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Electronic Industrial Corporation and anr. Vs. Collector of Customs, Bangalore and anr. - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtKarnataka High Court
Decided On
Case NumberWrit Petition No. 3399 of 1981
Judge
Reported in1982(10)ELT15(Kar)
ActsCustoms Act 1962, - Sections 11, 111, 112 and 124
AppellantElectronic Industrial Corporation and anr.
RespondentCollector of Customs, Bangalore and anr.
Appellant Advocate K.G. Raghavan, Adv.
Respondent AdvocateBasavaraj, Central Govt. Adv.
Excerpt:
.....well before 1-12-1980 and a firm order had been placed by the firm before 1-12-1980. the said consignment arrived at bangalore on or about 1-12-1980. in spite of waiting for a week or more after the arrival of the consignment, the petitioners could not clear the same from the customs authorities at bangalore. iv was filed on 16-6-1981 raising additional grounds as well as challenging the finding recorded in the adjudication proceedings which has been produced as annexure l to the additional statement of facts. in the result, the 3rd respondent could not pass an order confiscating the same as well as imposing a personal penalty of rs. 2603/81, when the question directly arose as to whether the petitioner or the like of it were required to produce the phased production programme, the..........is an item know as volume control. the said item of component is an imported item. the petitioner-firm imported in all 15,000 of these components which are manufactured at japan. the firm had placed its order well before 1-12-1980 and a firm order had been placed by the firm before 1-12-1980. the said consignment arrived at bangalore on or about 1-12-1980. in spite of waiting for a week or more after the arrival of the consignment, the petitioners could not clear the same from the customs authorities at bangalore. on approaching the 2nd respondent-assistant collector of customs, customs division, air cargo complex, for clearance of the imported components namely, the volume controls, he refused to clear the same by his letter dated 24-1-1981 addressed to the firm, unless it produced its.....
Judgment:

1. The 1st petitioner herein is M/s. Electronic Industrial Corporation (hereinafter referred to as the Firm), a firm registered under the provisions of the Indian Partnership Act. The 2nd petitioner is one of its partners. The firm carries on the business and are engaged in the manufacture of electronic and electrical items including transistorized equipments like radios, testing instruments, tape-recorders, loud-speakers, cassette tape cartridges. They have been carrying on this business and manufacturing activities for the last 20 years. The petitioners are also registered as Small Scale Industrial Unit with the appropriate authorities in the State of Karnataka.

2. It is asserted by the firm that one of the essential components of either a tape-recorder or the transistors that are manufactured by the petitioners is an item know as volume control. The said item of component is an imported item. The petitioner-firm imported in all 15,000 of these components which are manufactured at Japan. The firm had placed its order well before 1-12-1980 and a firm order had been placed by the firm before 1-12-1980. The said consignment arrived at Bangalore on or about 1-12-1980. In spite of waiting for a week or more after the arrival of the consignment, the petitioners could not clear the same from the Customs authorities at Bangalore. On approaching the 2nd respondent-Assistant Collector of Customs, Customs Division, Air Cargo Complex, for clearance of the imported components namely, the volume controls, he refused to clear the same by his letter dated 24-1-1981 addressed to the firm, unless it produced its phased production programme for the manufacture of tape-recorder or tape-players as also the small scale industries certificate. In response to the same, the firm by its letter dated 28-1-1981 informed that the firm was registered with the Director of Industries, Bangalore, and was holding registration certificate showing that they are manufacturers of tape-recorder and also pointed out that a photostat copy of that certificate had already been furnished to the 2nd respondent. But as it did not have any approved phased production programme it could not produce the same and therefore the items imported should be cleared from the customs authorities. Finally, the 2nd respondent by his letter dated 7-2-1981 merely informed the petitioner-firm that the matter was receiving consideration. After waiting for a little over 15 days, the petitioner-firm approached this Court seeking a writ of mandamus directing the 2nd respondent-Assistant Collector of Customs to forthwith release the consignment imported by the petitioner-firm under Air Way Bill No. 098 - 3098 - 6410 produced as Annexure C to the petition consisting of five packets. This Court issued emergent notice regarding rule on 26-2-1981. On 3-4-1981 respondents entered appearance and took time. On 10th April, 1981, an order was made by this Court permitting the respondents to proceed under Section 124 of the Customs Act, 1962, (hereinafter referred to as the Act) in as much as proceedings thereunder had been commenced after the filing of the petition, by the Additional Collector, subject however, to liberty being reserved to the petitioner-firm to seek appropriate redress in this Court if the adjudication proceedings under Section 124 of the Act went against it by suitably amending the petition and rule was issued. Accordingly, an amendment application I.A. No. IV was filed on 16-6-1981 raising additional grounds as well as challenging the finding recorded in the adjudication proceedings which has been produced as Annexure L to the additional statement of facts. I.A. No. IV was allowed on 22-6-1981. Prayer in regard to quashing the order at Annexure L was permitted to be included in addition to the prayer, originally made in the petition.

