Case: Northern Plastics Ltd Vs. Hindustan Photo Films Mfg. Co. Ltd.&amp;Ors

The common appellant, Northern Plastics Ltd., which will hereinafter be referred to as ‘thefor the sake of convenience, is said to have obtained Small Scale Industries Registration (SSI Registration) on 24th August, 1985 for slitting and confectioning of jumbo rolls of various types of films. The said registration, according to the appellant, was obtained under the Industries (Development & Regulation) Act, 1951 (‘IDRfor short). A notification was issued by the Competent Authority under the said Act on 18th July 1986 effectively taking away the exemption from requirement of licence in respect of Item 20 of 1st Schedule to the IDR Act thus making it obligatory for owner of industrial undertaking to have licence within six months. It is the case of the appellant that although it was not the owner of industrial undertaking as defined by the IDR Act, under a mistaken belief it applied for COB licence on 8th December, 1986. On 7th July, 1988 a notification was issued by the Central Government in exercise of its powers under Sub-section (1) of Section 25 of the Act exempting jumbo rolls of graphic art films and jumbo rolls of photographic colour paper, of width 1 metre or more and of length 600 metres or more, falling within Chapter 377 of the First Schedule tothe Customs Tariff Act, 1975 (51 of 1975), when imported into India, from so much of that portion of the duty of customs leviable thereon under the said First Schedule as was in excess of the amount calculated at the rate of 60 percent ad valorem, subject to the following conditions:(i) the importer undertakes conversion of the said jumbo rolls by slitting or confectioning into finished products;(ii) the importer holds an industrial licence underthe Industries (Development and Regulation) Act, 1951 (65 of 1951), for slitting and confectioning of photo-sensitised materials from jumbo rolls.According to the appellant the benefit of this concession in import duty on the jumbo rolls of various types of films which were being imported by the appellant was available to it. The appellant had imported various consignments of articles of X-Ray films and graphic art films through the port at Bombay between January, 1989 and May, 1989. The shipments concerned for the same consignments were made in favour of the appellant by the foreign exporters between 15th December, 1988 and 20th April, 1989. According to the appellant the goods were worth Rs. 246 lacs approximately in foreign exchange. That the appellant had paid customs duty amounting to Rs. 196 lacs on these consignments and the additional duty if the exemption was not available to the appellant on these consignments would have become payable to the extent of Rs. 130 lacs. The total value of the goods imported at Bombay port by the appellant during the aforesaid period worked up to Rs. 572 lacs according to the appellant. The Assistant Collector of Customs (Bombay) had not granted the requisite relief of confessional import duty payable for the imported assignments of the appellant. Hence a writ petition being Civil Writ Petition No. 2021 of 1988 was moved by the appellant in the High Court of Delhi where principal relief sought was for the grant of benefit of the aforesaid customs exemption notification. A prayer was also made for issuance of COB licence by the Competent Authorities under the IDR Act. Initially the appellant had not joined M/s.a public sector undertaking in the said writ petition as a respondent as it was merely a business rival of the appellant. However on an application by the HPF a Division Bench of the High Court by its order dated 8th May, 1989 allowed it to be a party-respondent in thepetition. In the aforesaid writ petition filed by the appellant before High Court of Delhi initially an order was passed by a learned Single Judge directing removal and release of the jumbo rolls imported by the appellant at Bombay at concessional rate of customs duty. However this interim order was set aside by a Division Bench of the High Court by its order dated 8th May, 1989. Pending this writ petition in the Delhi High Court, upon an application by the appellant, an order was proposed to be passed by the Assistant Collector of Customs (Bombay) on 31st May, 1989 permitting the clearance of the imported consignment of the appellant upon payment of full rate of customs duty. The said proposed order was placed for approval before the Additional Collector of Customs (Bombay). Below