IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:18.02.2010 CORAM: THE HON’BLE MR.JUSTICE P.JYOTHIMANI WRIT PETITION NOS.2044 AND 2045 OF 2010 AND CONNECTED MISCELLANEOUS PETITIONS. M/s.Shubham Construction Rep. by its authorized representative Mr.Hem Chand Dubey Gnaghara Kala, Lalganj Mirzapur, Uttar Pradesh 231 001. .. Petitioner in WP.No.2044/2010 M/s.Deepak Enterprises Rep. by its Prop.M.S.Mehta 881-A, Ward No.6 Mehrauli Delhi 110 030. .. Petitioner in WP.No.2045/2010 Vs. 1. The Commissioner of Customs (Sea Port-Imports) 60 Rajaji Salai Chennai 600 001. 2. The Additional Commissioner Of Customs (Group 5A) 60 Rajaji Salai Chennai 600 001. 3. The Deputy Commissioner of Customs (Group 5A) 60 Rajaji Salai Chennai 600 001. .. Respondents in Both the W.Ps., Writ petitions filed under Article 226 of the Constitution of India praying for issuance of Writ of Certiorarified Mandamus presented under Article 226 of the Constitution of India to issue a Writs of Certiorarified Mandamus calling for the records in file F.No.S59A/778/2009, Gr.5A, dated 07.01.2010 of the 3rd respondent herein and quash the same and to direct the respondents to release the impugned goods imported under Bill of Entry, (1) 279266, dated 05.08.2009, forthwith in terms of the order in appeal https://hcservices.ecourts.gov.in/hcservices/ C.Cus.No.1138/2009, dated 15.09.2009, and (2) 294982, dated 25.08.2009, forthwith in terms of the order in appeal C.Cus.No.1147/2009, dated 17.09.2009, respectively, passed by the Commissioner of Customs (Appeals) and to further direct the respondents to compensate the petitioner in respect of the detention/storage/demarage charges sufferred by him in respect of the impugned goods from the date of the order of Commissioner of Customs (Appeals) till the date of its release. For petitioners : Mr.N.Viswanathan For respondents : Mr.T.R.Senthilkumar COMMON ORDER These writ petitions are filed by the respective petitioners, who are the work contractors, traders in digital office equipments and suppliers of spares, challenging the orders of the third respondent, the Deputy Commissioner of Customs (Group-5A), Chennai-1 in F.No.S59A/701/2009-Gr.5A and F.No.S59A/778/2009-Gr.5A dated 7.1.2010 respectively and also for direction against the respondents to release the goods imported under Bill of Entry No.279266 dated 5.8.2009 and 294982 dated 25.8.2009 respectively in terms of the orders of appeal passed by the Commissioner of Customs (Appeals) in Cus. No.1138/2009 dated 15.9.2009 and Cus.No.1147/2009 dated 17.9.2009 respectively and also for further direction to the respondents to compensate the petitioners in respect of detention/storage/demurrage charges suffered by them from the date of the order of the Commissioner of Customs (Appeals) till the date of its release. 2. It is the case of the petitioners that during the course of their trading operations, they imported 108 units and 77 units respectively of old and used digital multifunction (print and copying) machines falling under sub heading No.8443 3100 of the Customs Tariff Act apart from 24 units of used photocopier machines falling under CTH 84433930 by the petitioner in W.P.No.2044 of 2010 under bill of entry bearing Nos.279266 dated 5.8.2009 and 294982 dated 25.8.2009 respectively. 2(a). In terms of the provisions of the Customs Act, 1962, the third respondent seized the same. The petitioners purchased the said goods from their supplier, M/s.Ruehl Printing Solutions GmbH, Baiersdorfer StraBe, 15,91099 Poxdorf/Germany for Euro 17,275/- against invoice No.907217 dated 1.7.2009 and from M/s.Habibullah Copiers Trading LLC, PO.No.83565, Dubai, UAE for US $221100/- against invoice No.190HCT2009 dated 5.8.2009 and accordingly declared the said transacted value in the bill of entry for assessment. https://hcservices.ecourts.gov.in/hcservices/ 2(b). On examination of the goods by the Docks Officers with the help of an approved Chartered Engineers viz., M/s.Supreme Techno Associates Private Limited, who have issued the reports dated 10.8.2009 and 31.8.2009, it was found that the goods imported were as per declared and estimated value of goods at an enhanced value of Euro 19830 as against the transacted value of Euro 17275 and enhanced value of US $27570 as against the transacted value of US $22100 respectively. 