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Sita Ram Gurdas Mal Vs. Collector of Central Excise, New Delhi and anr. - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Writ No. 11 of 1955
Judge
Reported inAIR1958P& H35
ActsConstitution of India - Article 226; Sea Customs Act, 1878 - Sections 182 and 188
AppellantSita Ram Gurdas Mal
RespondentCollector of Central Excise, New Delhi and anr.
Appellant Advocate Bhagirath Das, Adv.
Respondent Advocate Har Parshad, Adv.
DispositionPetitions allowed
Cases ReferredGanesh Mahadev v. Secretary of State
Excerpt:
.....by the tribunal if no procedure is laid down in the statute unless such compliance is expressly or by necessary implication excluded by the provisions of the statute under which the function is exercised. this, to my mind, is a very strong indication that the legislature intended adjudication by the customs authorities under section 182 and similar provisions to be of quasi judicial nature. it is well known that generally the customs authorities give ample opportunity to the importers to prove their allegations before final orders are passed after their experts have ex- pressed their opinion in the matter......another 25 cases on 20-2-1951. under the customs tariff rules, 1951, this commodity is liable to customs duty at rs. 45/- per cwt. if it is 'unsifted and uncleaned', but if it is found to be 'sifted and cleaned' then ad valorem duty is payable. the customs authorities classified the goods as 'sifted and cleaned' and charged rs. 8,245/9/- and rs. 8.492/10/- as import duty on both the items. the petitioner paid the duty under protest and then claimed refund of rs.2,332/14/3 and rs. 2,968/7/- on the ground that the goods imported were in fact 'unsifted and uncleaned'. this claim was rejected by the assistant collector (customs) on 26th december, 1951. the firm appealed under section 188, sea customs act, to the collector, central excise, new delhi, and the appeals were dismissed on 4th.....
Judgment:
ORDER

Bishan Narain, J.

1. The firm Messrs. Sita Ram Gurdas Mal carries on the business of imports and exports in Amritsar. It imported 25 cases of acacia gum on 14-2-1951 and another 25 cases on 20-2-1951. Under the Customs Tariff Rules, 1951, this commodity is liable to customs duty at Rs. 45/- per cwt. if it is 'unsifted and uncleaned', but if it is found to be 'sifted and cleaned' then ad valorem duty is payable. The customs authorities classified the goods as 'sifted and cleaned' and charged Rs. 8,245/9/- and Rs. 8.492/10/- as import duty on both the items. The petitioner paid the duty under protest and then claimed refund of Rs.2,332/14/3 and Rs. 2,968/7/- on the ground that the goods imported were in fact 'unsifted and uncleaned'. This claim was rejected by the Assistant Collector (Customs) on 26th December, 1951. The firm appealed under Section 188, Sea Customs Act, to the Collector, Central Excise, New Delhi, and the appeals were dismissed on 4th August 1952. The firm then filed petitions for revision under Section 191 of the Act to the Central Government. The Central Government made minor deductions in the duty chargeable. The petitioning-firm is dissatisfied with these orders and has filed these petitions (Civil Writs Nos. 11 and 17 of 1955) under Article 226 of the Constitution to get the refund as claimed by it. As the questions involved in these two petitions are common, it will be convenient to decide both of them by this judgment.

2. It is urged before me on behalf of the petitioner that inasmuch as the impugned orders involve petitioner's rights of property, he was entitled to get an opportunity to be heard before an adverse order was passed against him in the proceedings which were of quasi judicial nature and that the authorities were bound to observe principles of natural justice in deciding the cases even though no procedure of a hearing is provided in the Sea Customs Act. The respondents' case on the other hand is that the adjudication under Section 182 of the Act is in the nature of proceedings in rem, that the customs authorities are not judicial tribunals and that the order is a purely administrative order. Further it is pleaded that in the present cases the Assistant Collector (Customs) took samples from the two consignments and that on subsequent verification it was found that the imported goods were 'cleaned and sifted'. While it is admitted that this subsequent verification was done in the absence of the petitioner from the market, it is pleaded that the petitioner's presence at that time would have defeated the purpose of the verification.

3. On these pleadings the following two questions require determination in these petitions :

1. whether the customs authorities while acting under Sections 182, 188 and 191 of the Sea Customs Act are purely administrative bodies and their decision is not quasi judicial; and

2. whether in the present cases the proceedings taken to determine the duty leviable were in accordance with the doctrine of natural justice.

4. I proceed to take up the first point. Their Lordships of the Supreme Court in Maqbool Hussain v. State of Bombay, AIR 1953 SC 325 (A), have held that the customs authorities are not judicial tribunals and the adjudging of confiscation, increased rate of duty or penalty under the provisions of the Sea Customs Act does not constitute a judgment or order of a Court or Judicial Tribunal necessary for the purpose of supporting a plea of double jeopardy. In the course of discussion their Lordships after referring to various provisions of the Act observed at page 330.

