1 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 20.06.2011 CORAM: THE HONOURABLE MS.JUSTICE K.SUGUNA AND THE HONOURABLE MR.JUSTICE A.ARUMUGHASWAMY W.A.(MD).No.375 of 2011 B.C.Hariharan : Appellant/Writ Petitioner Vs. 1.The Joint Commissioner of Customs, Office of the Commissioner of Customs & Central Excise, No.1, Williams Road, Cantonment, Trichy 620 001. 2.The Commissioner of Customs & Central Excise, No.1, Williams Road, Cantonment, Trichy 620 001. : Respondents/Respondents PRAYER: Writ Appeal is filed under Clause 15 of the Letters Patent against the Order dated 28.01.2011 made in W.P.(MD).No.3135 of 2010 on the file of this Court. Prayer in WP(MD)No.3135 of 2010: Petition filed under Article 226 of the Constitution of India, praying for the issuance of a writ of certiorarified mandamus, calling for the records in and connected with C.No.VIII/17/29/1998-customs Legal dated 01.12.2009 on the file of the respondent, quash the same and consequently direct the respondent to return to the petitioner the entire sale proceeds of the auctioned Silver Ingots with interest at appropriate rates from the date of sale of the impugned silver ingots. For Appellant : Mr.B.Kumar Senior Counsel For Mr.B.Sathish Kumar For Respondents : Mr.B.Vijay Karthikeyan Senior Standing Counsel JUDGMENT [Judgment of the Court was delivered BY K.SUGUNA, J] This Writ Appeal is filed as against the order dated 28.01.2011 passed in W.P.(MD).No.3135 of 2010. 2. The facts leading to this case are as follows:- (i). On 14.03.1993, the residential premises of the appellant was searched by the officers of the Customs Preventive Unit, Salem. In the said search, six gunny bags containing silver ingots of foreign origin approximately weighing 30 Kgs each were seized. The second respondent herein, by order dated 19.12.1994, had absolutely confiscated the seized goods. (ii). Aggrieved by the said order, the appellant had filed an appeal before the Customs, Excise, Gold Control Appellate Tribunal, Chennai. By order dated 08.11.1996, the Tribunal had confirmed the order of confiscation passed by the second respondent and reduced the penalty. https://hcservices.ecourts.gov.in/hcservices/ 2 Challenging the order of the first respondent dated 08.11.1996 and the order passed by the second respondent dated 19.12.1994, the appellant had filed W.P.No.14948 of 1998. The learned Single Judge of this Court, by order dated 25.10.2006, had disposed of the said Writ Petition. In the operative portion of the order passed in the said Writ Petition, the learned Single Judge had held as follows:- "..... I am of the view that the same view which has been taken by the Kolkata Tribunal in Hiralal Bhagat v. Commissioner of Customs, 2003 (154) ELT 124, can be taken in this case also, in view of the policy of the Central Government on liberalization of importation of silver and gold ingots, but having regard to the submission that the silver ingots confiscated from the petitioner are not available, which fact is not disputed by the learned counsel for the petitioner, I am of the view that this Writ Petition can be disposed of by directing the respondents to consider the case of the petitioner for imposition of redemption fine in lieu of total confiscation, if the silver ingots seized from the petitioner are still available with the Department, in the sense that the order of the authorities has been confirmed, but modified to the extent that in respect of total confiscation, the petitioner's case can be considered for levying redemption fine in addition to the penalty imposed and confirmed." (iii). Subsequent to the said order dated 25.10.2006, the first respondent, by order dated 01.12.2009, had rejected the request of the appellant seeking return of the goods on the ground that the seized goods were not available, since the same were already disposed of. Challenging the said order dated 01.12.2009, the appellant had filed W.P.(MD).No.3135 of 2010. The learned Single Judge of this Court, by order dated 28.01.2011, had dismissed the said Writ Petition. As against the said order, the present Writ Appeal is filed. 3. According to the learned Senior Counsel appearing for the appellant, as per the order dated 25.10.2006 passed in W.P.No.14948 of 1998, the total confiscation order was modified and a direction was issued to the respondents to consider the case of the appellant for levying redemption fine in addition to the penalty imposed. According to the learned Senior Counsel for the appellant, since the confiscated goods were already disposed of, the sale proceeds, after deducting the redemption fine and penalty, may be returned to the appellant. In support of his contention, the learned Senior Counsel has relied on the following Judgments:- (i). Northern Plastics Ltd. v. Collector of Customs and Central Excise reported in 1999 (113) ELT 3 SC, at Paragraph Nos.7 and 9, which read as follows:- "7. As the order of confiscation of goods was held to be bad the goods were required to be returned to the owner thereof. As the order of confiscation was declared as illegal by this Court on the ground that there was no mis-declaration of the goods and that the applicant was entitled to import those goods on the O.G.L., the confiscated goods, if they had not been disposed of, would have been required to be released in favour of the applicant and the applicant could have claimed damages for the damage to the goods and loss caused to it as a result