IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL CIVIL CIVIL APPELLATE JURISDICTION APPELLATE JURISDICTION APPELLATE JURISDICTION WRIT WRIT WRIT PETITION NO.2011 OF 2009 PETITION NO.2011 OF 2009 PETITION NO.2011 OF 2009 M/s Hamilton Housewares Pvt.Ltd.. Petitioner vs Union of India & ors .. Respondents .. Mr.Jitu Motwani i/b PDS Legal for Petitioner Mr.R.V.Desai, Sr.Counsel with Mr.Rajinder Kumar for Respondents .. CORAM CORAM CORAM : F.I.Rebello and : F.I.Rebello and : F.I.Rebello and J.H.Bhatia, J.H.Bhatia, J.H.Bhatia, JJ JJ JJ DATED: DATED: DATED: 23rd 23rd 23rd April, 2009 April, 2009 April, 2009 ORAL ORAL ORAL JUDGMENT {Per F.I.Rebello, J } JUDGMENT {Per F.I.Rebello, J } JUDGMENT {Per F.I.Rebello, J } Rule. By consent heard forthwith. 1. The petitioners regularly import various table ware and household items made of glass like dinner sets directly from the manufacturer M/s Wenzhou Huishunda Industrial Trade Co.Ltd China. The petitioners have entered into a long term arrangement and agreement to purchase from the said supplier. The goods are manufactured by the supplier exclusively for the petitioners under the designs and specifictions given by the petitioners. The goods also bear the brand name of the petitioners. The total value of imports from 2005 till 15.11.2008 was US $ 43,21,440/- (approximately Rs.18,58,21.920/-). The total number of sets (all types imported is nearly 4 lakhs lakhs lakhs sets). The petitioners have duly filed sets). The petitioners have duly filed sets). The petitioners have duly filed bills of entry for clearance describing the goods as " Glassware " and presented the goods for assessment by the customs. The goods have been cleared from time to time. 2. Heading 70.13 covered "Glassware of a kind used for table, kitchen, toilet office and indoor and similar purposes". The classification claimed in the bills of entry for the imported goods was Tariff Item 701332.39 as ’others’. The goods including the cartons used for packing the goods were physically verified/examined by the customs department at the time of assessment. The examination report prepared by the officers themselves show that the goods imported by the petitioners as opalware. Thus, the customs department had satisfied that the description ’glassware’ mentioned by the petitioners in the Bills of Entry covered the imported goods ’opalware’. In other words, at the time of assessment itself, the department was satisfied that the goods imported were opalware and the description’ glassware ’ given by the petitioners covered the imported goods. The assessments so made were final. 3. The DRI after investigation has alleged that the petitioners have mis-classified and mis-declared the goods in as much as the petitioners ought to have described the goods as opalware instead of declaring them as glassware. According to the DRI, the imported goods are classifiable under sub-heading 70133229. This sub-heading applies to "glass having a linear coefficient of expansion not exceeding 5 x 10 per Kelvin with a temperature range of O C to 300 C. According to DRI, goods were not classifiable under 7013329.39 as originallly assessed by the assessing authority. Both these sub-headings fall within the same heading 70.13 and attract the same rate of duty. The DRI got the sample tested. The Chemical Examiner was specifically asked to give the coefficient expansion of the product. 4. According to the department, the petitioners have mis-declared the goods and consequently the invoice price/transaction value need not be accepted as the assessable value. The value of the imported goods has been sought to be re-determined in terms of Rule 6, on the basis of the transaction value of similar/identical goods purportedly imported by others. 5. The following third party evidence have been relied upon by the DRI: a) Two ’parallel’ invoices of M/s Wenzhou Huishunda Industrial Trade Co. Ltd; China in the name of M/s Vishal Hira Merchants Ltd and Hira Merchants Pvt.Ltd New Delhi found on visit by DRI to the premises of Vishal Hira Merchants Ltd; Delhi. b) A price list dated 9.2.2004 found in the premises of M/s Vishal Hira Merchants Ltd. c) E-mail correspondence exchanged between M/s Wenzhou Huishunda Industrial Trade Co Ltd; China and M/s K.P.International, New Delhi containing offer/counter offer/negotiation between these two entities regarding sale/purchase ofgoods. 6. A show cause notice dated 23.3.07 was issued by the DRI, demanding differential duty on account of valuation of the imported goods involving extended period of limitation. 7. On behalf of the Respondents, learned counsel has raised an objection to the territorial jurisdiction of this Court. For that purpose we may refer to a few facts : The total value of the goods, seized from the warehouses of the petitioners situated in Silvassa is Rs.5,26,59,815/- (value is as per the domestic sale price lists of the petitioners). The duty demanded on seized goods is Rs.17.66 lakhs. The impugned order of the Commissioner seeks to confiscate them and imposes a redemption fine of Rs.52,00,000/-. Though these goods were imported and cleared from ICD, Vapi seizure was made in Silvassa falling within the jurisdiction of this Hon’ble Court. The value of the goods imported through Nhava Sheva is Rs.26,14,000/-(FOB Value) involving customs duty of Rs.3,29,391/-. The goods so imported through Nhava Sheva has also been confiscated and redemption fine of Rs.3,50,000/- has been imposed. The show cause notice issued by DRI in respect of imports made through ICD, Vapi Nhava Sheva, Chennai and Kolkatta. Hence, a common adjudicating authority was appointed by Central Board of Excise and Customs appointing Commissioner of Customs, Ahmedabad. The Bank guarantees have been given from banks situated in Mumbai. Importer’s head office is located in Mumbai and carries on business from Mumbai. Thus, according to the petitioner, a major/substantial part of cause of action has arisen within the jurisdiction of this Hon’ble Court. 