G. Mehrotra, J.
1. As these two rules give rise to a common question of law and fact, they can be disposed of by one common judgment. The petitioner in Rule No. 36 is a partnership firm registered under the Indian Partnership Act and carries on business amongst other places at Biswanathghat in the district of Darrang. The general guarantee bond was executed in the name of M/s. Bhuramal Dhalulal through Sri Manmall Sethi in favour of the Assistant Collector of Central Excise and Land Customs, Gauhati for transporting goods from Assam to other parts of Indian Union through Pakistan. The petitioner succeeded to the interest of M/s. Bhuramal Dhalulal with effect from 10-4-1956 and continued to despatch goods under the aforesaid guarantee bond. The bond subsequently for the year 1955-56 was submitted by the petitioner and was accepted and a permit was issued by the respondent No. 1 in the name of the petitioner-firm by which they were permitted to transport Jute, Mustard Oil seeds, Mustard Oil, Tea, Foodstuff and Spices etc. for the financial year 1955-56 from one place in Indian Union to any other place in Indian Union through Pakistan. The conditions embodied in the bond were that the partners of the firm guaranteed to produce within two months from the date of despatch of goods from Assam, a certificate from the consignees of the due landing and receipt of the goods by them, and they further undertook not to divert any cargo through Pakistan. It was further provided that in the event of short delivery at destination as compared with the consignment despatched from Assam, the petitioner-firm would undertake to pay duty and cess and such penalty as might be levied under the Land Customs Act and! the rules thereunder. On /-3-1955 and 12/3/1955, the petitioner-firm despatched 1052 maunds of Jute from Tezpur Steamer ghat to Calcutta via Dhubri through Pakistan water in a vessel--'M. V. Raju' for being delivered to M/s. Ramdea Harakchand, Calcutta under the terms of the aforesaid bond.
The vessel was owned by M/s. Neptune Navigation of 133 Canning Street, Calcutta which carried goods on hire by water as common carrier from all parts of Assam to the other places of Indian Union through Pakistan. On 20-3-1955 the vessel left Dhubrighat; but according to the petitioner, the vessel caught fire on the way near Tepakhola in Eastern Pakistan on the river and the whole lot of jute was burnt down to ashes with the result that not a single fibre of jute reached Calcutta. The petitioner was therefore unable under the terms of the guarantee bond to submit the necessary certificate.
2. The petitioner thereafter informed the respondent No. 1--the Assistant Collector of Central Excise and Land Customs about the incident. The Assistant Collector, Central Excise and Land Customs issued a demand notice dated 12/ 16th April, 1956 demanding payment of Rupees 3247/8/- on account of customs duty and Rupees 27/2 on account of cess. On the issue of this demand notice by the Central Excise and Land Customs Collector, the petitioner-firm submitted a petition to the respondent No. 1 on 4-5-1956 stating the reasons for which the petitioner could not be asked to pay customs duty and cess duty for non-production of a certificate as to the arrival and receipt of the goods by the consignees.
The Assistant Collector by his order dated 13-8-1956 informed the petitioner that an appeal against the order passed by the Assistant Collector lay to the Collector of Central Excise and Land Customs. The petitioner thereafter preferred a revision petition before the Secretary to the Government of India, Ministry of Finance, under section 191 of the Sea Customs Act within, the period allowed by law. But that was refused on the ground that no appeal had been filed to the Collector of Central Excise. On these facts, a petition, under Article 226 of the Constitution has been filed praying for a writ of mandamus or any other direction or order directing the respondent to cancel, recall or otherwise forbear from giving effect to the order dated 12-4-1956 passed by the respondent No. 1 and for quashing of the aforesaid order. Further mandamus has been claimed restraining the respondent from acting in terms of the order dated 12-4-1956.
3. In the Civil Rule No. 101, the petitioner carries on business in the district of Darrang in jute, mustard seeds and various other commodities. The general guarantee bond was executed by the petitioner in favour of the Assistant Collector of Central Excise and Land Customs, Jorhat and on the basis of the aforesaid bond, permission was granted in the name of the petitioner to transport goods from Assam to the other parts of the Indian Union through Pakistan territory. The conditions were similar to those mentioned in the guarantee bond referred to in the other petition. The petitioner despatched 3053 maunds of jute from Tezpur to Calcutta via Dibrugarh through Pakistan waters in the same vessel--'M.V. Raju' to M/s. Milapchand Hiralal. This vessel is the same which was carrying goods despatched by the petitioner in the other petition and caught fire with the result that the petitioner's goods were totally destroyed and no certificate could be produced. A notice of demand was issued on 12-4-1956 on the petitioner demanding payment of Rs. 9420/- on account of customs duty and Rupees 78/- on account of cess. Representation was made to the Assistant Collector and the petitioner received a reply to the effect that an appeal lies to the Collector of Central Excise and Land Customs and the appeal being beyond time, no appeal could be filed. A letter dated 5-11-1956 was received by the petitioner from the Assistant Collector informing him that as the goods were despatched under the terms of the general guarantee bond executed by the petitioner, he was liable to pay the Government dues and the department had nothing to do with M/s Rajasthan Jute Company of Tezpur. Similar relief has been claimed in this petition also.