the said proposal the Additional Collector of Customs (Bombay) put his endorsement agreeing to the said proposal on 1st June, 1989. The said order which came to be communicated to the appellant on 5th June, 1989 entitled the appellant to clear the imported goods on payment of full customs duty without availing of the benefit of the concessional rate of import duty pursuant to the earlier referred notification dated 7th July, 1988.3. Having come to know about this order of the Additional Collector of Customs, HPF which is a public sector undertaking wholly owned by Government of India, which was already joined as a party, at its own request, to thepending petition, moved an interim relief application in that petition for staying the clearance and removal of the goods imported by the appellant. The High Court by its order dated 9th June, 1989 in vacation granted ex parte stay of theorder. The interim relief application of HPF was subsequently heard byanother Vacation Judge in the High Court on 21st June, 1989 and after completion of the arguments on behalf of the HPF on 26th June, 1989 a request was made for not pronouncing the judgment in the said interim relief application. However, the said request was not granted and the interim relief application of HPF was dismissed on 26th June, 1989 by the High Court. That thereafter HPF filed a writ petition in the High Court of Bombay on that very day, that is, 26th June, 1989 praying for similar interim relief against release of the imported goods to the appellant. The High Court rejected the request for ex parte interim relief. A Special Leave Petition was also moved by the HRF before this Court against the Delhi High Court order dated 26th June, 1989 vacating the ex parte stay granted against the release of imported goods in favour of the appellant. The said Special Leave Petition was dismissed as withdrawn by this Court. After HPFs Special Leave Petition was dismissed as withdrawn by this Court on 27th June, 1989 a writ appeal was moved by the HPF before a Division Bench of the Bombay High Court against the order of learned Single Judge refusing to grant ex parte stay in writ petition of HPF, but no interim relief was granted by the High Court even in this writ appeal. Under these circumstances HPF filed an appeal to CEGAT on 28th June, 1989 against the order of Additional Collector of Customs (Bombay) dated 5th June, 1989. An ex parte interim order was obtained from CEGAT for a week up to 6th July, 1989. HPF then withdraw the writ petition before the Bombay High Court. In the meantime the status quo order granted by CEGAT expired on 6th July, 1989 and it was not extended. HPF then filed a writ petition before the High Court of Delhi being Writ Petition No. 1992 of 1989 against the order dated 7.7.1989 passed by CEGAT and the Division Bench of the High Court passed an ex parte stay of the order of the Additional Collector of Customs dated 5th June, 1989 on 12th July, 1989. The High Court of Delhi by its order dated 17th July, 1989 disposed of Writ Petition No. 1932 of 1989 moved by the HPF against the Additional Collectors order and directed CEGAT to dispose of the appeal of the HPF. The High Court, however, further directed that till the final disposal of the appeal by the CEGAT the stay granted on 12th July, 1989 would continue. Before HPFs appeal could be heard by the CEGAT an appeal being No. 2072 of 1989 was filed by the Ministry of Industries, New Delhi before CEGAT under Section 129-A of the Act against the very same order of Additional Collector dated 5th June, 1989. A Bench of CEGAT by its order dated 31st July, 1989 dismissed the appeal of HPF against Collector of Customs on the ground that HPF being a business rival of the appellant was not person aggrieved as contemplated by Section 129-A of the Act and hence the appeal was not maintainable. Thereafter on 8th August, 1989 the other appeal filed by Ministry of Industries against the very same order of Additional Collector of Customs was also dismissed as not maintainable, the Ministry of Industries being held not an aggrieved person within the meaning of Section 129-A of the Act. Under these circumstances HPF filed another Writ Petition No. 2286 of 1989 in the Delhi High Court on 9th August, 1989 challenging two orders, (i) the order of CEGA T dated 31st July, 1989 holding its appeal as not maintainable; and (ii) the order of Additional Collector of Customs (Bombay) ordering release of the imported goods to the appellant. A Division