Union Of India & Ors vs Shakti Lpg Ltd. & Anr

J U D G M E N T CIVIL APPEAL NO 1356 / 2008 (arising out of S.L.P.(C) No. 15278/2006) WITH C.A No 1357 / 2008 (arising out of SLP) NO.18978/2007) HARJIT SINGH BEDI,J.

2. The facts have been taken from SLP) No. 15278/2006.

3. These appeals filed by the Union of India arise out of the following facts : On 6.3.1996 the respondent Shakti LPG Ltd. imported 1714.5 MT of boiler steel plates worth Rs. 4.79 crores claiming that the said goods would be utilized for the extension of their storage terminal at Kakinada. As the said import could be entitled to a concessional rate of duty on the production of the appropriate certificates which were then not available with the importer, the goods were warehoused in one of the bonded godowns of the Central Warehousing Corporation on 30th May 1996 for an initial period of one year. The respondent thereafter applied for the extension of the warehousing period which was allowed by the Commissioner, Customs on 5th September 1997 upto 31st March 1998. A security deposit of about Rs.10, 00,000/- and an advance customs duty of about Rs.98, 00,000/- were deposited with the department on 31st March 1998 but the goods were still not cleared. From 1998 till 31st January 2001, several notices were sent to the respondent to clear the goods or to pay the duty and during this period the warehousing period was extended six times with the last extension expiring on 31st January 2001. As the respondent sought no further extension thereafter, the aforesaid period came to an end. Several notices were thereafter issued to the respondent under Section 72(1) of the Customs Act, 1962 (hereinafter called the "Act") raising a demand of duty etc. As no reply was forthcoming, a notice under section 72(2) of the Act was issued to the respondent on 3rd December 2001 for sale of the goods by auction so as to recover of the outstanding dues. Interestingly, however, the respondent vide his letter dated 31st December 2004 also surrendered the goods with the result that it ceased to have any claim over them. The auction of the goods was duly advertised and it was actually held on the 28th of September 2005 and on the same day the respondent made a request for permission to re-export the goods under section 69(1) of the Act and for the cancellation of the auction sale. The respondent also filed Writ Petition No. 6907 of 2005 before the Bombay High Court for permission to re-export the goods. This petition was disposed of by the Bombay High Court on 19th October 2005 directing the Commissioner to dispose of the respondent's application for re-export of the goods by a reasoned order after hearing the petitioner. The personal hearing was given to the respondent on 28th November 2005 wherein it was proposed to export the goods to a unit operating in the special economic zone (SEZ) Pithampur in Madhya Pradesh. The Chief Commissioner by his order dated 3rd January 2006 rejected the request of the respondent to clear the goods for export to the SEZ without payment of the duty on the plea that such an export was not envisaged as it was within the country. This order was challenged by the respondent in Writ Petition No.60 of 2006 before the Bombay High Court once again praying that it be permitted to export the goods outside India. This petition was dismissed as being devoid of merit vide order dated 13th January 2006 and a Special Leave Petition against the said order was dismissed by this Court on 3rd February 2006. Undeterred the respondent then moved an application before the Bombay High Court seeking a review of the order dated 13th January 2006. This application too was dismissed on the 22nd February 2006. The respondent then approached the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) by way of an appeal challenging the order of the Chief Commissioner dated 3rd January 2006. This appeal too was dismissed as withdrawn on the request of the respondent. The department thereupon initiated proceedings for the re- auction of the goods on which the respondent submitted a letter dated 8th June 2006 for permission to re-export the goods to the UAE though without any supporting documents. The re-auction was held on 14th July 2006 and the petitioner received a bid of Rs.3.78 crores which was sufficient to meet only a part of the demand. On 18th July 2006 the respondent filed yet another Writ Petition No. 4655 of 2006 before the Bombay High Court for a direction to re-export the goods. This Writ Petition came up for hearing before the High Court on 26th July 2006 and the High Court directed the department to file a statement as to the expenses that had been incurred by it till date. The department thereupon filed a detailed affidavit in the Bombay High Court pointing out the repeated defaults on the part of the respondent and that the protracted proceedings in one forum or the other had resulted in a revenue loss of Rs.8.55 crores. This Writ Petition was disposed of by the order dated 9th August 2006 by accepting the undertaking of the respondent to re-export the goods by 14th September 2006 without calling upon the respondent to pay any duty. This order has been impugned in the present Special Leave Petition. The respondent thereafter moved an application in CWP No. 4655 of 2006 before the Bombay High Court seeking a clarification that the order passed on 9th August 2006 was with consent of both parties. The Division Bench in its order dated 14th February 2007 observed that though the order dated 9th August 2006 did not specifically say that it was an order by consent but the understanding was that it was in fact so. This order has been impugned by the Union of India in the connected Special Leave Petition No. 18978/2007 on the ground that no consent had even been given by it at the time when the order dated 9th August 2006 had been made by the High Court.

9. The Chief Commissioner finally concluded that there was no merit in the request of the petitioner dated 28th September 2005 to allow him any further extension of the warehousing period for re-export of the goods. This order was challenged by the respondent in CWP No. 60 of 2006 which too was dismissed and the Special Leave Petition filed thereafter was also dismissed. It is therefore clear from the record that the circular dated 14th January 2003 would not be applicable in the present case as the application for extension of time had been made on 22nd /28th September 2005 when the auction was to be held on 28th September, 2005 but had been stalled on account of the efforts of the respondent and that the respondent cannot be permitted to take advantage of its own wrong and to say that though the auction could not be finalized due its stalling efforts yet it was entitled to fall back on the circular and to argue that the first auction had not been held on 28th September 2005 but on 14th July 2006. We are also of the opinion that the respondent having surrendered its title in the goods vide letter dated 31st December 2004 it was not open to it to contend that this surrender had been withdrawn subsequently. In the light of the present circumstances the observations made in Commissioner of Customs, Calcutta (supra) can have no applicability.

12. We accordingly allow both appeals without any order as to costs.