeals against the five orders dated 24th November, 1959, but thereafter on or about 17th December, 1960 fifteen other orders were passed by the Collector, respondent No. 1, in respect of the fifteen other shipments of manganese ores from the Port of Visakhapatnam by the said company and by those orders, the said Collector demanded various amounts by way of short levy in respect of the concerned shipments. Against those orders, different and respective appeals were preferred. 6. It has been stated that in spite of the above and the pendency of the appeals, on 19th June, 1961, the Collector of Customs, Madras, wrote 20 separate letters to the said company that no appeal would be heard unless they deposited total sums of extra duty payable into the Customs House, Treasury, Visakhapatnam, under Section 189 of the said Act of 1878 and necessary rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned above, it would be proved ex facie that the appellate authority had apparently rejected their appeals, without considering their prayers and without giving them due opportunities to be heard and those appeals were admittedly treated as closed, only on the ground that the petitioners had failed to make the deposit. It has been alleged that in doing so or acting in that manner, the appellate authority did not exercise the discretion vested in him and the said authority had not really formed necessary opinion appropriately, which in law, they were obliged and bound to form. It has further been stated that the copy of the order was never served on the petitioners and the fact that the petitioners' appeals were dismissed due to non-payment of duty as demanded, was not also duly notified, which again was incumbent on the Deputy Collector of Customs concerned. The petitioners have further stated that taking into consideration, the relevant dates and even if the order as made can be treated to be a correct and proper one, the last date for treating the appeal as closed, should have been 18th July, 1961, but as the appeal was informed to have been closed earlier, there was not only irre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rule on 16th May, 1972, along with the corresponding interim order on terms and it appeared from the order sheet that compliance having been made, the said company is enjoying the interim order, although the rule has been discharged against the Collector of Customs, Visakhapatnam, respondent No. 1, for default of Court's Order dated 25th March, 1972. In the rule, the notices dated 28th February, 1967, certificate dated 7th December, 1970, and the notice dated 7th January, 1971, some particulars whereof have been mentioned hereinbefore, have been sought to be impeached, by claiming them to be malafide, arbitrary perverse, contrary to law, apart from claiming them to be issued in colourable exercise of power and against violation of principles of natural justice. In addition to the submissions which were put forward by and on behalf of the petitioners, it was also claimed that the Assistant Collector of Customs concerned in the instant case, had no jurisdiction whatsoever to forward the certificate to the Certificate Officer nor had the Certificate Officer any jurisdiction to act on the basis of the certificate in the instant case. Entire proceedings, starting from the initiation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to determine its grade or manganese contents and the actual value of the substance is dependent on such content. He has stated that in this case, samples of manganese ore were drawn as per the practice and in presence of the said company's agent, viz., M/s. International Shipping Corporation Ltd. He has further stated that the manganese content which was adopted as the basis for final assessment in respect of each export was disclosed to the petitioners in the concerned notices for the payment of duty as short-levied and as such the payments which were neither contested nor appealed against and were duly and properly made, were not illegal or irregular. It was also the case of the deponent that as the short-levied amount of duty was not paid, the paid company was reminded by several letters for necessary payment and such reminder was issued for the purpose of fulfilling the requirements of the principles of natural justice. 12. The deponent has stated that the City Civil Court at Bombay, in the judgment in Suit No. 2575 of 1959 has not observed that the Indian Trade Journal is not a correct guide for the purpose of ascertaining the real value. It has further been stated by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority asked the petitioners to deposit the amount for enabling them to consider the appeals. It was also the case of the petitioners that the exact date on which the appeal was to be treated as closed by the appellate authority, due to non-compliance of Section 189 of the 1878 Act, would not be material and that would not affect the recovery of duties as short-levied, which were pending since 1959-1969 and according to him Section 160(7) of the Act of 1962 protect the proceedings in question, which had been started under the said Act of 1878. 14. It was further stated by the deponent that the shipping bills were assessed provisionally at the petitioners' request and the assessment in five cases as mentioned above, were finalised in November, 1959, and the short-levy amounts were demanded on 24th November, 1959, and the remaining 15 cases were finalised in November, 1960 and the amounts as short-levied were duly demanded on 17th December, 1960. He has stated that necessary actions were, therefore, taken within three months time-limit as prescribed under Section 131 of the Act of 1878. It was also his case that since demands issued for recovery of short-levied amount of duty we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covery Act, 1890. The proceedings as initiated were also claimed to be within jurisdiction, legal, valid and proper. It has also been claimed that the attempt to recover the legal dues as in this case, was made bona fide and there was no illegality in the same. The deponent has further stated that the Assistant Collector of Customs concerned has not signed or sent any certificate under Section 3(1) of the Revenue Recovery Act, 1890, but such certificate was issued under Section 142(c) of the said Act. The said certificate has been claimed to have been issued in due and proper exercise of power, competence, jurisdiction and the sending of the same to the authorities at Calcutta, was claimed to be appropriate. 