Bench of the High Court while admitting the writ petition restrained clearance of the goods in favour of the appellant pending the writ petition. In the said writ petition Ministry of Industries was also permitted on its application to be impleaded as party-respondent. The Union of India representing Ministry of Industries in its turn filed another writ petition being Civil Writ Petition No. 3023 of 1989 on 24th October, 1989 before the High Court of Delhi against the order dated 8th August, 1989 passed by CEGAT against it. That petition was also admitted by the High Court of Delhi. Both these writ petitions were heard together and by a common order dated 9th March, 1990 a Division Bench of the High Court took the view that the appeals filed by the respective first respondents in these appeals were maintainable before the CEGAT as they could be said to be persons aggrieved within the meaning of Section 129-A of the Act and that they had sufficient locus standi in public interest to maintain their appeals. In the result the Division Bench of the High Court partly allowed the writ petitions of both the first respondents in these appeals moved by the Union of India as well as HPF and passed the followinghave held that the Union of India and M/s. Hindustan Photo Films Ltd. are ‘aggrievedand can maintain an appeal under Section 129-A of the Customs Act. The main question in the writ petition at the root of the entire controversy between the parties is whether the said importation of the photo-sensitized material at Bombay was legal or not would now be decided by the Appellate Tribunal. But assuming that M/s. Northern Plastics Ltd. takes an appeal against our order to the Supreme Court and our decision is reversed, still the question of the legality of the importation would be open to the parties to be argued in this writ petition before us. Thus, till the main question of legality of importation is finally disposed of, in the interests of justice, it is necessary that the subject-matter of the controversy, viz. the imported goods, are preserved in the custody of the Customs Authorities and are not released. Since the goods are now stored under the suitable conditions of storage with M/s. Northern Plastics Ltd. there is no likelihood of their deteriorating. No variation in our order dated 9.8.1989 in regard to the release of goods is, therefore, called for.The writ petition is partly allowed to the extent indicatedalready noted the aforesaid common order of the Division Bench of the High Court of Delhi has resulted in present two appeals on grant of special leave by this Court. Pending these appeals it was felt by this Court that the imported goods in question were likely to deteriorate with passage of time and if that happened the contesting parties would stand to suffer irretrievably. Consequently by an order dated 25th April, 1990 a Bench of two learned Judges of this Court was pleased to direct that Chief Controller of Imports and Exports may be appointed as Court Receiver for disposing of the goods in question by sale in auction as expeditiously as possible and at the maximum price they will fetch in the market. It was further directed that the amount of the sale proceeds of the auction shall forthwith be deposited by the receiver in this Court to the credit of these appeals. Accordingly the goods were auctioned. By a further order dated 21st September, 1990 another Bench of two learned Judges of this Court accepted the offer of four purchasers who had offered to purchase all the disputed goods for a total sum of Rs. 1,40,00,000. Four auction sales were confirmed in favour of the concerned auction purchasers. By the same order it was directed that the auction amount shall be deposited by this Court in a Fixed Deposit Account and the amount so deposited shall remain in the custody of the Court and shall be disposed of in accordance with the final judgment in the appeals pending before the Customs, Excise and Gold (Control) Appellate Tribunal. The aforesaid order was passed for the obvious reason that by that time under the common judgment under appeal CEGAT was directed by the High Court to dispose of the appeals of Union of India as well as HPF pursuant to its judgment. However as these appeals are being disposed of finally by us by the present judgment appropriate orders will have to be passed by us in connection with this deposited amount. We shall do so after considering the main question involved in controversy between the parties in these appeals.

