TMI Blog1992 (1) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms, Bombay confiscating the goods in question under Section 111(d) of the Customs Act, 1962, and directed the Collector of Customs and the Union of India to hand over the said goods (four consignments of raw silk yarn) to the first respondent or his clearing agent, for reshipment to Hong Kong in terms solicited by him. The learned Judge granted a further direction to the effect that for the period the goods were detained, rendering the first respondent liable to pay demurrage to Bombay Port Trust, the Collector of Customs and the Union of India shall issue a detention certificate in his favour. 3. The second respondent Ms. Renu Pahilaj is doing business at Delhi in the name and style of "Acquarius." The first respondent is an Indian national resident abroad doing business at Hong Kong in the name and style of UNISILK. The second respondent obtained an advance import licence on 20-5-1985 for importing raw silk valid for a period of 18 months from the date of its issue. The import licence was granted subject to the condition that raw silk imported should be utilised for manufacturing garments which ought to be exported by the second respondent. Some time prior to October 1985, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd: the advance import licence against which the said four consignments were imported has since been cancelled by the appropriate authority which means that there is no valid import licence for clearance of those goods; since, for re-exporting the said goods, a valid import licence is necessary and because it is not there - and also because the second respondent has abandoned the goods - permission for re-export cannot be granted. 7. The first respondent did not prefer an appeal against the said order. He directly challenged the same in the Bombay High Court by way of a Writ Petition. He reiterated his contention viz., since the second respondent has failed to pay and receive the documents regarding the said four consignments, he himself continues to be the owner thereof; if so, the said goods cannot be confiscated or proceeded against in any manner for any act or default of the second respondent. He claimed to be entitled to re-export the same to Hong Kong. The case of the Collector of Customs and the Union of India was that the second respondent must be deemed to be the owner of the said four consignments by virtue of the definition of 'importer' in Section 2(26) of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porter' contained in Section 2(26) of the Customs Act read with Clause 5(3)(ii) of the Imports (Control) Order, the second respondent must be deemed to be the owner of the goods and the first respondent cannot be heard to say that he is the owner of the goods. Whatever may be the position under the Sale of Goods Act and/or the Contract Act, so far as the authorities under the Customs Act and Imports (Control) Order are concerned, the second respondent is the owner of the said goods and no one else. For the acts and defaults of the second respondent, therefore, the said goods are liable to be confiscated. The first respondent's remedy is to sue the second respondent for damages and/or such other reliefs as he may be entitled to in law but he cannot claim title to said goods once they are imported into this country. It is also submitted that because of misuse of earlier consignments by the second respondent, the authorities were entitled to confiscate the said four consignments, covered as they were by the same Import Licence. In any event, once the import licence was cancelled, the goods could not have been cleared by anyone from the customs. On the other hand, Sri Salve, learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer;" 14. Section 112 provides for levy of penalty for improper importation of goods. For the purpose of this case, it is not necessary to set out Section 112. Section 120 provides that the smuggled goods may be confiscated notwithstanding any change in their form. Section 124 provides for the issuance of a show cause notice before the goods are confiscated and for affording a reasonable opportunity of being heard in the matter to the person affected. 15. The Imports and Exports (Control) Act, 1947 empowers the Central Government to prohibit, restrict or otherwise control import and export of goods, by an order published in the Official Gazette (Section 3). Section 4G provides for confiscation of goods in certain situations. The Section reads thus: "Section 4G. Confiscation - Any imported goods or materials in respect of which - (a) any condition of the licence or letter of authority under which they were imported, relating to the utilisation or distribution of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specified in any direction attached to the licence; (iii) that the applicant for a licence shall execute a bond for complying with the terms subject to which a licence may be granted. (2) A licence granted under this Order shall also be subject to the conditions contained in Schedule V. (3) It shall be deemed to be a condition of every such licence that :- (i) no person shall transfer and no person shall acquire by transfer any licence issued by the licensing authority except under and in accordance with the written permission of the authority which granted the licence or of any other person empowered in this behalf by such authority; (ii) that the goods for the import of which a licence is granted shall be the property of the licensee at the time of import and thereafter upto the time of clearance through customs: Provided that the conditions under items (i) and (ii) of this sub-clause shall not apply in relation to licences issued to the State Trading Corporation of India, the Minerals and Metals Trading Corporation of India and other similar institutions or agencies owned or controlled by the Central Government and which are entrusted with canalisation of imports: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned as (i), (ii) and (iii) which shall attach to every import licence granted under the Order. First of these conditions says that the import licence shall be non-transferable except under the written permission of the Licensing Authority or other competent Authority. Condition (ii) - which is the provision relevant herein says that the goods for the import of which a licence is granted "shall be the property of the licensee at the time of import and thereafter upto the time of clearance through customs." This condition, however, does not apply to STC, MMTC and other similar institutions entrusted with canalisation of imports. It also does not apply to certain eligible export houses, trading houses and public sector agencies mentioned in the second proviso. Condition (iii) says that the goods for which the import licence is granted shall be new goods unless otherwise mentioned in the licence. Now coming back to the Condition (ii), the question is what does it mean and what is the object underlying it when it says that the imported goods shall be the property of the licensee from the time of import till they are cleared through customs. It is necessary to notice the language of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken against him for suspension/cancellation of licence. May be, some other proceedings can also be taken against him. But certainly he cannot be treated as the owner of the goods even in such a case. Holding otherwise would place the exporter in a very difficult position; he loses the goods without receiving the payment and his only remedy is to sue the importer for the price of goods and for such damage as he may have suffered. This would not be conducive to international trade. We can well imagine situations where for one or other reason, an importer chooses or fails to pay for and take delivery of the imported goods. He just abandons them. (We may reiterate that we are speaking of a case where the import is not contrary to law). It is only with such a situation that we are concerned in this case and our decision is also confined only to such a situation. Condition (ii) in sub-clause (3) of Clause 5, in our opinion, does not operate to deprive the exporter of his title to said goods in such a situation. 20. At this stage, it may be appropriate to clarify one aspect. There may be cases, where the importer opens a letter of credit and makes some other arrangement ensuring/guar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to the four consignments in question. Be that as it may, it is sufficient for the present to notice that so far no action has been taken on that account either under the Customs Act or under Section 4G of the Imports and Exports (Control) Act, 1947. Section 4G of 1947 Act is also conceived to meet such a situation, as a reading thereof would disclose. It says that non-compliance with any condition of licence relating to utilisation of such goods renders the said goods liable to confiscation notwithstanding that such goods are mixed up with other goods or material. Even though a period of more than five years has passed by, no action has been taken either under the Customs Act or under Section 4G of Imports and Exports (Control) Act, though the import licence of the second respondent has been cancelled. We must presume in the circumstances that no such action was or is contemplated. In these circumstances the title of the first respondent to the said goods remains free of any cloud. 22. Coming to para 26(iv) of the Import-Export Policy for the year 1985-86, it too, in our opinion, is of no material relevance herein. It reads : "26. Import is valid if it fulfils, among other t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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