2(c). The petitioners, in order to avoid additional demurrage and detention charges, by letters dated 10.8.2009 and 31.8.2009 respectively addressed the second respondent, the Additional Commissioner of Customs (Group 5A), agreeing to pay the enhanced value determined by the chartered engineers for assessment. The petitioners also informed that for the import of the said goods as per the foreign trade policy, they do not require any licence and even if it is felt that any licence is required for the import, the same may be adjudicated without a show-cause notice to avoid any further delay. 2(d). It is stated that the second respondent in the orders dated 12.8.2009 and 2.9.2009 respectively enhanced the value of imported goods of Euro 19830 stated to be equivalent to Indian currency of Rs.13,94,692/- apart from confiscating the imported goods under section 111(d) of the Customs Act,1962 read with section 3(3) of the Foreign Trade (Development & Regulation) Act, 1992 with an option to redeem the same on payment of fine of Rs.4,18,000/- under section 125 of the Customs Act while imposing a penalty of Rs.3,49,000/- under section 112(a) of the Customs Act. 2(e). In respect of the writ petitioner in W.P.No.2245 of 2010, the second respondent ordered enhancement of the value of the imported goods of US $27570 equivalent to Indian currency of Rs.13,15,089/- apart from confiscating the imported goods under section 111(d) of the Customs Act read with section 3(3) of the Foreign Trade (Development & Regulation) Act, 1992 with an option to redeem the same on payment of Rs.4,07,000/- under section 125 of the Customs Act while imposing a penalty of Rs.5,43,000/- under section 112(a) of the Customs Act. 2(f). Aggrieved by the said orders of the second respondent in so far as they relate to the confiscation of imported goods, the petitioners filed statutory appeals in terms of section 128 of the Customs Act before the first respondent, the Commissioner of Customs (Appeals), Chennai who by his order in Appeal No.1138/09 dated https://hcservices.ecourts.gov.in/hcservices/ 15.9.2009 and Appeal No.1147/09 dated 17.9.2009, while confirming the order of confiscation ordered by the second respondent, however, reduced the redemption fine and penalty to Rs.2,10,000/- and Rs.1,30,000/- and Rs.2,00,000/- and Rs.1,35,000/- respectively in both the cases. 2(g). The Commissioner of Customs (Appeals) passed the orders on 15.9.2009 and 17.9.2009 respectively and in spite of the same, the respondents have not allowed the petitioners to clear the goods out of the customs custody. In the representations made on 16.9.2009, 14.10.2009 and 19.10.2009 (W.P.No.2044/10), 19.9.2009 and 14.10.2009, 19.10.2009 and 3.11.2009 (W.P.No.2045/10), the petitioners have stated about the mounting detention and storage charges and requested to clear the goods based on the orders of Commissioner of Customs (Appeals) dated 15.9.2009, unless the said orders are annulled or stayed by the higher appellate forum. 2(h). It is stated that since the respondents have not passed any order clearing the goods, by the representation dated 19.10.2009, both the writ petitioners even offered to clear the goods on payment of applicable duty on the enhanced value and to furnish bank guarantee equivalent to 50% of the fine and penalty imposed by the second respondent, in case the respondents desire to file appeal against the orders of the Commissioner of Customs (Appeals). 2(i). It is the case of the petitioners that the third respondent in his letter dated 7.1.2010, which is impugned in these writ petitions, addressed to the counsel of the petitioners informed that the first respondent had already directed the release of goods on the petitioners furnishing bank guarantee for 50% of the value of fine and penalty imposed by the second respondent in addition to the remittance of duty assessed on the goods and penalty. 