4. The contention of the petitioner's counsel is that there is no liability of the petitioners to pay the amounts referred to in the notices of demand as customs duty under the terms of the bond.
The bond only required that a certificate had to be given after the goods have reached Calcutta within two months of the despatch and in case any of the goods was diverted to Pakistan, the petitioners were liable to pay the customs duty. But the contract did not provide for any payment of duty on the goods which are lost by fire or any other such accident in the Pakistan waters. In the present case, there was no diversion of any of the goods to Pakistan and thus there was no liability to pay the customs duty on the goods lost by fire. It was further urged that there was no power given to the respondents to pass any order under any of the statutes demanding the customs duty from the petitioners and the notices of demand are illegal and without jurisdiction and should be quashed.
5. The Advocate General, who appears for the respondents has raised three main contentions. The first contention is that the liability of the petitioner arose under the provisions of the Indian Tariff Act and Land Customs and Sea Customs Act from the date when the goods crossed the Indian border and were exported. The liability, according to him, was not under the contract, the contract only provided for exceptional conditions under which the liability was not to be enforced against the petitioners, and unless the petitioners succeed in establishing that in the present circumstances, the exception was operative, they could not claim any benefit under the contract and they were liable to pay the customs duty.
As we have already pointed out, the petitioners' case was that the liability arose if at all, under the contract and there was no other statutory liability. The second contention raised by the Advocate General is that the liability being there, it could be enforced. A number of preliminary points were also raised by the Advocate General. He firstly urged that petitioners' remedy was to file an appeal against the order of the Assistant Collector of the Central Excise and Land Customs and having failed to file the proper appeal, this court will not exercise its power under Article 220 in favour of the petitioners. It was then contended that the right claimed by the petitioners is one under the contract and no contractual right can be enforced by means of a writ under Article226 of the Constitution.
Lastly it was arged that the petitioner raised controversial points of fact as to whether there was destruction of the goods by fire or not, this Court will not therefore give any relief to him under Article 226 of the Constitution. As to the point raised by the petitioner that there is no provision in the statute under which the notice could be issued, the contention in short of the Advocate General is that as there was liability of the petitioner to pay the duty to the Government, it was open to the Assistant Collector to issue notice demanding payment of the amounts as any other creditor could have done, no objection therefore could be taken to the issue of the notice and the petitioners are not entitled to any relief on that account.
6. Section 2 of the Indian Tarrif Act--Act No. XXXII of 1934 provides that there shall be levied and collected in every port to which this Act applies, the duties specified in the first and second schedules. The first schedule deals with the import tarrif and the second schedule deals with the export tarrif.
Item No. 1 of the Second schedule is raw jute. Section 5 of the said Act provides that where the customs duty at any rate prescribed by or under this Act or any other law for the time being-in force is leviable on any article when imported into, or any article when exported from, a port in the State, the Central Government may by notification in the Official Gazette direct that a duty of customs at the like rate shall be levied on any such article when imported or exported, as the case may be, by land from or to any territory outside the States which it may, by a like notification declare to be foreign territory for the purposes of this section.
It is not disputed that a notification was issued under this section by which Pakistan was declared a foreign territory. Under Section 4 of the Land Customs Act, the Chief Customs authority has been empowered by notification in the Official Gazette to (a) establish land customs stations for the levy of land customs in any land customs area and (b) prescribe the routes by which alone goods or any class of goods specified in the notification may pass by land out of or into any foreign territory or to or from any land customs station from or to any foreign frontier.
Section 20 of the Sea Customs Act provides that customs duty shall be levied at such rate as may be prescribed by order under law for the time being in force on goods imported or exported by sea into or from any customs port from or to any foreign port. Customs port has been defined as any place declared under Section 11 to be port for the shipment and landing of goods.
7. It is urged by the Advocate General that reading Section 5 along with Section 2 of the Indian Tarrif Act, the goods despatched by the petitioner were liable to pay the customs duty. The source of the levy of the customs duty is to be found in these sections and the contract only created an exception in favour of the petitioner.
Ordinarily all the goods which left the Indian borders and entered into the Pakistan border will be deemed to have been exported and would be liable to payment of customs duty; but in order to help the trade, the contract created an exception and the goods which reached the Indian borders were not taxed. The certificate of arrival had to be given within two months from the date of the despatch. The petitioners, therefore, according to him, were entitled to the exception only under the conditions laid down in the contract. Apart from those circumstances, the petitioners were liable to pay the customs duty.
8. The counsel for the petitioner has however controverted this contention on the ground that in the, notice of demand, it is expressly mentioned that the demand was made under the terms of the general guarantee bond executed by the petitioners. The source of the levy therefore, according to the petitioner, was not the provisions of Indian Tarrif Act; but the terms of the bond and if the terms of the contract do not give any right to pay the customs duty in respect of goods which are not diverted to Pakistan, but are lost by fire, the respondent No. 1 had no right to demand the duty.
