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IN THE HIGH COURT OF GAUHATI, ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH
DEVASHIS BARUAH, J.
Ladi Steel Industries Pvt. Ltd. – Petitioner
Versus
Union Of India, Through Secy. To Govt. Of India, Ministry Of Railways and Ors. – Respondents
WP(C) No.1974 Of 2020, WP(C) No.611 Of 2015
Decided On : 14-11-2023
Penalty - Mis-declaration of Commodity - Rate Circular No.5/2011 - 2007/TCI/302/1Pt.H, Corrigenda dated 08.06.2012 and 05.05.2014 - Summary of Acts and Sections: The court discussed the legality and validity of the penalty imposed on the petitioner for mis-declaration of a commodity found in a specific rake. The court analyzed the Rate Circular No.5/2011 and its corrigenda, particularly focusing on Clause 2.6, which stipulated the imposition of penalty for mis-declaration. The court held that the circular could not override Rule 126(1)(b) of the General Rules, which provided for penalties for false declaration. The court declared that the penalty imposed on the petitioner was illegal and unauthorized, setting aside the impugned communications and directing the release of the petitioner's goods.
Fact of the Case:
The petitioner, a small scale industry, purchased raw material from a supplier in Rourkela, which was booked for carriage by containers of the Container Corporation of India Ltd. (Respondent No.3) to its depot at Guwahati. Upon arrival, the goods were withheld due to alleged mis-declaration, leading to financial losses for the petitioner. The petitioner challenged the penalty and circular in two writ petitions, which were taken up together for final disposal.
Finding of the Court:
The court found that the penalty imposed on the petitioner was illegal and unauthorized, as there was no mis-declaration in the petitioner's consignment. The court set aside the impugned communications and directed the immediate release of the petitioner's goods by the Container Corporation of India Ltd.
Issues: The issues involved the legality and validity of the penalty imposed on the petitioner, the applicability of the Rate Circular No.5/2011 and its corrigenda, and the interpretation of Rule 126(1)(b) of the General Rules in relation to the imposition of penalties for false declaration.
Ratio Decidendi: The court held that the circular could not override Rule 126(1)(b) of the General Rules, and declared that the penalty imposed on the petitioner was illegal and unauthorized. The court directed the release of the petitioner's goods and read down Clause 2.6 of the Impugned Circular to apply only to consignments improperly described, not the entire consignment.
Final Decision: The court set aside the impugned communications and directed the immediate release of the petitioner's goods by the Container Corporation of India Ltd. The court also read down Clause 2.6 of the Impugned Circular to apply only to consignments improperly described, not the entire consignment.
JUDGMENT :
1. The legality and validity of the imposition of the penalty upon the Petitioner on account of mis-declaration of the commodity found in ROU-AMJ rake which arrived on 14.11.2014 is the subject matter of challenge in WP(C) No.611/2015 and the circular being Rate Circular No.5 bearing No.2007/TCI/302/1Pt.H dated 14.02.2011 along with its Corrigenda dated 08.06.2012 and 05.05.2014 on the basis of which the Container Corporation of India Ltd. have imposed the penalty upon the Petitioner have also been put to challenge in WP(C) No.1974/2020.
2. Taking into account that in both the writ petitions, the issues which involved are interconnected and the litigation is common amongst the common parties, this Court takes up both the writ petitions together for final disposal by this common judgment and order.
3. The facts involved in the instant cases as could be discerned from the pleadings are that the Petitioner is a small scale industry and manufactures TMT (HSD) Bars. For the purpose of manufacturing the said commodity, the raw material required is M.S. Ingots. The Petitioner procures the said raw material by placing orders from various entities including one Shri Mahavir Ferro Alloys Private Limited, a manufacturer based in Rourkela, Odisha. It further reveals that in the month of 2014, the Petitioner had purchased raw material in the form of Iron Ingots of an amount of Rs.88,56,917/- from Shri Mahavir Ferro Alloys Private Limited. The said Shri Mahavir Ferro Alloys Private Limited who is the Respondent No.6 in WP(C) No.611/2015 engaged the services of one M/s Reliable Sponge Private Limited for delivery of raw materials from Rourkela to Guwahati. The raw materials were booked by the consignor i.e. M/s Reliable Sponge Private Limited at the depot of Respondent No.3 i.e. Container Corporation of India Ltd. located at Rourkela, Odisha for carriage by containers of Respondent No.3 to its Amingaon Depot at Guwahati. Invoices dated 03.11.2014, 04.11.2014, 05.11.2014 and 07.11.2014 were issued by the Respondent No.6 for purchase of M.S. Ingots wherein the Petitioner was shown as the consignee. It is the further case of the Petitioner that the freight charges were duly paid by the Petitioner to the Respondent No.3 amounting to Rs.5,73,440/-and money receipt and invoices were duly issued by the Respondent No.3.
4. On 14.11.2014 when the said goods arrived at Amingaon, Guwahati, the Petitioner submitted all the requisite documents but the representatives of the Respondent No.3 refused to release the goods for delivery to the Petitioner. The Petitioner thereupon wrote a letter dated 21.11.2014 to the Respondent No.5 who was the Terminal Manager of the Respondent No.3 stating that the non-delivery of the raw materials have caused huge losses to the Petitioner and also requested for immediate release of the goods. However, there was no response for which the Petitioner issued another communication dated 24.11.2014. On 26.11.2014, the Petitioner received a letter from the Respondent No.5 whereby the Petitioner was informed that the containers carried by the Respondent No.3 were withheld till realization of some penalty. Along with the said communication, another letter dated 22.11.2014 from the competent authority of the Respondent No.3 was issued directing the Respondent No.5 to collect the penalty from the consignors Maa Bhawani Transport and Reliable Sponge Pvt. Ltd. for alleged mis-declaration of cargo found in ROU-AMJ rake and it was also directed to withhold the cargo till penalty was realized.
5. The Petitioner upon receipt of the said communication, issued a notice dated 26.11.2014 to the Respondent Nos. 4 and 5 stating inter alia that the Petitioner was suffering loss due to withholding of the goods and requested that the goods be handed over by way of open delivery. The Petitioner vide the said notice also demanded the value of the consignment along with interest @18% per annum and production loss of Rs.40,000/-per day from
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