Reasoning:
So far as the Union of India is concerned we may proceed on the basis that it may have to subserve a larger public interest by raising the present dispute and may legitimately feel aggrieved by the order of the Additional Collector of Customs. But even if it is so, the statutory procedure laid down by the Parliament in its wisdom for enabling the challenge to the adjudication order of the Collector of Customs by way of appeals or revisions as per the aforesaid relevant statutory provisions, to which we have made a mention, has got to be followed in such an eventuality. Bypassing the said statutory procedure a direct frog leap to CEGAT is contra-indicated by the statutory scheme of the Act. If such direct appeals are permitted the very scheme of Section 129-A(1) would get stultified. It must, therefore, be held that direct appeal filed by the Union of India through Industries Ministry to CEGAT under Section 129-A(1) was clearly incompetent. It may be added that the Union of India could have used the mode set out in Section 129-D, but it did not do so.As a result of the aforesaid discussion it must be held that the High Court had committed a patent error of law in taking the view that the concerned writ petitioners before it had sufficient locus standi to prefer appeals before CEGAT. The decision of CEGAT holding that they had no such locus standi was perfectly justified on the scheme of the Act and it was wrongly set aside by the High Court. Consequently the appeals will be required to be allowed.12. However a further question survives for our consideration. Asthe High Court has noted in the impugned judgment, the other contentions in the writ petitions filed by the contesting respondents were not considered by it in view of its decision on the right of appeal which was made available to the concerned writ petitioners before theCEGAT. We have, however, to observe in this connection that the High Court was not at all justified in presuming what it should do in case theappeal succeeded before this Court. Proper direction in that connection should have been left to be given by this Court in such an eventuality. High Court could not have been pre-empted the same by the impugned judgment. However in view of the fact that other contentions in the writ petitions were not examined by the High Court in any case they will now have to be examined by it. As the decision on the right to appeal to CEGAT made available to the contesting respondents by the High Court is being set aside by us, the question remains as to what further appropriate orders can be passed in this connection. So far as this question is concerned it may be noted that two writ petitions were moved, one by Union of India being Civil Writ Petition No. 3023 of 1989 and another by HPF being Civil Writ Petition No. 2286 of 1989. As we have taken the view that HPF being a business rival of the appellant had no right to challenge the order of Additional Collector of Customs, Bombay passed in favour of the appellant its writ petition being Civil Writ Petition No. 2286 of 1989 filed before the High Court will stand dismissed. However writ petition filed by the Union of India being Civil Writ Petition No. 3023 of 1989 will have to be permitted to proceed further on remaining controversy before the High Court insofar as Union of India seeks to challenge the order of Collector of Customs, Bombay dated 1st/5th June, 1989. As we have taken the view that Union of India could legitimately challenge the said order before appropriate forum in public interest and as it has wider locus standi at least in proceedings under Article 226 of the Constitution of India if not before CECAT, its challenge in the writ petition under Article 226 against the said order cannot be told off the gates. That challenge will have to be examined by the High Court under Article 226 on its own merits. It is obvious that it will be open to the appellant as contesting respondent to try to support the impugned order of the Assistant Collector /Collector of Customs on all legally permissible grounds. In short the said controversy between the Union of India on the one hand and the appellant on the other in Union of Indias Writ Petition No. 3023 of 1989 will have to be examined by the Division Bench of the High Court on its own merits. As the proceedings are pending since long before the High Court so far as the aforesaid challenge is concerned it would be in the interest of justice to request the High Court to decide the said writ petition on the merits of the question regarding the legality and propriety of the order of Collector/Assistant Collector of Customs dated 5th June, 1989 as expeditiously as possible preferably within a period of four months from the date of receipt of a copy of this order at its end.13. Now remains the last question as to whatis to be done about the amount fetched in auction of the goods pursuant to the interim order of this Court dated 24th September,1990. We cannot accede to the request of the learned Counsel for the appellant that the said invested amount with accrued interest may be permitted to be withdrawn by the appellant at this stage by furnishing bank guarantee. In our view as the amount is lying deposited and invested by this Court since more than six and half years by now and as we are requesting the High Court to decide the pending writ petition of Union of India on the surviving question as aforesaid within four months from the date of receipt of copy of the present order it would be in the interest of all concerned to continue the investment of the deposited amount of the auction price by this Court and to direct that the withdrawal of that amount shall abide by the final result of the writ petition of the Union of India before the High Court and shall also remain subject to the result of further appeal, if any, against the High Courts judgment in the said writ petition.