2(j). The said communication of the first respondent is assailed by the petitioners on the ground that they are perverse and frivolous and the detention of the goods can be continued only if there is an order of stay granted by the higher forum, and therefore, by the lethargic conduct of the respondents in not releasing the goods as per the terms of the orders passed by the Commissioner of Customs (Appeals) dated 15.9.2009, enormous demurrage charges and detention charges were paid by the petitioners resulting in huge loss. In these circumstances, the present writ petitions have been filed by the petitioners for the reliefs as stated above. https://hcservices.ecourts.gov.in/hcservices/ 3. The respondents have filed a counter affidavit in W.P.No.2044 of 2010 which is adopted in W.P.No.2045 of 2010 also. In that, while it is admitted that the Commissioner of Customs (Appeals) has partly allowed the appeals filed by the petitioners, in respect of fine and penalty, it is stated that there was no direction to release the goods and according to the respondents, there was no obligation on the part of the respondents to release the goods, unless the petitioners filed appeal against the order of the Commissioner of Customs (Appeals) to have the goods released and therefore, without filing an appeal, the present writ petitions are not maintainable. 3(a). It is also stated that the Department filed appeal against the order of the Commissioner of Customs (Appeals) before the CESTAT on 10.12.2009 and the same was numbered as C/16/2010 and the stay petition was numbered as C/Stay/13/2010 and early hearing petition was numbered as C/Misc/15/2010 in respect of the order which is subject matter in W.P.No.2044 of 2010 and in respect of the order challenged in W.P.No.2045 of 2010, appeal as well as stay petition was also filed on the same date, but remained to be numbered. 3(b). According to the respondents, when the statutory remedy of appeal is available, the writ petitions are not maintainable. It is also stated that when the petitioners themselves are having the right of appeal for the purpose of release of goods, without exhausting the same, the writ petitions filed under Article 226 of the Constitution are not maintainable. It is stated on the merits of the case that the petitioners have not produced specific licence for old and used digital multifunction (print & copying) machines and under the Foreign Trade Policy 2004-2009, there are restrictions regarding the import of secondhand goods except secondhand capital goods. Therefore, the confiscation has been done in accordance with law. 3(c). While it is admitted that the Additional Commissioner of Customs viz., the second respondent passed the original order under section 111(d) of the Customs Act, 1962, with an option to the importer to redeem the goods on payment of Rs.4,18,000/- as redemption fine, the Commissioner of Customs (Appeals) has only reduced the fine and penalty, against which the department is stated to have filed appeal. 3(d). It is specifically stated in para-15 of the counter affidavit that the petitioner in the letter dated 19.10.2009 informed that the petitioner would execute bank guarantee for 50% of redemption fine and penalty imposed by the original authority and requested for the release of goods in view of the increase in demurrage and detention charges and that was considered by the https://hcservices.ecourts.gov.in/hcservices/ Department and the petitioners were permitted to clear the goods on payment of duty, fine and penalty as ordered by the Commissioner of Customs (Appeals) and on execution of 50% bank guarantee on the fine and penalty imposed by the original authority. 3(e). It is the case of the respondents that the impugned orders were passed only in terms of the request made by the petitioners dated 19.10.2009 and that is also the case of the counsel for the respondents while making his contentions. It is also stated that the imports were subject to the adjudication by the department. It is also stated that the consignment under the bill of entry No.279266 dated 5.8.2009 is a third consignment and as such a third offence and the same has been made without licence and since the petitioners are importers and repeated offenders, to safeguard the interests of the Revenue, the impugned orders came to be passed. 