8. The parties have relied on the following judgments: In Ambika Industries vs Commissioner Ambika Industries vs Commissioner Ambika Industries vs Commissioner of of of Central Excise 2007 (213) E.L.T. 323 (S.C), Central Excise 2007 (213) E.L.T. 323 (S.C), Central Excise 2007 (213) E.L.T. 323 (S.C), the Court was considering the issue where an appeal could be filed. While considering Article 226 (2) of the Constitution of India the Court noted that keeping in view the expression "cause of action" used in clause (2) of Article 226 of the Constitution of India indisputably even if a small fraction thereof accrues within the jurisdiction of the Court, the Court will have jurisdiction in the matter though the doctrine of forum conveniens may also have to be considered. In In In Canon Steels P.Ltd vs Commissioner of Customs Canon Steels P.Ltd vs Commissioner of Customs Canon Steels P.Ltd vs Commissioner of Customs (Export (Export (Export Promotion) 2007 (218) E.L.T. 161 (S.C.) Promotion) 2007 (218) E.L.T. 161 (S.C.) Promotion) 2007 (218) E.L.T. 161 (S.C.) the issue again as where an appeal lay. The Court after considering several judgments was pleased to hold that the place where the appellate order or a revisional order is passed may give rise to a part of cause of action although the original order was at a place outside the said area. When a part of cause of action arises within one or the other High Court, it will be for the petitioner to choose his forum. In our opinion, considering the facts set out earlier, there can be no dispute that a substantial part of cause of action has arisen within the jurisdiction of this Court. Considering Article 226 (2) of the Constitution of India, this Court would have the jurisdiction to hear and decide the matter, irrespective were the original order or appellate order was passed. 9. The petitioners have approached this Court to impugn the order dated 17th October 2008 passed by respondent no. 6, and order dated 20th/30th January, 2009 passed by the respondent no.2. A show cause notice was issued to the petitioners as to why the goods should not be classified under CTH 70133200 of the Customs Tariff Act, 1975. Similarly, a show cause notice was issued for re-determination of the value of the goods in the terms of Rule 6 of Customs Valuation Rules, 1988 read with Customs Act, 1942. Similarly, directions to show cause for recovery of differential customs duty as also interest payable. Subsequent thereto order has been passed. 10. Aggrieved by that order the petitioners herein preferred and appeal to CESTAT. In the appeal preferred they had also prayed for a stay. By the impugned order dated 21st January 2009, CESTAT was pleased to order encashment of the bank guarantee to recover Rs.62,06,000/- towards redemption fine towards the goods seized and provisional release to recover the full amount of differential duty and adjust the amount towards the penalty payable by the appellant company. The CESTAT then observed that even after encashment of the bank guarantee the balance amount to be recovered by the revenue would be about Rs.1.6 crores which is around half of the total amount payable by the appellants. It waived the requirement of pre-deposit of the balance amount and stayed recovery of the sum during the pendency of the appeal. It is this order which is the subject matter of the present petition. 11. The issue before us is whether the order of the tribunal at the time of pre-deposit is sustainable. The law on the grant of interim relief may be explained considering firstly the judgment in : In Indu Nissan Chemicals Industries Indu Nissan Chemicals Industries Indu Nissan Chemicals Industries Ltd Ltd Ltd vs vs vs Union of India 2008 (221) E.L.T. 7 (S.C.). Union of India 2008 (221) E.L.T. 7 (S.C.). Union of India 2008 (221) E.L.T. 7 (S.C.). The Supreme Court for the purpose of stay in so far as the provisions of the Customs Act are concerned, noted that there are two important expressions in section 129-E. One is " Undue hardship." This is a matter within the special knowledge of the applicant for waiver and has to be established by the applicant. A mere assertion about " Undue hardship " would not be sufficient. The Court noted that in S.Vasudeva vs State of S.Vasudeva vs State of S.Vasudeva vs State of Karnataka Karnataka Karnataka and others AIR 1994 SC 923 and others AIR 1994 SC 923 and others AIR 1994 SC 923 and under Indian conditions the expression " Undue hardship" is normally related to economic hardship. " Undue hardship " which means something which is not merited by conduct of the applicant or is very much disproportionate to it. Undue hardship is not warranted by the circumstances. Even in such matters though discretion is available the same has to be established judicially. There is always the requirement if establish a prima facie case before interim order of protection can be passed. Further, on a cursory glance of it appears that the demand raised has no legs to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. . In Varsha Plastics P.Ltd vs Union of India 2009 In Varsha Plastics