16. It has further been stated by the deponent that the provisional assessment in the instant case was made at the request of the said company's agents and such request would appear from the endorsement at the reverse of the shipping bills. It has further been stated by the deponent that the petitioners have obtained the benefits of such order and as such would be estopped from raising any plea, which would be contrary to their acts or actions. He has further stated that eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with Section 30(b) of the Act of 1878, i.e. the repealed Act, and similar assessments made by Visakhapatnam Customs House, in identical cases, have been upheld by the Andhra Pradesh High Court as would appear from the judgment in Writ Petition Nos. 1210 and 1211 of 1958, which again have been affirmed by the Division Bench of that Court in Writ Appeals Nos. 41 and 42 of 1960. 18. The deponent has further stated that before finalisation of the assessment, the Customs House at Visakhapatnam, wrote to the said company requiring thereby to produce the related test reports of the analysis at the Port of the destination, the final invoices, contracts and any other documents in support of the value declared in the shipping bills and the documents which were submitted by the said company were taken into consideration at the finalisation of the assessment and as such, it has been stated that there was or has been no question of any violation of Section 29 and in fact, the proper procedure for determining the real value was followed. It has been stated that the values declared by the said company in the shipping bills were not acceptable to the authorities and accordingly th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition was filed by Shri Dhirendra Nath Bose and the same was dated 17th May, 1976. The said deponent is the Export in-charge of the said company and in the affidavit-in-reply, he has not only repeated and reiterated the statements in as contained in the petition of motion, but he has denied the material allegations as contained in the opposition. He has claimed that the said company would be entitled to ask for protection under Article 19(1) (g) of the Constitution of India. It was claimed that the basis of the demand of the short-levy, in the instant case, was invalid and improper and such being the fact, this Court should interfere, as there was thus an admitted exercise of a jurisdiction, which was illegal and irregular. It has been stated that the said company having duly taken exception to the demand at the material time, they would be entitled to maintain the petition as filed, and this Court would also be entitled to interfere. The deponent has further submitted that no due and proper opportunities was received by the said company, in the matter of making representation and thus there was violation of principles of natural justice. He has further denied that the samples as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat duties on the basis of the prices at which like kind and quality of goods could be delivered at Visakhapatnam, thus relied on the prices laid down in the Indian Trade Journal, an authoritative index of the price of such manganese ores. 21. It has been stated further that it was not shown or proved by the said company that the prices laid down in the Indian Trade Journal, were not the prices that could legitimately be taken to apply to Visakhapatnam Port. He has also stated that the prices given in the Indian Trade Journal, during the relevant period was the comparative price and it was further claimed that the said journal was the only reliable publication, which could be accepted as the source for obtaining accurate data, in respect of the value of the concerned ores. It was also his case that the price as laid down in the Indian Trade Journal has also been accepted all throughout the country as the proper criteria in coming to the conclusion as to the real value of the goods as required under Section 30(b) of the said 1878 Act. 22. This supplementary affidavit was filed on the basis of the liberty granted on 2nd August, 1976, and the deponent further clarified and state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate dated 7th February, 1970, to the District Collector, Visakhapatnam, with a request to forward the same to the Collector, 24-Parganas, Alipore. It was the case of the deponent that on receipt of the same, the District Collector, Visakhapatnam sent to the Collector, 24-Parganas, on 13th September, 1970, clarifying the provisions of Section 142(c) of the said Act and explaining the real legal position and sent the fresh certificate dated 7th February, 1970, to the District Collector, 24-Parganas, Alipore. On receipt of such certificate and the letter of 17th September, 1970, the Certificate Officer concerned, started case No. 77/78 (O.P.A.)/70-71 and issued a notice on 7th December, 1970, under Section 3(1) of the Revenue Recovery Act, 1890. Against such notice, the said company inter alia raised an objection that as the certificate was not signed by the District Collector, Visakhapatnam, the same was without jurisdiction and thereafter, the Tax Recovery Officer by his memo of 7th January, 1971, issued a notice, that unless the duties are paid by 2nd February, 1971, he would proceed to realise the amount and at that stage, the present rule was obtained on 16th May, 1972. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st affidavit-in-confirmation is a pensioner and in the past, he was attached to the Customs Circle, Visakhapatnam, as an Inspector of Central Excise and he has further stated to have looked after this case as such Customs Officer. It has been stated by him that in 1950, the Collector of Customs, Visakhapatnam, issued a circular to the shippers of manganese ore, that samples were to be drawn by the Customs Officers in the case of export of such ore to foreign countries in order to have the declared percentage of manganese ore content verified and thereby to determine the assessable value for the purpose of levy of export duty. Thus deponent has stated to have the approval and sanction of the Government of India. 