of illegal retention of the goods by the respondent. We have referred to above how the applicant was prevented by the respondent and the Hindustan Photo Films from redeeming/obtaining those goods. The https://hcservices.ecourts.gov.in/hcservices/ 3 goods having been sold away the respondent is now not in a position to return the goods to the applicant. As this situation has been brought about by the respondent by his own acts he cannot now escape from the liability of returning to the applicant the money value of the said goods. If without challenging the first order passed on 31.1.1989 and the interim order passed by the Gujarat High Court in favour of the applicant on 27.4.1989 the respondent had returned the goods on the terms and conditions imposed by the Gujarat High Court then he would not have landed himself in this situation. It should have been realised by the respondent while challenging the said orders and retaining the goods in his possession that the goods were of perishable nature and that they required air conditioned accommodation. Having made all attempts to prevent the release of goods in favour of the applicant the respondent cannot now contend that the applicant and not he was really responsible for deterioration of the goods and the consequent less realisation of price. 9. It was contended by Mr. Dave that the applicants are not liable to pay any duty as the goods were not cleared by the respondent and they were subsequently confiscated and sold by the respondent and, therefore, the applicants cannot be said to have imported the goods. On the other hand, it was contended by Mr. C.S. Vaidyanathan, learned Additional Solicitor General that the import of the goods was by the applicants and as soon as the said goods landed on the land mass of India proper amount of duty became payable thereon. In our opinion, Mr. Vaidyanathan is right in his submission particularly when full impact has to be given to the order passed by us declaring retention and confiscation of the goods to be illegal. Mr. C.S. Vaidynathan, learned Additional Solicitor General, however, further submitted that value of the goods as shown in the import documents was only Rs. 33.04 lacs and as the duty and the Warehousing charges payable are more than the said amount the applicant is not entitled to recover anything from the respondent. What is over-looked by the learned Counsel is the consequence of setting aside the order of confiscation on the ground that it was illegal. The applicant has become entitled to the value of the goods as on the date or time when the goods ought to have been cleared by the respondent for home consumption. If the value of the goods in India after importation and payment of duty, in January 1989, was Rs. 33.04 lacs only then the applicant, and for that matter any sensible person would not have imported the goods at all. It would be reasonable to presume that an importer would have imported the goods of the value of Rs. 33.04 lacs if its value in Indian market at the relevant time was more than CIS value of the goods plus the duty payable thereon (Rs. 33.04 lacs + 47.07 lacs = Rs. 80.11 lacs). It is also not the stand of the respondent that such goods were available in the Indian market at that time at a lesser price. Therefore, it is now the obligation of the respondent to return at least Rs. 80.11 lacs - 47.07 lacs, the amount of duty payable thereon. As the applicant has been deprived of the use of the goods worth Rs. 33.04 lacs the respondent is under a legal obligation now to refund that amount to the applicant. The respondent cannot now be permitted to take the advantage of his own wrong and contend that the value of the goods should be determined only are Rs. 48.50 lacs inclusive of its value and the https://hcservices.ecourts.gov.in/hcservices/ 4 amount of duty payable thereon because they could be sold at that price only. We also cannot accept the contention of the learned Counsel for the respondent that if the applicant has suffered any loss as a result of the wrongful act of the respondent then he should file an action in tort and this Court cannot order payment of any amount in these applications. No doubt it would be open to the applicant to initiate such an action if it feels that the loss suffered by it is more than Rs. 33.04 lacs. Merely because it is open to the applicant to initiate such an action it would not be just and proper to refuse the claim made in these applications as in any case the applicant is entitled to return of the money value of the goods which were illegally confiscated by the respondent. Even though the applicant has claimed interest @ 21% we do not think it proper to award interest at such a high rate and considering the facts and circumstances of the case it would be in the interest of justice if the respondent is directed to return the amount of Rs. 33.04 lacs with interest at the rate of 12% from 1.2.1989 till the date of payment as the Collector by its order dated 31.1.1989 had held that the goods were properly described and the import was legal." (ii). Collector of Customs, Madras v. Meena A.Bharwani reported in 2006 (194) ELT 273 Madras, at Paragraph No.6, which reads as follows:- "The material facts leading to the order of the Tribunal are undisputed. The confiscated gold jewellery had been disposed of in July, 1980 and the diamond jewellery also was sold in July, 1983 and, afterwards, the second respondent on 25-7-1983 