3. It may be stated that the grievance of the petitioner is two fold, the item imported is an item admittedly covered by Entry I of Appendix 10 of Import Policy for the period 1980-81 and therefore it was permissible for the firm to import the same under open general licence. In the result, the 3rd respondent could not pass an order confiscating the same as well as imposing a personal penalty of Rs. 1,00,000/- as ordered in Annexure L which is passed by the Additional Collector who initiated the proceedings under Section 124 of the Act. One of the prayers in I.A. No. IV referred to above was to include the Additional Collector as the 3rd respondent.

4. The 2nd grievance which was of the earlier origin is that the 2nd respondent had required the petitioner-firm to produce approved phased production programme. In W.P. No. 2603/81, when the question directly arose as to whether the petitioner or the like of it were required to produce the phased production programme, the Court took the view that the demand for that document was not legally supportable inasmuch as there was no notification issued by the Government of India under Section 11 of the Act imposing that as an additional condition in the import licence. That decision has been affirmed in writ appeal filed by the Revenue.

5. In the result, so far as the second of the grievances in issue is concerned, it has already been decided against the respondents. If impediment is not there, the firm is entitled to the release of five parcels mentioned in Annexure C to the petition and hence a writ of mandamus is liable to be issued against the respondents for release of the same.

6. The only impediment that remains, I can see is the order of confiscation at Annexure I to the petition passed by the 3rd respondent-Additional Collector. Therefore, the question is whether the order of the 3rd respondent-Additional Collector at Annexure L is sustainable in law. Paragraph 7.4 of the order is as follows :

'7.4. In view of my above discussion, I hold that the importation of the Volume Controls in question by M/s. Electronic Industrial Corporation, is an item covered by item 1 of Appendix 10 on OGL - Actual users, but having been imported in violation of the conditions of the OGL, is in contravention of Section 11 of the Customs Act, 1962. I, therefore, find that the volume controls in question, are liable for confiscation under Section 111 of the said Act. M/s. Electronic Industrial Corporation are also liable for penalty under Section 112 of the Customs Act, 1962.'

7. On the above conclusion, the 3rd respondent-Additional Collector imposed the penalty of absolute confiscation of 15,000 volume controls imported under Air Way Bill No. 098 - 3098 - 6410 as well as a penalty on the firm in the sum of Rs. 1,00,000/- as personal penalty. The only reason given by the 3rd respondent-Additional Collector is that the volume controls have bene imported by the firm without obtaining approval for its phased production programme before importing the same. This, in spite of the decision rendered by me in W.P. No. 2603/1981. No doubt the Revenue had taken the matter up in appeal before a Division Bench of this Court. But the Division Bench had not granted stay of the operation of my order in W.P. No. 2603/1981. In that circumstance, law declared by this Court was binding on the 3rd respondent-Additional Collector. It is not proper for an officer of that rank in the revenue to ignore that ruling after being aware of it and by independent reasoning of his own to come to the conclusion that there was violation of the conditions imposed under Section 11 of the Act when the very decision in the said writ petition was that the condition imposing the requirement of the production of approved phased production programme was not legally enforceable condition under Section 11 of the Act. This should not be encouraged. In fact, there is not even an attempt to distinguish that decision, even where is not permissible. Nothing more need be said about this than to observe that Officers of the Revenue should respect the decisions of this Court curbing their enthusiasm to protect public revenue lest such enthusiasm is mistaken for contempt.

8. For the reasons I have given, the conclusion reached by the 3rd respondent-Additional Collector is unsustainable in law and therefore liable to be quashed as made illegally and without jurisdiction.

9. Accordingly, the order at Annexure L is quashed and a writ of mandamus will issue to the 1st and the 2nd respondents to the effect that the items imported in five parcels bearing Air Way Bill No. 098 - 3098 - 6410 shall be released in favour of the petitioner-firm or its agents within three days from the date of receipt of this order subject to payment of duty.

10. Shri Raghavan, learned counsel appearing for the petitioners has further pointed out that for no fault of the petitioners, the goods imported have been lying in the warehouse of Mysore Sales International at the Air-Cargo Complex and the consignment has incurred demurrage which the petitioner would not have been liable but for the illegal and untenable stand taken by the respondents and therefore this Court as a consequential relief should order respondents to issue a no demurrage certificate to the petitioners so that it will not be liable to pay demurrage to M/s. Mysore Sales International. Such a direction may issue. Rule is made absolute in terms above stated.

11. In the circumstances, there will be no order as to costs.


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