By TIOL News Service

NEW DELHI, MAY 15, 2017: THE petitioner had filed Bill of Entry for clearance of consignment - "Transmitter Broadcasting Equipment Sub-System (Data processing unit with transmitting capabilities for Broadcasting), Software and other Standard Accessories". The assessable value of the goods was declared at Rs.51,70,619/-.

Upon arrival in India, the goods were examined under First Check to ascertain the correct nature of the goods. The quantity was found to be compliant with the Invoice and packing list.

The petitioner had explained the functioning of the equipment and that it is meant for one to one communication between the field reporter and the studio. It was also explained that the signal that is captured by devices such as Cameras (not part of the equipment), processes the signal and broadcasts to the audience. Thus, the device is merely a communication part using GSM network for transmission and thus, may be classified under CTH 8517.

However, the goods were not cleared by the Customs authority and it was alleged that the goods are specifically classifiable under CTH 85255020 and is not permitted to be imported except against the license issued by the WPC wing of the Ministry of Telecommunication and Information Technology.

The goods were absolutely confiscated and penalty was imposed.

During pendency of the appeal before the CESTAT, the respondent department was restrained from disposing off the goods. However, despite this restraint, the respondent auctioned off the goods.

Incidentally, the tribunal allowed the appeal of the importer petitioner and by order dated 29.01.2014 set aside the impugned order of 25.10.2012.

The petitioner submits that no notice was served on it before auctioning off of the goods and it had not waived the issuance of such notice. Thereafter, the petitioner by way of numerous letters dated 28.01.2014, 12.02.2014, 24.04.2014, 24.05.2014, 10.07.2014, 20.08.2014, 09.09.2014 made requests for the refund of cost of the goods so declared at the time of import i.e. Rs.51,70,619/- along with interest.

Since there was no response, the petitioner has approached the High Court seeking a direction to the respondents to grant the refund amount to it along with interest. They rely on the following decisions in Northern Plastic Ltd. = 2002-TIOL-1889-SC-CUS, AhsanWaris = 2014-TIOL-2521-HC-KOL-CUS in support and also contend that the action of the department is also in violation of the customs Circular F.No.711/4/2006-Cus(AS) dated 14.2.2006.

The counsel for the respondent submitted that the petitioner had not approached the court with clean hands inasmuch as it is not the respondent who sold the goods but the same were sold by the Custodian, M/s Delhi International Airport (P) Ltd, IGI Airport, New Delhi under Section 48 of the Customs Act, 1962. And this was done as the petitioner failed to respond to the notices issued to him regarding disposal of his property under Section 48 in the event of his failure to clear the cargo. To this effect, the Customs claims to have taken out advertisements in the Indian Express, the Hindustan Times and the Educator newspapers by the Custodian and thereafter the goods were sold as part of a larger container lot for Rs.81,000/- to M/s. Star Traders . In view of these facts, the customs authorities stated that the custodian i.e., M/s DIAL Ltd. was a necessary party to the instant writ petition.

The High Court observed -

+ Clearly, there was negligence on the part of the customs authorities; they do not deny that an interim order operated during the pendency of the petitioner's appeal, before the CESTAT. This meant that any action towards sale carried with it an inherent risk of exposure to a potential action for restitution. In other words, once the customs authorities were aware that the confiscation order was not final, but subject to the outcome of the appeal, they were accountable to the importer in the event of its success . A notice to the petitioner could have averted a possible risk of liability, because it was to notify the importer to make arrangement for purchase. The customs authorities allowed to sell the goods, at a vastly depressed price, despite their assumption that they were prohibited articles. However, the CESTAT upheld the declared value of the goods.

+ As can be seen from the authorities cited, the goods could not have been auctioned off before due notice of sale is given to the petitioner and without obtaining the consent of the CESTAT during pendency of the appeal. The fact that the respondent authorities auctioned off the goods during the pendency of the appeal is an act which is against the letter of the law . Their subsequent inaction against the communications made by the petitioner for payment of the refund amount, is clear apathy .

+ It is apparent from both the above judgments [Northern Plastic Ltd. = 2002-TIOL-1889-SC-CUS, AhsanWaris = 2014-TIOL-2521-HC-KOL-CUS] that the amount payable to the petitioner, is that which was assessed to be the value of the goods at the time of seizure i.e., Rs. 51,70,619/- and not the amount for which the respondent sold the petitioner's goods for i.e., Rs. 81,000/-. Furthermore Circular No.711/4/2006-Cus (AS) dated 14.02.2006 mandates the customs authorities to give due notice of sale to the petitioner before making the auction and states, "…that the requirement to issue notice to the owner of the goods shall also obtain in case of goods that have been confiscated but in respect of which all appeal/ legal remedies have not been exhausted by the owner of the goods.".

+ The customs department has tried to shrug off its responsibility upon the custodian of the goods i.e., M/s DIAL for selling the goods under Section 48 of the Customs Act, 1962. From reading that provision, it is apparent that only after obtaining permission by the proper officer, the goods can be sold . In this case, the proper authority empowered to give such permission is the customs authority as only on the declaration of this authority, that the goods are not what they have been described as in the Bill of Entry, the petitioner's goods were not cleared. Further, Section 48 of the Customs Act 1962 deals with goods not cleared, warehoused or transshipped within 30 days after unloading. However, in the present case, the goods were stopped from being cleared only on the basis of allegation made by the customs authority which allegation was ultimately rejected by the CESTAT, New Delhi, by its order dated 29.01.2014 . Thus, giving permission for auction at an advanced stage of the matter while it is still being adjudicated does not set a good precedent.

+ Clearly, the customs authorities wrongly disposed off the petitioner's property during the period when the petitioner's appeal was pending. Furthermore, in terms of the order of 25.10.2012, the goods were absolutely confiscated by the customs authority, so the goods ending up in the custody of M/s DIAL Ltd could not have been without the respondent's consent as M/s DIAL Ltd had no jurisdiction over the goods, let alone authority to sell.

The first two respondents were accordingly directed to pay the amount of Rs.51,70,619/-, i.e., the declared value of the confiscated goods to the petitioner, after deducting the customs duty payable on it, in accordance with law and also pay interest @ 9% per annum from the date of unauthorized auction of the confiscated goods till payment.

The writ petition was allowed.

(See 2017-TIOL-913-HC-DEL-CUS)