P.Ltd vs Union of India 2009 In Varsha Plastics P.Ltd vs Union of India 2009 (235) (235) (235) E.L.T. 193 (S.C.) E.L.T. 193 (S.C.) E.L.T. 193 (S.C.) the Court noted refering to the judgment in Eicher Tractors Ltd, Haryana vs Commissioner of Customs 2001 (1) SCC 315 considering the Customs Valuation Rules, that price paid by importer to the vendors in ordinary course of commerce shall be deemed to be the value in the absence of any of the special circumstances indicated in section 14 (1) and particularized in Rules 4 (2). However, when the transaction value under Rule 4 is rejected, the value shall be determined proceeding sequentially through Rule 5-8 of the Rules. Explaining Eicher, the Court said that the ratio of the judgment cannot be said to have laid down that even in a case of invoice manipulation or under-invoicing or ridiculously low price or misdeclaration in respect of valuation of goods or description or non-commercial considerations or in such like circumstances the transaction value cannot be rejected by the assessing authority. The main ground for not accepting the transaction value is the purported misdeclaration of goods. In the show cause notice it was the contention that the petitioner have paid any additional amount to the foreign supplier or others directly or indirectly. The two parallel invoices allegedly found in the premises of M/s Vishal Hira Merchants Ltd, Delhi are not the basis for demanding duty from the petitioner. 12. In the instant case, the Assessing Authority had examined the goods found them to be opalware and then assessed them. Prima facie, therefore it cannot be a case of mis-declaration as to classification. The petitioners had classified the goods under tariff item no.701332.39. The department sought to claim it under item no.701332.29. Both the tariff item fall under heading 70.13 and relate to glassware and attract same rate of duty. The petitioners had described the goods as glassware. After physical examination of the goods the examination report prepared by the officers described the goods found as ’opalware.’ In the instant case, the petitioners had supported their classification by getting the same tested at Central Glass and Ceramic Research Institute, Kolkatta. The C.G.R.I. after testing the samples had certified the thermal expansion of the imported goods at 6992 x 10C = 6.992 x 10 per Kelvin. The petitioners also produced a certificate from the manufacturer certifying the co-efficient thermal expansion of the imported goods as 5.9 x 10 per Kelvin. The samples taken by the Centre were sent for test report of the Chemical Examiner. (Exhibit C). The querries asked were : (1) The samples are to be tested for Boron Silicate Content ; (2) Whether the goods are having thermal resistance of 0-300 C ; and (3) The linear Coofficient of Expansion. The Chemical Analyser set out that the glass samples received are translucence in nature and according to ASTMC 162 this type of glass is called Opal Glass. The glass was tested up to 300-C. The data obtained after heating up to 300 C was set out which shows no thermal expansion. In so far as boron silicate content the percentage given was between 9.68 to 13.4 depending upon the nature of the item. In so far as linear coefficient expansion is concerned, it appears that no test was done. However, reference was placed on the literature setting out that as per the literature that would be indicative of low linear coefficient of expansion. Specific thermal expansion was not given as was given by the Central Glass and Ceramic Research Institute, Kolkatta and the material produced by the petitioners from the manufacturer. The petitioners herein had also applied for cross-examining the Chemical Analyst which was rejected. 13. It is in this context that we must consider the order passed by the tribunal. We are clearly of the opinioin that the impugned order of the Assessing Officer suffers from various defects including violation of the principles of natural justice and fair play. The Chemical Analyser who has done the test was not made available tobe cross-examined. Apart from that, the Chemical Analyser failed as the record shown to carry out the test for linear coefficient expansion. In these circumstances, we had suggested to the learned counsel for the respondents that the matters shouldgo back to the Assessing Officer for conducting the test for linear coefficient expansion. The respondents have expressed their inability to agree to the suggestion. 14. The petitioners have been regularly importing goods for a long time between 2005 up to 15th November, 2008 which are valued approximately over Rs.18 crores. The Assessing Officer had at the time of import though the petitioners had classified them underheading " glass" the department’s oficers had noted that it was opal and had not disputed the declaration. In these circumstances, we are of the opinion that apart from the fact that the petitioners have made out a strong prima facie case, undue hardship would be caused to them if the impugned order is not set aside.The order of the A.O. has no legs to stand. In that context, the order of the tribunal dated 20/30th January, 2009 will have to be set aside. 15. For the aforesaid reasons, petition allowed. Impugned order is set aside. Pre-deposit waived. The Tribunal to hear the appeal on merits. Bank Guarantee already furnished to be kept alive pending the hearing and final disposal of the appeal. { J.H.Bhatia, J } J.H.Bhatia, J } J.H.Bhatia, J } { F.I.Rebello, J } F.I.Rebello, J } F.I.Rebello, J }