Oswal Spinning And Weaving Mills LTD. vs Collector Of Customs

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1988 Supreme(SC) 297

SUPREME COURT OF INDIA
R.S. PATHAK, CJI., RANGANATH MISRA AND B. C. RAY, JJ.
M/s OSWAL SPINNING & WEAVING MILLS LTD.
Versus
COLLECTOR OF CUSTOMS AND ANOTHER
Civil Appeal No. 4102 of 1984{From the Order dated July 31, 1984 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. CD(SB)(T)-817/82(D)}, decided on April 19, 1988
Advocates appeared
Harish N. Salve and N. D. Garg, Advocates, for the Appellant;
B. Datta, Additional Solicitor General (R. P. Srivastava, D. N. Mukherjee and Ms S. Relan, Advocates, with him), for the Respondents.

Advocates:
B.DUTTA, D.N.MUKHERJI, HARISH N.SLAVE, N.D.GARG, R.P.Srivastava, S.Relan

Headnote:
Customs Act, 1962 - Section 111(d) and (m) - Section 125 - Section 130-E - Section 45 - Section 3 - Section 112 - Section 126 - Section 141 - Imports and Exports (Control) Act, 1947 - Section 3 - Major Port Trusts Act, 1963 - Sections 42 and 43 - Section 42(7) - Imported Goods - Confiscation of Goods - Clear Goods on Payment - Appellants imported 58 bales of woollen rags through State Trading Corporation - When goods arrived at Calcutta, Customs authorities called upon appellants to show cause as to why same may not be confiscated - After hearing appellants, as also State Trading Corporation, respondent 1, to which a notice was also issued, Collector of Customs by his order directed confiscation of goods in exercise of power but in lieu of confiscation, appellants were given option to clear goods on payment of redemption fine of Rs 50,000 - Appellants appealed to Central Board of Excise and Customs which sustained order of confiscation but reduced redemption fine to Rs 20,000 – Held, Imported goods were not handed over to custody of Port Trust - Therefore it is customs authorities who are in possession and control of said imported bales of woollen rags and they cannot shirk their responsibility for loss and damage of said goods and they are liable to pay value of goods to appellant as damages in order to re-compensate appellant - It is pertinent to mention in this connection that under Sections 42 and 43 of Major Port Trusts Act, 1963 it is only when goods have been taken charge of and receipt given for them under Section 42(7) of said Act liability for any loss or damages which may occur to person to whom receipt has been given by Board, arises - In instant case as not a single document has been produced before this Court by customs authorities showing that goods were handed over to custody and possession of Board of Trustees and that Board issued any receipt for that as required under Section 42 read with Section 43 of said Act - Therefore, under no circumstances can Board of Trustees be held responsible for loss or destruction of said imported goods - As stated hereinbefore imported goods were kept unloaded in customs area and were confiscated and as such respondent 1 is liable for loss or damages that has been caused to appellant by destruction of imported goods from their custody and possession - It is not possible for this Court while hearing appeal under Section 130-E of Customs Act against order of Appellate Tribunal to ascertain and determine money value of imported goods which have been lost or destroyed from possession and custody of customs authorities - Appellant may take appropriate proceedings for determination of damages and for recovery of same in accordance with law - Appeal Disposed of.

Judgments

RANGANATH MISRA, J. (for himself and Pathak, C. J.) (concurring)- We have had the benefit of reading the judgment proposed by my learned Brother Ray, J. We agree with the conclusion that respondent 1 is liable for the loss or damage to the goods and would like to briefly indicate the reasons for such conclusion.

2. The appellants imported 58 bales of woollen rags through the State Trading Corporation from Canada. When the goods arrived at Calcutta, the Customs authorities called upon the appellants to show cause as to why the same may not be confiscated under the provisions of the Customs Act (hereafter referred to as the Act). After hearing the appellants, as also the State Trading Corporation, respondent 1, to which a notice was also issued, the Collector of Customs by his order of March 12, 1981 directed confiscation of the goods in exercise of power under Section 111(d) and (m) of the Customs Act but in lieu of confiscation, the appellants were given the option under Section 125 of the Act to clear the goods on payment of redemption fine of Rs 50,000. The appellants appealed to the Central Board of Excise and Customs which sustained the order of confiscation but reduced the redemption fine to Rs 20,000 and directed :

. . .after the goods are mutilated to the satisfaction of Collector of Customs, Calcutta, by the importers at their cost and under customs supervision so as to render them unfit for use except as rags and after payment of appropriate duty, the goods be released on payment of a fine of Rs 20,000 within three months hereof. The appellants then moved the Central Government in revision against the Boards order and in due course the revision was transferred to the Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal by its order dated July 31, 1984 gave the following direction while disposing of the appeal :

... the goods be released on payment of customs and other related duties, under T.I. 63.02, with countervailing duty as leviable under corresponding entry in the Central Excise Tariff. This is subject to Boards order about payment of redemption fine of Rs 20,000 and mutilation of the goods to the satisfaction of the Collector, at the cost of the appellants and under the supervision of the customs authorities.

3. The appellants then moved this Court by way of appeal under Section 130-E of the Customs Act. On December 17, 1986 this Court directed waiver of the redemption fine. Mr Salve for the appellants agreed to pay the duty, as directed, when delivery was to be taken of the goods. When appellants complained that a part of the goods was not traceable, notice was issued to the Calcutta Port Trust authorities and it has been joined as respondent 2 to this appeal.

4. In view of the order waiving the demand of redemption fine and the appellants agreeing to pay the demand of appropriate duty as directed by the Tribunal, the only question that survives for examination is as to the availability of the goods return whereof has to be made to the appellants and in case the whole or part of the goods is not traceable, in what way the direction of the Tribunal for return of the goods has to be worked out. It is not disputed that 58 bales of the goods in question had been received, nor is there any dispute that the entire goods had been confiscated under the Act. Section 45 of the Act provides :

45. Restrictions on custody and removal of imported goods.-(1) Save as otherwise provided in any law for the time being in force, all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Collector of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII.

(2) The person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the time being in force,-

(a) shall keep a record of such goods and send a copy thereo