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HIGH COURT OF CALCUTTA
Bose
SOORAJMULL NAGARMULL - Appellant
Versus
ASST. CONTROLLER OF CUSTOMS - Respondent
Civil Matter 113 Of 1950
Decided On : FEBRUARY 16, 1951
CUSTOMS - IMPORT OF LUBRICATING OIL - CLASSIFICATION - DENIAL OF NATURAL JUSTICE - VIOLATION OF FUNDAMENTAL PRINCIPLES OF JUDICIAL PROCEDURE - WRIT OF CERTIORARI - JURISDICTION OF HIGH COURT - SECTION 198 OF THE SEA CUSTOMS ACT, 1878 - BAR TO PROCEEDINGS - INTERPRETATION.
Fact of the Case:
The petitioner imported lubricating oil, which was classified under Item 27(3) of the Indian Customs Tariff Act, 1934, attracting a higher rate of duty. The petitioner challenged the classification, contending that the oil should have been classified under Item 27(1), which attracted a lower rate of duty. The Customs authorities refused to release the goods unless the petitioner agreed to accept the results of a chemical test and to pay extra duty and penalty. The petitioner signed a letter to this effect, but the goods were not released. The Customs authorities then served a memorandum on the petitioner, calling upon it to explain why it should not pay extra duty and penalty for the goods and for the false declaration made in the Bill of Entry. The petitioner replied to the memorandum, but the Customs authorities insisted on another letter being written and signed by the petitioner, in which they extorted an undertaking to produce documents showing user of the oil as lubricating oil within three months as a condition for immediate release of the goods. The petitioner executed a Bond and paid an extra duty of Rs. 75,925/- on that day and it is not till the 30th March 1950 that they allow the petitioner to take away the goods. Subsequently when the petitioner goes on repeatedly asking for a copy of the test report to be supplied to it and writes five or six letters and offers to pay the necessary fees, that petitioner is ultimately met with a reply on the 22nd May 1950 that the test had not till then been finalised and the question whether a copy of the test report would at all be granted to the petitioner or not would be considered when the final decision was reached. It now appears that the Test was finalised sometime in July 1950 but no copy was furnished to the petitioner and the excuse now put forward for not supplying it is that the petitioner did not make fresh requests after the finalisation for being supplied with a copy. It is not suggested however how the petitioner would come to know whether the Test was finalised or when it was finalised if it was not informed about these things. Without furnishing the petitioner with a copy of the Test Report or giving the petitioner any proper and reasonable opportunity to represent its case or defence the petitioner is faced with an order calling upon the petitioner to produce a proper licence and on the 17th November 1950 the petitioner is called upon to pay the penalty of Rs. 4,65,473/-12/ -. The petitioner filed a writ petition challenging the classification of the goods, the demand for extra duty and penalty, and the denial of natural justice.
Finding of the Court:
The High Court held that the Customs authorities had acted in an arbitrary and high-handed manner, and had violated the principles of natural justice by refusing to provide the petitioner with a copy of the chemical test report and by failing to give the petitioner a proper opportunity to represent its case. The Court also held that Section 198 of the Sea Customs Act, 1878, which barred proceedings against the Customs authorities for acts done in pursuance of the Act, did not apply in the present case, as the Customs authorities had acted in excess of their jurisdiction. The Court quashed the orders and demands made by the Customs authorities and allowed the petitioner to file a suit or take other proceedings for discharge or cancellation of the Bond or refund of extra duty paid.
Issues: 1. Whether the Customs authorities had acted in an arbitrary and high-handed manner, and had violated the principles of natural justice by refusing to provide the petitioner with a copy of the chemical test report and by failing to give the petitioner a proper opportunity to represent its case. 2. Whether Section 198 of the Sea Customs Act, 1878, barred proceedings against the Customs authorities for acts done in pursuance of the Act.
Ratio Decidendi: 1. The Customs authorities had acted in an arbitrary and high-handed manner, and had violated the principles of natural justice by refusing to provide the petitioner with a copy of the chemical test report and by failing to give the petitioner a proper opportunity to represent its case. The Customs authorities are bound to observe the fundamental principles of natural justice, even though they are not bound to follow the strict rules of judicial procedure. 2. Section 198 of the Sea Customs Act, 1878, did not bar proceedings against the Customs authorities for acts done in pursuance of the Act, as the Customs authorities had acted in excess of their jurisdiction.