had received a letter from the Tribunal enclosing a copy of the grounds of appeal. The respondents have duly informed the Government of India as well as the Tribunal about the disposal of the jewelleries. The Central Board confirmed the order of confiscation by its order, dated 6-3-1980 and the petitioner did not take steps to file a revision immediately and had kept quiet. It is needless to say that a party, who is seeking redress in a court of law or a quasi judicial authority, ought to be vigilant in protecting his rights. The petitioner was not vigilant and allowed the jewelleries to be disposed of. As per the records, the jewelleries were disposed of according to rules and the sale proceeds was Rs.34,439.35. The Tribunal ought to have passed an appropriate order taking note of the disposal of the jewelleries by the respondents. Instead, the Tribunal has ordered to allow the confiscated jewelleries to be cleared on payment of fine of Rs.7500/- in lieu of confiscation and they have further ordered the reduction of personal penalty to Rs.1500/- from Rs.6000/-. In so far as the order pertaining to the reduction of penalty is concerned, admittedly the respondents have refunded the balance amount of Rs.4500/- to the petitioner. In so far as the order relating to return of confiscated jewelleries on payment of a fine of Rs.7500/- in lieu of confiscation is concerned, the jewelleries no longer exist and only sale price of Rs.34,439.35 was with the respondents. The respondents could have deducted the fine of Rs.7500/- from the sale price and could have returned the sum of Rs.26,939.35 as sale proceeds of the jewelleries to the petitioner as per the order of the Tribunal. They did not do so. Instead, the second respondent demanded a duty at the rate of 120% amounting to Rs.35,160/- along with redemption fine of Rs.7500/- from the petitioner. The Tribunal in its order did not impose any duty as claimed by the second respondent. The learned https://hcservices.ecourts.gov.in/hcservices/ 5 counsel for the appellants/respondents contended that the petitioner is liable for the payment of the duty apart from the fine and penalty levied on her as per Section 125(2) of the Customs Act. As already seen, the petitioner has preferred a revision against the order of the Board in the appeal and after adjudication, the Tribunal has passed final order. The respondents are bound by the order passed by the Tribunal. The Tribunal did not impose any duty on the petitioner and in such circumstance, the respondents cannot impose a duty at the rate of 120% in addition to the redemption fine. Any such imposition if made would amount to varying the order of the Tribunal, which is not permissible in law. The contention of the appellants can never be accepted. The respondents are bound to refund the balance sale price of Rs.26,939.35 and the petitioner is entitled to that amount along with interest at the rate of 12% per annum. We agree with the reasonings of the learned Single Judge in entirety." 4. It is the further submission of the learned Senior Counsel for the appellant that once the total confiscation has been modified, the seized goods will automatically become the goods of the appellant. Under such circumstances, the appellant is entitled for return of the goods and in the absence of those goods, the sale proceeds, after deducting the redemption fine and penalty, may be returned to the appellant. Basing on this, the learned Senior Counsel for the appellant has prayed for allowing of the Writ Appeal. 5. On the other hand, it is the stand of the learned Senior Standing Counsel appearing for the respondents that as per the order of the learned Single Judge dated 25.10.2006 passed in W.P.No.14948 of 1998, the case of the appellant for levying redemption fine has to be considered only in the event of availability of the seized goods. However, those goods were already disposed of in the year 1998, and therefore, the question of considering the claim of the appellant for payment of redemption fine does not arise at all. According to the learned Senior Standing Counsel, in the Customs Act, 1962 also, there is no provision for the redemption of the sale proceeds. Therefore, in the absence of any statutory provision, the question of consideration of the claim of the appellant for payment of redemption fine does not arise at all. 6. Apart from the above, according to the learned Senior Standing Counsel for the respondents, from the nature of the seized goods, the authority concerned came to the conclusion that the seized goods are smuggled goods. Under such circumstances, the question of disbursement of sale proceeds or the return of the goods does not arise at all. According to the learned Senior Standing Counsel, as far as the Judgment reported in 2006 (194) ELT 273 Madras is concerned, it relates to Jewels seized from a passenger. As far as the Judgment of the Hon'ble Supreme Court reported in 1999 (113) ELT 3 SC is concerned, in the said Judgment, the total confiscation was set aside, consequently, the entire seized goods were returned. 