26. The deponent has also stated that in terms of the above, the shippers/their agents, who filed the shipping bills for the shipment of the concerned ore, used to request the Collector of Visakhapatnam, to make provisional assessment of contents of the subject shipping bills, so as to enable the Customs Officers to inspect the lots as produced/tendered for export, draw samples from them in their presence, and then to determine the assessable value. It has further been st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made by the Customs concerned, the stocks were loaded on board the vessel. The particulars of the vessels and the shipping bills have been mentioned in paragraph 4 of his affidavit. 29. It has further been stated by the deponent that chemical test reports of the authorities clearly demonstrate, manganese content declared in the shipping bills were higher and as such it was and still is incumbent on the Department to refund the duty which had been obtained from the said company on the basis of wrong declaration. 30. Shri Dhirendra Nath Bose, an Assistant in the mineral ore department of the said company has filed an affidavit-in-opposition to the affidavit-in-confirmation dated 13th December, 1979. This affidavit was dated 22nd February, 1979. He has also dealt with the other affidavit-in-confirmation dated 4th December, 1978. It has been stated by him that such affidavit-in-confirmation should not be allowed to be used as no reasons have been disclosed as to why they were not made earlier, even though liberty was obtained for using supplementary affidavits from this Court. It has further been stated that on inspection of the records as taken, in terms of the leave granted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he presence of the said company's agents. 32. There was another additional affidavit dated 24th April, 1979, filed on behalf of respondents through Bhagyarathi Nanda, the Deputy Collector of Customs, Visakhapatnam. He has stated that pursuant to the leave given by this Court on 29th March, 1979, the Customs Authorities were permitted to file a further affidavit and the affidavit which is being dealt with now was filed in terms of such leave. He has stated that as the Deputy Collector of Customs, he has looked into all available files relating to the matter. It was his case, that although there were and are Collector's two notes. Board's letters, the documents and records available in the files revealed that the notices of demands/orders were passed by the then Collector of Customs, Visakhapatnam, and was presumably done on his own judgment. He has stated that the letter of 6th July, 1957, would disclose a general formula relating to the assessment of value and the same is not an order directing the then Collector of Customs, Visakhapatnam, to fix the percentage of ore manganese. In view of the above, he has stated that the orders as made, were due, legal and valid and it would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods under the provisions of the Sea Customs Act, 1878, act in a judicial and quasi-judicial capacity. The Customs Authorities are therefore required to follow the elementary rules of natural justice, namely, give an aggrieved person an opportunity of being heard and give a fair trial before adjudging the person guilty, of an offence and then to fine him. 34. Apart from the above, it was also contended that the order as made was against all canons of justice and fair play and since the initial order was a nullity, the same cannot be affirmed in appeal without stating the reasons duly. In fact, it was also claimed that the appellate order was also void, irregular and bad as the same contained no reasons or was not a speaking order. On a reference to the determinations in the case of Smt. Maneka Gandhi v. Union of India, AIR 1978 S.C. 597, it was contended and claimed that even though the proceedings in this case are held to be administrative in nature and the order as made is an administrative one, the principles of natural justice would apply and would be available to the petitioners. This was of course an argument made in the alternative. In that case, while dealing with the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not fall foul of that article. It was also submitted on the basis of the determinations in the case of Mohinder Singh Gill v. Chief Election Commissioner, AIR 1978 S.C. 851, the attempt of the answering respondents to validate the impugned order by subsequent reasonings given in this affidavit, would not be permitted and cannot be done. In that case, it has been observed that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out. 36. Section 39 of the said 1878 Act deals with payment of duties short-levied or erroneously refunded and lays down that when customs duties or charges have been short-levied through inadvertence, error, collusion or misconstruction on the part of the officers of customs, or through misstatement as to real value, quantity or description on the part of the owner, or when any such duty or charge, after having been levied, has been owing to any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default of the agent, such duty shall not be recovered from the agent unless in the opinion of the Assistant Collector of Customs the same cannot be recovered from the owner, importer or exporter, it was claimed that steps or actions, if any must be initiated first against the owner or the demand to be made from them and not from the agents and since that was not done, so the actions as taken cannot be said to be legal and proper. The petitioners also claimed that for enforcement of payment of penalty, Section 193 of the Act of 1878, which lays down that when a penalty or increased rate of duty is adjudged against any person under this Act by any officer of Customs, such officer, if such penalty or increased rate be not paid, may levy the same by sale of any goods of the said person which may be in his charge or in the charge of any other officer of customs. 