3(f). It is also stated that on receipt of letter from the Customs House dated 23.11.2009, the petitioners have agreed for adjudication without show-cause notice to avoid demurrage charges and therefore, according to the respondents, the impugned orders passed by the respondents are valid in law. 4. Learned counsel for the petitioners would vehemently submit that when the Commissioner of Customs (Appeals) passed the orders in the appeals filed by the petitioners as early as on 15.9.2009 and 17.9.2009 respectively in these two cases, even though it is true that appeal remedy is available to the respondents within a period of 3 months, it is the duty on the part of the respondents to obey the orders of the Commissioner of Customs (Appeals) unless and until an order of stay is obtained from the Appellate Tribunal. According to him, the mere filing of appeal is not deemed to be an automatic stay under the provisions of the Customs Act. It is his contention that by the delaying tactics of the respondents for nearly four months, the goods are detained and the petitioners have been paying demurrage as well as storage charges to a large extent causing irreparable loss to them. 4(a). It is his further contention that even in the letter dated 11.1.2009 by the counsel addressed on behalf of the petitioners, the petitioners have only agreed to furnish bank guarantee for 50% of the total fine and penalty imposed by the original authority, of course in addition to the duty, but under the impugned order the first respondent who is a subordinate to the Commissioner of Customs (Appeals) and who is expected to obey his orders, has chosen to pass independent orders on the basis of the letter of the petitioners dated 11.9.2009 and 15.9.2009 sent through their counsel allowing the https://hcservices.ecourts.gov.in/hcservices/ petitioners not only to execute bank guarantee for 50% of fine and penalty as levied by the original authority and to pay duty applicable, but also directing the petitioners to pay fine and penalty as ordered by the Commissioner of Customs (Appeals) and in effect, the impugned orders reiterate the orders of the original authority in full while the appellate authority, the Commissioner of Customs (Appeals) has reduced the fine and penalty. 4(b). By relying upon the judgment of the Supreme Court in Union of India v. Kamlakshi Finance Corporation Ltd [1991 (55) ELT 433 (SC)], he would contend that the first respondent being a subordinate authority to the Commissioner of Customs (Appeals), is expected to follow the orders of the Commissioner of Customs (Appeals) unless the same are stayed by the higher forum and therefore, the conduct of the first respondent is in clear violation of the orders passed by the Commissioner of Customs (Appeals). 5. On the other hand, Mr.T.R.Senthilkumar, learned counsel for the respondents would submit that there is an adequate alternative remedy available to the petitioners under the Customs Act, and therefore the writ petitions are not maintainable, by relying upon the Division Bench judgment of this Court in M/s.Nivaram Pharma Private Limited v. The Customs, Excise and Gold (Control), Appellate Tribunal [(2005) 2 MLJ 246] apart from another order of a learned Single Judge of this Court reported in M/s.Parmar Exports, Chennai v. The Assistant Commissioner of Customs (Drawback), Customs House, Chennai [2010 TI0L-93– HC-Mad-Cus]. 6. The impugned orders passed by the first respondent, which is challenged in these writ petitions are as follows: “ In this regard, it is stated that the request made by the importer for release of the goods on execution of 50% Bank Guarantee on the fine and penalty levied by the original authority was processed and Commissioner has ordered for release of the goods on payment of applicable duty, fine & penalty as ordered by Commissioner (Appeal) in addition to execution of 50% Bank Guarantee on the fine and penalty imposed by the original auhtority.” 