'All these provisions go to show that far from being authorities bound by any rules of evidence or procedure established by law and invested with power to enforce their own judgments or orders the Sea Customs Authorities are merely constituted administrative machinery for the purpose of adjudging confiscation, increased rates of duty and penalty prescribed in the Act.'

On the strength of these observations, it is argued on behalf of the customs authorities that the proceedings before them are purely administrative and it is not necessary for the authorities to observe the principles of natural justice when fixing duty payable by an importer. This decision of their Lordships of the Supreme Court overrules the decision in Assistant-Collector of Customs for Appraisement v. Soorajmul Nagarmull, 56 Cal WN 452: (AIR 1952 Cal 656) (B), so far as it is held in the Calcutta case that the proceedings before the Customs Authorities are judicial in nature. It must, however, be remembered that in the Maqbool Hussain's case (A), there was no investigation as to whether the proceedings are of quasi judicial nature. Their Lordships were only concerned with Court of law as distinct from administrative tribunals and they have authoritatively laid down that the customs authorities are purely administrative tribunals. There is, however, no discussion in the judgment whether the proceedings taken by the customs authorities are of quasi judicial nature or whether they must observe the principles of natural justice when adjudging the duty payable by an importer. The fact that there is no procedure prescribed to be followed by the customs authorities in the matter of adjudication of the duty payable etc. does not conclusively determine that the said authorities are absolved from observing the doctrine of natural justice. It is well known that various tribunals in this country and elsewhere have been established which exercise judicial functions. Whether a particular function, exercised by an administrative tribunal is a judicial function or not depends on the nature of decision and on the provisions of law according to which that decision is to be made. When a question raises whether an authority created by an Act is a quasi judicial tribunal, then one has to see if the tribunal has a duty to decide disputes in a judicial manner and declare the rights of parties in a definitive judgment. To decide in a judicial manner involves that the parties are entitled as a matter of right to be heard in support of their claim and to adduce evidence in support of it and that the authority has to decide the matter on a consideration of the evidence produced before it. If the decision is to be made by the authority on a purely subjective view of the matter, then it is the exercise of administrative and executive functions. On the other hand if the decision is to be made objectively on the impersonal and impartial consideration of facts and law of the case, then it is a judicial function. As I have stated above, when judicial function is to be exercised by an administrative tribunal then the tribunal, while exercising that function, may be called a quasi judicial tribunal as distinct from an ordinary Court of law (see Bharat Bank v. Employees of Bharat Bank, AIR 1950 SC 188 (C) and Virindar Kumar Satyawadi v. State of Punjab, (S) AIR 1956 SC 153 (D). It is well established that in the exercise of quasi judicial function the doctrine of natural justice must be observed and complied with by the tribunal if no procedure is laid down in the statute unless such compliance is expressly or by necessary implication excluded by the provisions of the statute under which the function is exercised. Now the doctrine of natural justice in substance only means that the interested parties should have a fair and reasonable chance of putting their case before the authority or in other words they should have a fair and reasonable hearing. This doctrine is not concerned with the form of the proceedings taken but with the substance of the matter. Bearing these rules in mind, it is to be seen whether the customs authorities are under obligation to observe the principles of natural justice or not.

5. Now, under Section 182 of the Act, the the Assistant Collector has to 'adjudge' the increased rates of duty etc. payable by the importer. This adjudication is subject to appeal under Section 188 and subject to revision under Section 191 of the Act. It affects the pecuniary liability of the importer and may seriously prejudice his rights to carry on his business. The word 'adjudge' implies' a judicial decision. It follows that the dispute between the customs authorities and the importer under Section 182 of the Act involves a judicial approach and a judicial decision. In AIR 1950 SC 188 (C), the Hon'ble Mr. Justice Mehr. Chand Mahajan has observed at page 196 :

'The expression 'adjudication' implies that the tribunal is to act as a Judge of the dispute; in other words, it sits as a Court of Justice and does not occupy the chair of an administrator.'