37. When an officer of customs who has adjudged a penalty or increased rate of duty against any person under this Act is unable to realise the unpaid amount thereof from such goods, such officer may notify in writing to any Magistrate within the local limits of whose jurisdiction such person or any goods belonging to him may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heme of the same and the cases as cited at the Bar and so also the other case of Ponkunnam Traders v. Additional Income-Tax Officer, Kottayam - (l972) 83 1TR 508, which was further cited by Mr. Deb, it can safely be deduced and held that the Customs Authorities are quasi-judicial authorities or at least they act in such capacities and thus they are to act fairly, and as such, principles of natural justice have to be followed and observed by them and furthermore, the appellate authority is required to pass a speaking and reasoned order, if the initial order, as claimed, was a nullity. The principles as above, would also apply and would be available, even if the proceedings are administrative in nature. It is also true that at the stage of hearing of a Court proceedings, by filing affidavits, defects or lacuna, if any, in the order or the proceedings cannot be cured and such opportunity must not also be permitted ordinarily. 39. Under Section 39 of the said 1878 Act, there is nothing which would require the Customs Authorities, in terms of the decision of Assistant Collector of Customs etc. v. Bilbon Paper Printed Ltd. and Anr. - (1965) 69 CWN 972, to be objectively satisfied abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person hears evidence and arguments and another person decides, then such a procedure is destructive of the concept of judicial hearing and defeats the object of personal hearing. Personal hearing enables the authority concerned to watch the demeanour of the witness and clear up his doubts during the course of the argument and the party appearing to persuade the authority by reasoned argument to accept his point of view. But, if one person bears and another decides, then personal hearing becomes an empty formality and such a procedure offends the basic principle of judicial procedure. The above determination will certainly have no direct bearing and application on the facts of the case. But the principles, on application of the rules of natural justice as enunciated, may be applied in this case. But, one thing is certain, in this jurisdiction, I shall not be entitled to review and reappraise the evidence and as such, it becomes difficult for me to agree or to accept, that while coming to their conclusions as they did, the authorities concerned, took into consideration, matters or factors, which were extraneous wholly. If of course, by reference, to the Indian Trade Journal such sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny's case as made out by the respondents in their successive and several affidavits as indicated hereinbefore, claimed and contended that since there was no unauthorised, arbitrary, irregular and illegal use of power and jurisdiction in this case and more particularly when the determinations have also been made by the authorities, in due exercise of discretion, no interference should or need be made. He further contended that power, in this case, has been used and exercised bona fide and that also, on the basis of the declarations as made by the said company and more particularly as it was found on available materials, that such declarations and the available evidence, gave rise to some difference in price, for which, it was felt and opined that there was short-levy. It was also and further claimed that on the facts of this case, there would be no justification in holding that principles of natural justice were violated or the determination was made, on taking into consideration, extraneous matters. It was indicated by Mr. Sen that the wholesale cash price is not the same as the cost of goods on the basis that the goods should be taken as being sold to the exporter at the price whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the Sea Customs Act, yet, when the petitioner's husband has taken advantage of the same, the petitioner cannot, later on turn round and challenge it, apart from holding that Section 32 provides for a procedure where goods are undervalued by the owner and Section 137 refers to clearance for shipment and though neither under Section 32 nor under Section 137 any action was taken by the respondents, the question did not arise in the instant case because there was a provisional assessment and the assessee had agreed to pay the balance amount after the final assessment. 42. The price appropriate to the goods under assessment under Section 30(a) will be deduced, if at all, from the actual price relating to other goods of the kind and quality. But if there is an actual price for the goods them selves at the time and place and if the same is a wholesale cash price less trade discount, sub-section (a) of Section 30 will not apply for want of sale price of other goods. The goods under assessment under Clause (a) may be considered a class and their price as obtained, may correctly represent the price obtainable for goods of the same kind and quality. The language of the section, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s-impeached, but it cannot be doubted, that there was violation of principles of natural justice as the samples as examined, were drawn behind the back of the petitioners and that apart, the taking into account of the analyst's report, without any copy to the petitioners or any opportunities to them, in either to meet or contradict the same, was not only improper but that also constituted infraction of the principles of natural justice and fairness in action, which was expected of the authorities concerned in this case. I have recorded and indicated of the character of the authorities concerned in this case and thus the necessary pre-requisites they are to follow in a proceeding like this earlier and such being the position, if not on other grounds as claimed, the rule should at least on the ground of violation of principles of natural justice or for not following them and thus, for lack of fairness in action of the authorities concerned, may succeed. Such shortfalls or shortcomings in the case would take the same out of the mischief of the determinations in Baroness Wilhelmine von Maltazan v. Collector of Customs, AIR 1958 AP 122 as cited by Mr. Sen in support of his contentions t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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