7. As stated above, the original authority viz., the Additional Commissioner of Customs (Group 5A), second respondent herein, in the order dated 12.8.2009 which is subject matter of W.P.No.2044 of 2010, while ordering confiscation and rejecting the declared value, redetermined the value, gave an option to the importer to redeem on payment of fine and also imposed penalty. The said order is as follows: https://hcservices.ecourts.gov.in/hcservices/ “ (i) I reject the declared value of EURO 17275 (C&F) of the subject goods imported vide Bill Entry No.279266 dated 05.08.2009 under Rule 12 of Customs Valuation (Determination of Price of imported goods) Rules, 2007 and re-determine the value of the said goods at EURO 19830 (C&F) equivalent to Rs.13,94,692/- (CIF) under Rule 9 of CVR 2007. (ii) I confiscate the impugned offending goods valued at Rs.13,94,692/- (CIF) under Section 111(d) of the Customs Act,1962 read with Section 3(3) of Foreign Trade (Development & Regulation) Act 1992. However, I give an option to the owner of the goods to redeem the same on payment of fine of Rs.4,18,000/- (Rupees Four Lakhs Eighteen Thousand only) under Section 125 of the Customs Act 1962 subject to payment of applicable rate of duty. (iii) I also impose a penalty of Rs.3,49,000/- (Rupees Three Lakhs Forty Nine Thousand only) on M/s.Shubham Construction, Mirazapur, under Section 112(a) of the Customs Act 1962, for having rendered the subject goods liable for confiscation and having committed the offence for the third time.” 8. Likewise, in respect of the petitioner in W.P.No.2045 of 2010, the first respondent passed the original order on 2.9.2009 the operative portion of which is as follows: “ (i) I reject the declared value of USD 22,100/- (C&F) of the subject goods imported vide Bill Entry No.294982 dated 25.08.2009 under Rule 12 of Customs Valuation (Determination of Price of imported goods) Rules,2007 and re-determine the value of the said goods at USD 27,570/- (C&F) equivalent to Rs.13,57,764/- (CIF) under Rule 9 of CVR 2007. (ii) I confiscate the impugned offending goods valued at Rs.13,57,764/- (CIF) under Section 111(d) of the Customs Act,1962 read with Section 3(3) of Foreign Trade (Development & Regulation) Act,1992. However, I give an option to the owner of the goods to redeem the same on payment of fine of Rs.4,07,000/- (Rupees Four Lakh Seven Thousand only) under Section 125 of the Customs Act 1962 subject to payment of applicable rate of duty. (iii) I also impose a penalty of Rs.5,43,000/- (Rupees Five Lakh Forty three thousand only) on M/s.Deepak Enterprise, Delhi under Section 112(a) of the Customs Act 1962, for having rendered the subject goods liable for confiscation for the third time.” 9. The Commissioner of Customs (Appeals) in the appeals filed by the petitioners, while confirming the order of confiscation, reduced https://hcservices.ecourts.gov.in/hcservices/ the amount of fine and penalty by orders dated 15.9.2009 and 17.9.2009. The relevant portion of the orders are as follows: “ Order dated 15.09.2009: I therefore do not accept the contention that the machines, which are multi function machines including the function of photocopying, are not liable for confiscation as photocopiers. The order of the lower authority is therefore upheld in as much as it refers to the above. As regards the plea that the fine and penalty are on the higher side and that they have been fixed much lower for similar cases by various adjudicating authorities, it is not mandatory that the same has to be followed in all cases. The Apex Court has noted in the case of Indo China Steam Ship Navigation Co. Ltd., vs. Jagjit Singh, Addl.Collector, Calcutta and Others – 1983 (13) ELT 1392 (SC) that where an importer is inspired merely by cupidity to carry out illegal acts for the purpose of making profit, it would be open to the Customs to impose deterrent fines. At various times, in photocopier cases judicial forums have imposed fine and penalty cumulatively varying between 20% [CC Chennai vs. Omex International 2007 (216) ELT 144 (Tri-Chennai) to as much as 40% when margin of profit was found to be 25% [G.B.Trading Co. vs. CC, Tuticorin – 2008 (231) ELT 325 (Tri-Chennai). Here no finding has been made with regard to margin of profit by the lower authority. However, the need to impose a sufficiently deterrent fine and penalty has to be balanced with the requirement for