Moreover, the Act permits the importer to file an appeal and then a revision. This, to my mind, is a very strong indication that the legislature intended adjudication by the customs authorities under Section 182 and Similar provisions to be of quasi judicial nature. Wharton in his Law Lexicon has defined an 'appeal' as a judicial examination of the lower Court's decision by the High Court. Lord Davey in Ponnamna v. Arumogam, (1905) AC 383 at p. 390 (E), has stated an appeal to be one in which the question is whether the order of the Court from which the appeal is brought was right on the materials which that Court had before it. It follows therefore, that such a material is to be collected and if that be so then it must be at the instance and in the presence of the 'parties interested in the matter. It has been held in the Bharat Insurance Co. Ltd., Delhi v. State of Delhi, 1952-54 Pun LR 179: (AIR 1952 Punj 69) (F), that if a person has a right of appeal, then he has also a right to be heard. A Division Bench of the Bombay High Court in Ganesh Mahadev v. Secretary of State, ILR 43 Bom 221: (AIR 1919 Bom 30) (G), and a Division Bench of the Calcutta High Court in 56 Cal WN 452: (AIR 1952 Cal 656) (B), have also held that the proceedings before the customs authorities are quasi judicial in nature and it is incumbent on the customs authorities to follow, the elementary rules of natural justice and to give an aggrieved party an opportunity of being heard before an order under Section 182 of the Act is passed. My conclusion therefore is that the proceedings under Section 182 of the Act are of quasi judicial nature.

6. I must now consider whether in the present cases the petitioning firm was given a fair hearing by the customs authorities. The procedure adopted in these cases is not in doubt. At the time of Assessment samples were drawn. The customs authorities later on made enquiries in the Amritsar Market and found the imported goods to be 'sifted and cleaned'. Admittedly the importer was not informed of this enquiry nor was it made in his presence. The reason given for holding the enquiry in the absence of the importer is that otherwise the other traders would not have been honest enough to give correct opinion in the presence of the importer. On 26th December 1951 the Assistant Collector (Customs) rejected the importer's claim remarking that on subsequent verification the goods were found to be cleaned and sifted. The importer appealed within time under Section 188 of the Act. One of the grounds taken in the appeals was that all such goods imported from Afghanistan are always in their original crude form and there is no factory there to clean or sift acacia gum, and it was stated that this may be got confirmed from the Afghan Embassy in India at New Delhi. The Collector, Central Excise, New Delhi, did not fix any date of hearing of the appeals and dismissed them on 4th August, 1952. His order reads :

'Having regard to all the circumstances of the case I find that the gum in question was rightly assessed under Section 30 of the Sea Customs Act. The appeal is rejected.'

It is not clear what circumstances the Collector took into consideration when deciding the appeals. The petitioning-firm then filed revision petitions under Section 191 on the same grounds, but the Central Government declined to interfere. I find it impossible to hold that the procedure adopted in the present cases amounted to granting a fair hearing to the petitioners as at no time was he able to or was called upon to put his case before the authorities. It is true that the Act does not lay down any procedure for holding such an enquiry and it may be that no test has been laid down by the authorities to determine whether or not the imported acacia gum is 'sifted and cleaned.' That being so reliance has to be placed on the market opinion. I assume for the purposes of these cases that no person in Amritsar who deals in this commodity would in the presence of the petitioner have given correct opinion in an enquiry held by the customs authorities, though I find it a little difficult to hold that to be so. Even then it is not beyond human ingenuity to hold an honest enquiry in the presence of the importer. The Assistant Collector (Customs) does not even say in his order that he or his nominee had made enquiries in the market with the samples taken from the imported goods and this fact is mentioned for the first time only in the reply filed in this Court. In any case, after the customs authorities had secured an opinion adverse to the importer's claim, an opportunity should have been given to him to show that that opinion was wrong and incorrect.

Moreover, in the present cases the importer had claimed that 'sifted and cleaned' acacia gum could not be imported from Afghanistan as there was no arrangement in Afghanistan for sifting and cleaning this commodity, and yet no opportunity was given to him to prove this assertion. There is no suggestion that the Collector on appeal made any effort to get the required information from the Afghan Embassy as suggested by the importer. Moreover, the orders of the Assistant Collector and the Collector are so vague that there is no guarantee that these authorities had judicially applied their mind to the cases and that they were not carried away by their natural inclination to collect the highest possible amount of duty from the business-man.

It is well known that generally the customs authorities give ample opportunity to the importers to prove their allegations before final orders are passed after their experts have ex- pressed their opinion in the matter. It is not understood why that procedure was not adopted in the present cases. I therefore hold that in the present cases the procedure adopted by the customs authorities under Sections 182 and 188 of the Act violated the principles of natural justice and therefore the orders passed are liable to be, quashed in the present proceedings.

7. It was not argued before me that this Court could not set aside these orders in the exercise of powers conferred on this Court under Article 226 of the Constitution.

8. For all these reasons, I accept thesepetitions with costs and set aside the orders -of the Assistant Collector (Customs), dated26th December, 1951, of the Collector, CentralExcise, New Delhi, dated 4th August, 1952, andof the Central Government made under Section 191of the Act. The customs authorities will nowdecide the matter after giving adequate opportunity to the petitioner to present his casesbefore them.


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