7. According to the learned Senior Standing Counsel for the respondents, as far as the case in hand is concerned, the total confiscation was not set aside, consequently, the question of disbursement of sale proceeds or the return of the goods does not arise at all, especially when the seized goods are not available with the respondents https://hcservices.ecourts.gov.in/hcservices/ 6 department. That apart, according to the learned Senior Standing Counsel, since the wordings used in the order dated 25.10.2006 passed in W.P.No.14948 of 1998 are "to consider the case of the petitioner for imposition of redemption fine in lieu of total confiscation, if the silver ingots seized from the appellant are still available with the Department, in the sense that the order of the authorities has been confirmed, but modified to the extent that in respect of total confiscation, the petitioner's case can be considered for levying redemption fine in addition to the penalty imposed and confirmed", question of considering the claim of the appellant for payment of redemption fine does not arise at all. Basing on this, the learned Senior Standing Counsel for the respondents has sought for dismissal of the Writ Appeal. 8. We have considered the above submissions made by the respective learned counsel. 9. The issue in question is as to whether the order of the first respondent dated 01.12.2009 is valid or not. As per the said order, the confiscated goods cannot be returned to the appellant, since the same were already disposed of. The argument of the learned Senior Standing Counsel for the respondents that the seized goods are smuggled goods, consequently, question of return of the seized goods does not arise at all, will not hold good, in view of the finding given by the learned Single Judge in the order dated 25.10.2006 passed in W.P.No.14948 of 1998 wherein, in the operative portion, which has been referred to above, the learned Single of this Court had directed the respondents to consider the case of the appellant for imposition of redemption fine in lieu of total confiscation, if the silver ingots seized from the appellant are still available with the respondents department, in the sense that the order of the authorities has been confirmed, but modified to the extent that in respect of total confiscation, the case of the appellant can be considered for levying redemption fine in addition to the penalty imposed and confirmed. 10. When the order of the Tribunal has been modified in respect of the total confiscation, we are of the opinion that the claim of the appellant can be considered for levying redemption fine in addition to the penalty imposed and confirmed. The said order dated 25.10.2006 has reached its finality and even according to the learned Senior Standing Counsel for the respondents, as against the said order, no appeal has been filed. As per the said order dated 25.10.2006, the total confiscation order was modified and the respondents were directed to consider the claim of the appellant for payment of redemption fine. As rightly pointed out by the learned Senior Counsel for the appellant, once the total confiscation has been modified, certainly, the seized goods will become the goods of a person, from whom the same have been seized or it will become the goods of the owner. 11. The argument of the learned Senior Standing Counsel for the respondents that only in the event of availability of the seized goods, as per the earlier order dated 25.10.2006, the claim of the appellant for payment of redemption fine has to be considered cannot be allowed to stand, in view of the wordings used in the said order dated 25.10.2006, which have been extracted above. Besides, according to the learned Senior Standing Counsel for the respondents, as far as the quantum of the redemption fine is concerned, the same can be quantified only if the goods are available. As far as the case in hand is concerned, since already the goods were disposed of, the respondents department cannot quantify the redemption https://hcservices.ecourts.gov.in/hcservices/ 7 fine, consequently, the request of the appellant cannot be considered. The said argument will not hold good, for the reason that even according to the Senior Standing Counsel for the respondents, the goods were already sold in an auction. In the auction notice, certainly, the quality of the goods and the quantum of the goods would have been mentioned. Basing on the same, certainly, the redemption fine can be quantified. It is not the case of the respondents also that basing on the above, it is not possible for the respondents department to quantify the redemption fine, and therefore, based on the above technicalities, the valuable right of the appellant cannot be taken away. Under such circumstances, as rightly pointed out by the learned Senior Counsel for the appellant, the appellant is entitled for the sale proceeds, after deducting the redemption fine and penalty, if any. 12. For the foregoing reasons, the order dated 28.01.2011 passed in W.P.(MD).No.3135 of 2010 is set aside and the Writ Appeal is allowed. The respondents are directed to return the sale proceeds, after deducting the redemption fine as well as penalty, if any to be imposed, within a period of three months from the date of receipt of a copy of this order. No costs. Sd/- Assistant Registrar (Crl.side) /True copy/ Sub Assistant Registrar(C.S) To 1.The Joint Commissioner of Customs, Office of the Commissioner of Customs & Central Excise, No.1, Williams Road, Cantonment, Trichy 620 001. 2.The Commissioner of Customs & Central Excise, No.1, Williams Road, Cantonment, Trichy 620 001. +1. CC to Mr.B.Vijay Karthikeyan, Advocate, SR.No. 19136 NB JUDGMENT MADE IN W.A.(MD).No.375 of 2011 20.06.2011 TR : 14.07.2011 : 7p/4c https://hcservices.ecourts.gov.in/hcservices/