equity and justice. The lower authority has imposed as much as 30% fine and 25% penalty. In light of previous precedents, I am of the view that a fine of Rs.2,10,000/- and penalty of Rs.1,30,000/- would suffice under the circumstances. I therefore order accordingly. Appeal is partly allowed.” Order dated 17.09.2009: I therefore do not accept the contention that the machines, which are multi function machines including the function of photocopying, are not liable for confiscation as photocopiers. The order of the lower authority is therefore upheld in as much as it refers to the above. As regards the plea that the fine and penalty are on the higher side and that they have been fixed much lower for similar cases by various adjudicating authorities, it is not mandatory that the same has to be followed in all cases. The Apex Court has noted in the case of Indo China Steam Ship Navigation Co. Ltd., vs. Jagjit Singh, Addl.Collector, Calcutta and Others – 1983 (13) ELT 1392 (SC) that where an importer is inspired merely by cupidity to carry out illegal acts for the purpose of making profit, it would be open to the Customs to impose deterrent fines. At various times, in https://hcservices.ecourts.gov.in/hcservices/ photocopier cases judicial forums have imposed fine and penalty cumulatively varying between 20% [CC Chennai vs. Omex International 2007 (216) ELT 144 (Tri-Chennai) to as much as 40% when margin of profit was found to be 25% [G.B.Trading Co. vs. CC, Tuticorin – 2008 (231) ELT 325 (Tri-Chennai). Here the margin of profit has been indicated by the chartered engineer to be between 15-25%. In any case the fine and penalty imposed @ 30% and 40% of the CIF value appear to be exorbitant. The need to impose a sufficiently deterrent fine and penalty has to be balanced with the requirement for equity and justice. Keeping in view the precedents, I reduce the fine to Rs.2,00,000/- and penalty to Rs.1,35,000/-.” 10. A combined reading of the orders of the original authority, the second respondent and the Commissioner of Customs (Appeals) in these cases show that while both the authorities have accepted the confiscation, the original authority has given an option to the petitioners to redeem the goods on payment of redemption fine and penalty which has been reduced by the original authority. The redemption fine imposed by the original authority in W.P.No.2044 of 2010 viz. Rs.4,18,000/- has been reduced to Rs.2,10,000/- by the Commissioner of Customs (Appeals) and the penalty imposed by the original authority to the extent of Rs.3,49,000/- has been reduced to Rs.1,30,000/-. 11. Likewise, in respect of W.P.No.2045 of 2010, the redemption fine imposed by the original authority to the extent of Rs.4,07,000/- has been reduced to Rs.2 lakhs by the Commissioner of Customs (Appeals). The penalty of Rs.5,43,000/- imposed by the original authority, the second respondent, has been reduced to Rs.1,35,000/-. Unless and until these orders are stayed by the Appellate Tribunal, certainly the orders are binding on the first respondent. The first respondent has passed the impugned orders, based on the representations stated to have been made by the petitioners through their counsel dated 11.11.2009 and 15.12.2009 which is also the case of the counsel for the respondents during the course of arguments. 12. Now, let us refer to the relevant portions of the said letters of the counsel for the petitioners dated 11.11.2009 and 15.12.2009 as follows: Letter dated 11.11.2009: “ 4. …. My client states that in the last communication dated 19.10.2009 addressed to the learned Additional Commissioner he had after setting out the fact which came to his knowledge namely the fact of the department proposing to file an appeal against the order of the learned Commissioner https://hcservices.ecourts.gov.in/hcservices/ of Customs (Appeals) and had accordingly come forward to furnish a BG for 50% of the total fine and penalty imposed by the learned adjudicating authority, which would sufficiently cover the confirmation of the fines and penalties approved by the learned Commissioner of Customs (appeals) in his order in appeal referred to above.” Letter dated 15.12.2009: 4. …