1. This appeal is directed against the order dated September 10,1979, passed by the learned single Judge dismissing Misc. Petition No. 1713 of 1979 summarily.
2. The appellants in this appeal are the original petitioners - who will be hereinafter referred to as 'the petitioners'. Petitioner No. 2 is a partnership firm of which petitioner No. 1 is a partner along with three other partners. The 1st respondent is the Assistant Collector of Customs. The 2nd respondent is the appellate authority under the Customs Act. The 3rd respondent is the Union of India. The 4th respondent is the Corporation and a subsidiary company of State Trading Corporation. Respondents 5,6 and 7 were the partners of the old firm.
3. The 1st petitioner along with respondents Nos. 5, 6, 7 and 3 other partners constituted a partnership firm in the name and style of M/s. Takandas H. Kataria at Bombay and were carrying on the business. This firm (hereinafter referred to 'old firm') was dissolved on December 31,1974. On dissolution of the old firm the new firm came into existence which consisted of the 1st petitioner and 3 other partners. It is common ground that in the old firm there were in all seven partners and on its dissolution on December 31, 1974, the first petitioner and his three sons who were partners of the old firm on January 1,1975 formed a new partnership firm i.e. Petitioner No. 2.
4. Sometime in the year 1971, the old firm agreed to purchase 28 cases of C.N. Sheets from the State Trading Corporation of India. At that time the import of the C.N. Sheets was canalised through State Trading Corporation. The said consignment was sold by the State Trading Corporation through its subsidiary respondent No. 4 to the old firm on what is known as 'Sale on the High Seas basis'. The old firm was required to have the consignment cleared through the customs and pay customs duty leviable on the said consignment directly to the customs authorities. M/s. Bablani and Co. were the clearing agents of the old firm who cleared the consignment by filing the Bill of Entry for clearance of goods with the customs authorities. The goods were cleared on payment of customs duty on or about September 12,1972.
5. It appears that the customs department felt that the duty recovered in respect of these goods was short and, therefore, on May 21,1973, the 1st respondent issued a show cause notice under Section 28 of the Customs Act, 1962 to the State Trading Corporation demanding from them a sum of Rs.31,199.23 (being the duty short levied). The State Trading Corporation forwarded the said show cause notice to the clearing agents for necessary action. The clearing agents filed their reply to the show cause notice. The Assistant Collector by its order dated January 4,1974 negatived all the contentions raised by the clearing agents and levied the additional duty. M/s. Bablani and Co. preferred appeal on behalf of the State Trading Corporation but, however, the appellate authority vide its order dated January 24,1979, dismissed the appeal. During the pendency of these proceedings as stated earlier the old partnership came to be dissolved on December 31, 1974 and new partnership came into existence on January 1,1975.
6. In May 1977 an advertisement was issued through respondent No. 4 inviting offers by way of tenders for purchase of cellulose nitrate sheets lying with them. The 2nd petitioner (new firm) who was interested in purchasing the said goods filed a tender on May 23, 1977 in respect of 4 lots and deposited a total sum of Rs. 58,360/- as earnest money with respondent No. 4. Two tenders submitted by the 2nd petitioner were accepted and an amount of Rs. 8,660/- came to be adjusted towards these two tenders. Out of the balance of Rs.49,700/- the 4th respondent returned certain amounts to the 2nd petitioner leaving with them a balance of Rs. 31,199.33. It is this amount of Rs. 31,199.33 which the petitioners have deposited with the 4th respondent pursuant to the advertisement of May 1977 and which is paid over to the customs department towards the satisfaction of the order passed by the Assistant Collector on January 4,1974 and on appeal confirmed by the appellate authority on January 24,1979 is the subject matter of Misc. Petition No. 1713 of 1979.
7. Before filing this Misc. Petition No. 1713 of 1979, the petitioners corresponded with the 4th respondent requesting them to refund the amount of Rs. 31,199.33. Since there was no favourable reply the petitioners have filed this writ petition to this Court under Article 226 of the Constitution of India.
8. At the stage of admission the learned single Judge while rejecting the Misc. Petition summarily opined that the petitioners may proceed against 4th respondent if at all necessary and the customs authorities were in no way concerned with the petitioners. The learned single Judge also opined that the remedy of the petitioners is by way of suit and no writ petition can be entertained at their instance. Consistent with this opinion the learned single Judge dismissed the Misc. Petition.
