Back
High Court Of Calcutta
M. N. Roy
RUNGTA SONS (P) LTD. - Appellant
Versus
COLLECTOR OF CUSTOMS - Respondent
Civil Rule 2769 (W) Of 1972
Decided On : 09/02/1983
The petitioner, a company engaged in the export of manganese ore, challenged the demand notices issued by the customs authorities for short levy of duty on the ground that the assessment was made without affording them an opportunity of being heard and that the appellate authority had dismissed their appeal without considering their prayers and without giving them due opportunities to be heard. The court held that the customs authorities acted in a quasi-judicial capacity and were required to follow the principles of natural justice. It further held that the assessment was made on the basis of extraneous factors and materials without ascertaining the wholesale price, and that the appellate authority had failed to pass a speaking and reasoned order. The court also held that the demand notices were barred by limitation under Section 39 of the Sea Customs Act, 1878. Accordingly, the court quashed the assessment orders and the demand notices.
Fact of the Case:
The petitioner, a company engaged in the export of manganese ore, challenged the demand notices issued by the customs authorities for short levy of duty on the ground that the assessment was made without affording them an opportunity of being heard and that the appellate authority had dismissed their appeal without considering their prayers and without giving them due opportunities to be heard.
Finding of the Court:
The court held that the customs authorities acted in a quasi-judicial capacity and were required to follow the principles of natural justice. It further held that the assessment was made on the basis of extraneous factors and materials without ascertaining the wholesale price, and that the appellate authority had failed to pass a speaking and reasoned order. The court also held that the demand notices were barred by limitation under Section 39 of the Sea Customs Act, 1878.
Issues: 1. Whether the customs authorities acted in a quasi-judicial capacity and were required to follow the principles of natural justice? 2. Whether the assessment was made on the basis of extraneous factors and materials without ascertaining the wholesale price? 3. Whether the appellate authority had failed to pass a speaking and reasoned order? 4. Whether the demand notices were barred by limitation under Section 39 of the Sea Customs Act, 1878?
Ratio Decidendi: 1. The court held that the customs authorities acted in a quasi-judicial capacity and were required to follow the principles of natural justice, as they were empowered to adjudicate upon disputes and impose penalties. The court relied on the principles laid down in the case of Sovachand Mulchand v. Collector of Central Excise and Land Customs, where it was held that the Customs Authorities act in quasi-judicial capacity and as such they must observe principles of natural justice. 2. The court held that the assessment was made on the basis of extraneous factors and materials without ascertaining the wholesale price. The court found that the customs authorities had relied on the prices quoted in the Indian Trade Journal, which was not an authoritative index of the price of manganese ore. The court also found that the customs authorities had not taken into consideration the actual price at which the manganese ore was sold by the petitioner. 3. The court held that the appellate authority had failed to pass a speaking and reasoned order. The court found that the appellate authority had merely dismissed the petitioner's appeal without giving any reasons for its decision. The court held that this was a violation of the principles of natural justice, as the petitioner was entitled to know the reasons for the dismissal of its appeal. 4. The court held that the demand notices were barred by limitation under Section 39 of the Sea Customs Act, 1878. The court found that the demand notices were issued more than three months after the date of the first assessment. The court held that this was a violation of Section 39, which requires that demand notices be issued within three months from the date of the first assessment.
Final Decision: The court quashed the assessment orders and the demand notices.
( 1 ) THE petitioner No. 1, M/s. Rungta Sons (P) Ltd. (hereinafter referred to as the said company), is an existing company within the meaning of the Companies Act, 1956, and has its registered office at P-16, Kalakar Street, Calcutta, and petitioner No. 2 is a shareholder and director of the same. The said company at all material times carried on and still carries on business inter alia of export of manganese ore and on or about 17th January, 1951, a contract of agency was entered by and between the said company and Hindusthan Mineral Corporation, whereunder the said company was constituted as an agent for the purpose of sale, export and shipment of manganese from the Port of Visakhapatnam to foreign buyers and then the said company has stated to have entered into several contracts with various foreign buyers, for the sale of 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 (A) (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 from February, 1951 to June, 1952, the said company submitted to the customs authorities shipping bills and other documents including letters of credit opened by overseas buyers in favour of the said company, for the purpose of determining the duties payable under the Sea Customs Act, 1878 (hereinafter referred to as the said 1878 Act), on the said exporters. It was also the case of the petitioners that the Customs authorities levied and the said company paid duty on the basis of the prices as mentioned in the shipping bills and the said company also made or caused to be made 20 shipments of Indian manganese ore from the Port of Visakhapatnam. It has been stated that the customs authorities had collected duty on the basis of the prices mentioned in the shipping bills and the said company had paid the sum of Rs. 3,24,405. 12 as and by way of duty in respect of the shipments. It was also the case of the petitioners that the concerned ores were duly exported to the respective purchasers out of this country.
( 3 ) BY the Sea Customs (Amendment) Act, 1955, on or about 7th May, 1955, Sections 29a, 29b and 39 were introduced in the said 1878 Act and thereafter, on or about 29th November, 1959, by five separate orders, the Collector of Customs, Visakhapatnam, purported to demand various sums of rupees from the said company in respect of the first five shipments on the alleged ground of short levy, and by such order the said company was informed that an appeal against the decision would lie to the Collector of Customs, Madras, which could be taken, if so advised within three months from the date of the receipt of the concerned orders. Thereafter, on or about 2/4th August, 1960, a letter was sent by the Collector of Customs, Visakhapatnam, to the said company, requesting that the short levy amount should be paid at an early date and on or about 13th September, 1960, in reply, the said company informed the authorities conc
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