Final Decision: The High Court made the Rule absolute to the extent that the Orders and Demands contained in the letters dated the 22nd September 1950 and the 17th November 1950 and made by the Respondents Nos. 1 and 2 are quashed and cancelled. The petitioner will be at liberty to file suit or take any other proceedings as it may be advised for discharge or cancellation of the Bond or refund of extra duty paid or for such other reliefs to which the petitioner is entitled. The petitioner is entitled to costs of the present proceedings. The Rule as against the Union of India is discharged.
( 1 ) THIS is an application under Article 226 of the Constitution and under Clauses 4 and 21 of the Charter for Writs in the nature of Mandamus, Prohibition and Certiorari and also under section 45 of the Specific Relief Act for a direction on the Respondents prohibiting them from exercising jurisdiction to call upon the production of an import licence other than the licence already produced and from taking steps in enforcing the bond dated the 28th of March 1950 or from recovering a sum of Rs. 4,65,473/12/- and also for a. direction for withdrawal of the illegal demand and for refund of a sum of Rs. 75,925,/14/- illegally realised by way of extra duty and for certain other directions.
( 2 ) ON the 30th December 1949 the petitioner bought from Tiona Petroleum Co. of Philadelphia, U. Section A. , 7215 drums of pale spindle oil which is a lubricating oil and is used for lubrication alone. The said drums were imported into India by the petitioner under two invoices both dated the 30th September 1949, one for 6500 drums and the other for 715 drums. Both the said invoices described the goods thereby covered as 'spindle Oil' for lubrication not being a white spindle oil or a technically white or a white mineral with flash point open 250 degree P. minimum.
( 3 ) THE said oil was imported under Import licence No. 088842/ 48 /cci dated the 23rd June 1949 permitting import of lubricating oil excluding white spindle, Technically White and White Mineral Oil from the United States of America. The goods arrived at the Port of Calcutta on the 6th of March 1950. The petitioner states that the said oil is "lubricating Oil" within the meaning of item 27 (8) of the First Schedule to the Tariff Act 1934, i. e. , oil such as not ordinarily used for other purposes than lubrication. According to item 27 (8) the rate of import duty is Rs. 0/2/6 per Imperial Gallon. It is stated in the petition that the invoices, cables and correspondence and other papers relating to the purchase of the said goods bear out the fact that the oil that was purchased was 65/75 pale Spindle Oil whose open flash point was about 270 degree F. , and it was neither White Spindle nor Technically White oil nor White Mineral Oil. It is further stated that it would appear from the letter of the Central Board of Revenue, New Delhi, to the Indian Chamber of Commerce, Calcutta, according to the Board 'spindle Oil, is assessable to duty under item 27 (8) of the Indian Customs Tariff as 'lubricating Oil' and if duty is imposed under any other Tariff item than item 27 (8) since November 1948 such duty would be refundable to the persons entitled to such refund.
( 4 ) AFTER the arrival of the goods on or about 6th March 1950 a Bill of Entry was submitted and a sum of Rs. 49,752/1/- was calculated at the rate of Rs. 0/2/6 per Imperial Gallon under item 27 (8) as the duty payable for such goods and the said sum was paid to the Customs Authorities. The Customs Authorities however insisted on and did take a guarantee or bond in writing from the petitioner on the representation that on such bond being executed the said goods would be released to the petitioner immediately samples had been taken. But although such samples were taken on the 8th of March 1950, the goods were not released till 30th March 1950. On the 16th March 1950, the Respondent No. 1, the Assistant Collector of Customs informed the petitioner that on chemical test of samples drawn from the consignments the goods have been found to be classifiable as 'mineral Oil' under item No. 27 (3) of the Indian Customs Tariff which provides that "all sorts of Mineral Oils not otherwise specified shall be assessed to duty at 27 per cent 'ad Valorem. " The petitioner was called upon by the said Memorandum to show cause as to why the goods should not be confiscated and penalty imposed on the petitioner under Section 167 Clauses (8') and (37) of the Sea Customs Act and the petitioner was further directed to submit full correspond
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