The second line of argument is that even assuming that the source of the levy is the statutory provisions of the Indian Tarrif Act and the Land Customs Act, in the present case no duty was leviable as the goods cannot be said to have been exported. The goods were despatched for Calcutta. They had to pass in transit only through Pakistan and therefore the word 'export' does not mean the crossing of the borders only, it connotes an idea that the goods are sent out to foreign country, mixed up with the goods of the foreign country and are consumed there. Reliance was placed in this connection on the case of the Empress Mills v. Municipal Committee Wardha reported in AIR 1958 Sup. Court 341.
9. It is not necessary for us for the purposes of the present cases to examine the position whether the customs duty was leviable on these articles or not. The simple question which we have got to examine is how far the notices issued by the respondent were justified under any statutory provisions. It has not been seriously contested by the Advocate General that there is no procedure provided in any of these Acts for the recovery of the customs duty by issuing a notice of demand. There may be as he suggests remedy by means of a suit.
If there is no provision in the Act for the issue of the notice of demand, the petitioners, to our mind, are entitled to come to this Court, under Article 226 of the Constitution and ask for a writ of mandamus directing the respondents who are the Government authorities not to enforce the notice. It was contended by the Advocate General that there is a right in every creditor to send a notice to his debtor demanding his dues and this Court in the exercise of its powers under Article 226 of the Constitution will not issue a mandamus directing the creditor not to issue such a notice or to quash the notice.
It is open to the petitioner not to pay the amount and if and when steps are taken to recover the amount by proper suit, the petitioners may defend the suit on any ground. It was further contended that cases where illegal notices of demand are issued, the failure to comply with which results in penal consequences, stand on a different footing; but in the present case, there is neither any indication in the notices that coerceive process will be taken nor there is any provision in the Act which empowers the authorities to take the coercive measures on non-payment of the dues, and therefore no direction under Article 226 should be issued quashing the notices.
Ordinarily if an individual makes a demand from his debtor of any amount, that by itself does not give any right to the debtor to ask for the issue of a writ under Article 226 of the Constitution, but when the Government authorities in the exercise of their powers as such issue a notice of demand, calling upon a person to pay some money, it is not only a case of a notice by a creditor. The demand has got to be justified on some statutory basis and it will not be a valid defence to say that the petitioners could well have refused to pay the money.
Moreover, in the present case, it was contended by the respondents in the counter-affidavit that the petitioners had an alternative remedy available by means of an appeal under Section 188 of the Sea Customs Act which provides for an appeal by any aggrieved person against any decision or order passed by an Officer of Customs under this Act within three months from the date of such decision or order to the Chief Customs Authority. This right of appeal can only accrue if the notice of demand is treated to be a decision or an order passed by an Officer of the Customs Department.
If it is an order passed by the Customs Authorities, it effects the right of the petitioners to hold property, the petitioners have thus a right to come to this Court and ask for a writ of mandamus directing the respondents not to give effect to that order unless it has got any statutory foundation.
Section 39 of the Sea Customs Act provides that when customs-duties or charge have been short-levied through inadvertence, error, collusion or misconstruction on the part of the officers of customs or through mis-statement as to real value, quantity or description on the part of the owner, or when any such duty or charge after having been levied has been owing to any such cause erroneously refunded, the person chargeable with the duty or charge so short-levied or to whom such refund has erroneously been made, shall pay the deficiency or repay the amount paid to him in excess, on demand being made within three months from the date of the first assessment or making or the refund, and the customs collector may refuse to pass any goods belonging to such person until the said deficiency or excess be paid or repaid.
This section does not apply to the total loss of the goods. It only applies to the short-levied through inadvertence, error, collusion or mis-construction on the part of the customs officers and therefore the demand notice cannot be justified under this section. If however this notice is sought to be justified under Section 39 of the Sea Customs Act, the customs authorities can refuse the goods of the petitioner to pass and thus failure to comply with the notice will result in penal consequences to the petitioner and the petitioners would be justified in coming to this Court for a writ of mandamus directing the respondent not to give effect to these notices.
In this view of the matter, there is no force in the preliminary objections raised by the respondent that the petitioners had an alternative remedy available to them. The alternative remedy by appeal, as we have already pointed out was only available against orders under the Act and further, alternative remedy is not an absolute bar to the exercise of the powers by this Court under Article 226 of the Constitution.
In the present circumstances, where there was no justification in law for the issue of the notice, the order if at all was without jurisdiction and this Court will not stay its hands from giving relief to the petitioners on the ground that they could have approached the higher authorities under Section 188 of the Sea Customs Act.
10. In the result, therefore, we allow these petitions in so far that we issue a writ of mandamus directing the respondents not to give effect to the notices of demand as there is no statutory provision under which the said notices could be issued. If the respondent has any right to claim the customs duty, he can always enforce that by means of a proper proceeding, but the notice of demand was without any authority of law and is liable to be quashed. C.R. 36/57 and C. R. 101/57 are accordingly made absolute; but the parties will bear their own costs.
H. Deka, J.
11. I agree.