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High Court Of Calcutta
Ajit Kumar Sengupta, K. M. Yusuf
SUSHIL KUMAR KAYAN - Appellant
Versus
ASSISTANT COLLECTOR OF CUSTOMS - Respondent
Writ Appeal In Matter 2226 Of 1988
Decided On : 08/24/1992
CUSTOMS - VALUATION - IMPORT OF SECONDS/DEFECTIVE ZINC ALUMINIUM SHEETS IN COILS - ASSESSMENT OF CUSTOMS DUTY - CORRECT VALUATION OF IMPORTED GOODS - REMAND TO COLLECTOR OF CUSTOMS FOR FRESH ASSESSMENT - STOLEN GOODS - NO CUSTOMS DUTY LEVIABLE - CLAIM OF WEST BENGAL STATE WAREHOUSING CORPORATION - SECURITY FURNISHED BY APPELLANT - DISCHARGE OF LIEN.
Fact of the Case:
The appellant imported seconds/defective Zinc Aluminium Sheets in coils from the European Economic Community in August 1985. The Customs Authorities enhanced the value of the goods for assessment of customs duty, leading to a dispute. The appellant challenged the enhancement in the High Court, which directed the release of the goods upon furnishing a bank guarantee and a personal bond. During the pendency of the case, 18 coils of the imported goods were stolen from the warehouse. The appellant wanted to remove the remaining goods from the warehouse, but the West Bengal State Warehousing Corporation claimed warehousing charges for the entire period, including the stolen goods. The appellant furnished security towards the claim of the Warehousing Corporation, and the goods were released to a Customs Bonded Warehouse.
Finding of the Court:
The High Court held that the Collector of Customs had committed errors in assessing the value of the imported goods and failed to apply the principles of valuation under the Customs Valuation Rules. The Court found that the instances of under-invoicing relied upon by the Department were not relevant or comparable to the subject importation. The Court also held that the onus of proving mis-declaration of value was on the Department, which had not been discharged. The Court further held that no customs duty could be levied on the stolen goods.
Issues: 1. Whether the Collector of Customs erred in assessing the value of the imported goods for customs duty? 2. Whether the appellant was liable to pay customs duty on the stolen goods? 3. How should the claim of the West Bengal State Warehousing Corporation be dealt with?
Ratio Decidendi: 1. The Collector of Customs failed to apply the principles of valuation under the Customs Valuation Rules. The instances of under-invoicing relied upon by the Department were not relevant or comparable to the subject importation. The onus of proving mis-declaration of value was on the Department, which had not been discharged. 2. No customs duty could be levied on the stolen goods. 3. The appellant had furnished security towards the claim of the West Bengal State Warehousing Corporation, which was sufficient to secure the entire claim. The lien of the Warehousing Corporation would stand shifted to the security furnished.
Final Decision: 1. The order of assessment made by the Collector of Customs was set aside, and the matter was remanded for a fresh assessment after giving a hearing to the appellant. 2. No customs duty was to be levied on the stolen goods. 3. The appellant was directed to deposit Indira Vikas Patra of Rs. 8 lakhs with the Collector of Customs, which would be adjusted against the duty payable upon assessment. The fixed deposit receipt of Rs. 10 lakhs and Indira Vikas Patra of Rs. 8 lakhs furnished by the appellant towards the claim of the West Bengal State Warehousing Corporation were to be retained by the Registrar, Original Side, till 30th November 1992. If the Warehousing Corporation instituted any proceedings in respect of their claim within the specified time, the security would continue to the Credit Court of such suit until further orders. If no such proceedings were initiated, the security would be returned to the appellant. The entire balance of Indira Vikas Patra of Rs. 24 lakhs was to be released to the appellant. The Registrar, Original Side, was directed to return the aforesaid Indira Vikas Patra to the extent of Rs. 32 lakhs to the appellant within one week.
( 1 ) THE appellant imported a consignment, weighing 1995. 180 Metric Tons of Seconds/defective Zinc Aluminium Sheets in coils from European Economic Community in August, 1985 and declared the value of the goods at Rs. 2440. 76 per metric ton. On 25th September, 1985, the said goods were examined on the original Bill of Entry and the goods were found to be as per declaration on the Bill of Entry. There is no dispute that the goods imported are seconds/defective Zinc Aluminium Sheets in Coils. The appellant kept the goods in the warehouse of the West Bengal State Warehousing Corporation.
( 2 ) AFTER over a period in September/october, 1986, the Customs Authorities assessed the value of the goods at Rs. 3,995/- per metric ton against the appellant's declared value of Rs. 2,440. 76 per metric ton.
( 3 ) THE appellant moved a writ application in this Court challenging the said enhancement and asserting that there was no basis or material available with Customs Authorities to enhance the value of the goods. The Learned Single Judge passed an interim order directing release of the goods upon the appellant's furnishing a bank guarantee for 50% of the disputed customs duty and a personal bond for balance of the disputed duty. Pursuant to the said order, a bank guarantee of Rs. 15,66,005/- representing 50% of the total disputed duty of customs was furnished by the appellant on 29th June, 1987. The appellant also furnished a bond in terms of the said order.
( 4 ) BEFORE the appellant could take delivery of the said goods, the Special Investigation Branch of the Customs House issued instructions to the West Bengal State Warehousing Corporation Paharpur, where the goods were kept, not to deliver the goods to the appellant without the permission of the Special Investigation Department. The appellant then moved another writ application in this Court for release of the goods and also for a direction that the warehousing charges were to be borne by the Customs Authorities. This was rejected by B. L. Jain, J. Against that order, an appeal was preferred in this Court.
( 5 ) WHILE the matter was pending in the Appeal Court, there had been a theft at the Warehouse of the West Bengal State Warehousing Corporation at Paharpur and 18 coils weighing approximately 96 metric tons were stolen. The value of the goods which were stolen according to the appellant was Rs. 25 lakhs although the said goods were insured by the Warehousing Corporation to the extent of Rs. 5 lakhs only.
( 6 ) THE appellant wanted to remove the goods from the West Bengal State Warehousing Corporation on whom they lost faith. The Warehousing Corporation claimed that they were entitled to the warehousing charge in respect of the entire goods including the goods which was stolen from the very beginning till the date of their actual removal to another warehouse and their total claim was approximately Rs. 23. 0 lakhs. This Court permitted the removal of the goods by the appellant from the warehouse of the West Bengal Warehousing Corporation to the Customs Bonded Warehouse at Ghusuri, Howrah, on condition that the appellant will not be entitled to remove the goods until the lien in respect of the claim of the West Bengal State Warehousing Corporation is discharged. Against that order, the West Bengal State Warehousing Corporation preferred an appeal before the Supreme Court which in its final order directed the writ petitioner to furnish a security to the extent of Rs. 10 lakhs in the form of security towards the claim of the Warehousing Corporation. The appellant thereafter furnished a security of Rs. 10 lakhs in the form of fixed deposit before the Registrar, Original Side, Calcutta. As mentioned hereinabove, the goods stolen were insured by the West Bengal State Warehousing Corporation for Rs. 5 lakhs and this Court directed that the Corporation may realise the said amount from the Insurance Company and retain the same. The Corporation thus has got Rs. 1
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