9. Shri Gursahani, the learned counsel appearing in support of this appeal raised several contentions. According to the learned counsel the show cause notice issued by the Assistant Collector of Customs was clearly illegal and without jurisdiction inasmuch as the said notice was not in conformity with the provisions of Section 28(1) of the Customs Act, 1962. The claim made by the customs authority was clearly time barred since the demand was made after the expiry of six months. He further submitted that proviso to Section 28 of the Act has no application because the show cause notice does not fulfil the requirements of the said proviso. According to Shri Gursahani, since the demand made by the Assistant Collector under show cause notice was not within limitation the State Trading Corporation ought not to have paid the additional duty to the customs authorities. It was then submitted by Shri Gursahani that assuming without admitting that the importer was liable to pay the additional amount of duty, the State Trading Corporation should not have paid over the amount of duty to the customs out of the amounts deposited with them by the petitioners (new firm) under the tenders filled in on May 23,1977. This amount was deposited for a specific tender and, therefore, the State Trading Corporation could not have adjusted the same for any other purpose. Some other submissions were also advanced before us but at this stage it is not necessary to set out all these submissions in the view which we are inclined to take in this appeal.
10. Shri Sethna, the learned counsel appearing for the respondents 1 to 3 urged that the petitioners have no locus standi whatsoever to challenge the show cause notice. According to him the State Trading Corporation which was the canalising agency had cleared off the goods and paid the additional customs duty as they were held liable under the order of the Assistant Collector, Customs. The petitioners have no claim whatsoever vis-a-vis these respondents. He also urged that the old firm had suppressed certain facts and on misrepresentation cleared off the goods and therefore the show cause notice issued under Section 28 of the Customs Act was perfectly legal and cannot be said to be time barred as alleged by the petitioners. He also submitted that M/s. Bablani and Co. who were the clearing agents representing the old firm (of which appellant No. 2 was a partner) as well as the State Trading Corporation did file reply to the show cause notice and suffered the adverse orders in the customs proceedings, the petitioners-appellants now cannot successfully lay any challenge to the show cause notice. He therefore submitted that the appeal as against these respondents should be dismissed.
11. Shri Thakkar, the learned advocate appearing for the 4th respondent urged that the State Trading Corporation was fully justified in adjusting the amount, deposited by the appellants (new firm) with them towards the payment of the excess duty. He also urged that the partners of the new firm were also the partners of the old firm against whom the liability of the excess duty was adjudged and since the partners are jointly and severally liable, the amounts deposited by the petitioners for and on behalf of the new firm could be adjusted towards the payment of excess duty. The State Trading Corporation was fully justified in making payment of this excess duty to the customs department.
12. These submissions made before us and especially the submission in regard to the adjustment sought be relied upon by the 4th respondent appear to us fairly arguable and, in our opinion, in the absence of relevant material and return from the 4th respondent the petition could not have been dismissed summarily. We may make it clear that we express no opinion on any of these contentions and it would be for the learned trial Judge who will hear the matter to dispose of the same in accordance with law.
13. At the stage of admission of this appeal on October 17, 1979 this Court directed the 4th respondent to deposit certain amounts and pursuant to this direction the 4th respondent has deposited the said amount. According to the order of this Court the said amount has been invested in the nationalised bank. Shri Thakkar, the learned advocate appearing for the 4th respondent applies for withdrawal of this amount. The Prothonotary and Senior Master is hereby directed to permit the 4th respondent to withdraw the said amount along with interest earned thereon, upon 4th respondent furnishing unconditional bank guarantee of any nationalised bank to the satisfaction of the Prothonotary and Senior Master. The 4th respondent through their counsel undertakes to this Court to refund the said amount to the petitioners with 10 p.c.p.a. interest thereon in the event the petitioners succeed in the Miscellaneous Petition.
14. In the result, the appeal is allowed. The impugned order is quashed and set aside. Rule to issue in terms of prayer clauses (a) to (d) returnable on 9th December 1985. Rule to come up for hearing in normal course. Shri Sethana waives notice of the rule on behalf of respondents 1 to 3. Shri Thakkar waives notice of the rule on behalf of respondent No. 4. No order as to costs.